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February 24, 2020

Mules May Pack More Than Money

My colleague Dave Lott recently blogged on global law enforcement efforts to crack down on money mules. In his post, he categorized the two main groups of money mules: the innocents and the criminals. It just so happened that last November, I received an email trying to recruit me to be a mule (see the image).

email recruiting me to be a mule

I recently watched a fascinating video describing another type of unwitting mule. The nearly 20-minute video video fileOff-site link from the DEF CON 27 Hacking Conference is well worth your time. Nina KollarsOff-site link offers a highly entertaining glimpse into an interesting mule scheme known as triangulation fraud. (You can see the diagramOff-site link she uses in KrebsOnSecurity.) Rather than helping criminals launder money by moving ill-gotten funds, the mules in triangulation fraud help launder money by unwittingly purchasing legitimate, usually discounted, ill-gotten products from the criminals on a third-party marketplace. These criminals use data from stolen credit cards or synthetically created identities to purchase the products and then "cash out," or launder the funds by reselling them. Criminals will obviously use the data to purchase high-end products for their own use, but the adage that "cash is king" is true for criminals as well and they often look to turn their ill-gotten goods into cash.

The triangulation fraud scheme places the mule in an interesting position, as Kollars highlights in her video. While some people may not suspect they've been caught up in a fraudulent scheme, she was astute enough to know something fishy was going on and that she was, in fact, receiving illegally purchased goods—or, in essence, stolen goods. Ultimately, she reached out to the manufacturer of the products she received in an effort to return them. She also contacted law enforcement. Kollars acknowledged that even though she knew she was dealing with criminals, the deals were so good it was tempting to continue transacting with them.

We often write in this blog about the financial losses due to fraud of the various affected parties, including consumers, financial institutions, and businesses. But there is another important negative consequence I want to highlight now: mules help criminal and terrorist organizations fund illicit activities such as drug trafficking and terrorist activities by participating in moving money around the globe or by purchasing products, as Kollars describes in the video. It is imperative that people who suspect they are looking at a triangulation scheme or otherwise being recruited as mules immediately reach out to law enforcement. These schemes may seem small and harmless, but they are a form of money laundering. Let's all do our part to educate potential mule recruits about these schemes to stop them from being lured in and, if someone tries to recruit them, about the importance of notifying law enforcement immediately. We can all work together to put an end to the recruitment of unsuspecting citizens by global criminal and terrorist organizations.