FBI Issues Money Mule Warning

April 17, 2020 4 minute read

Criminals target coronavirus relief in Germany, Westpac braces itself for a nine-figure fine and the FBI warns of an increase in money mules.

We share our financial regulatory highlights from the week of 13 April 2020.

Criminals Target German Corona Relief

Fake websites have caused Germany’s North Rhine-Westphalian Ministry of Economic Affairs to temporarily suspend coronavirus-related economic relief efforts.

Criminals have been spoofing the official website and using phishing attacks to apply for economic aid and obtained applicants’ information. From there It was a simple issue for the criminals to file for the relief funding using the fraudulently obtained details and use their own account information instead.

Applications were suspended in coordination with the state police. Thousands of applicants have been affected by the freeze and it’s unclear whether or when the applications will begin to be processed again.

State police have set up an investigative commission for the coronavirus-relief fraud. The Ministry of Commerce commented: “In the coming days, the investigative team will continue to investigate to identify fraudulent applications”.

Hundreds of thousands of applications have been made since the scheme went live in March. There’s potential for further fraud as applicants supplied ID and tax numbers. But there’s also a general fear that the money has already been paid out and there will not be enough left in the fund for those who need it. German authorities have not yet been able to clarify how things stand for legitimate applicants.

Westpac Braces for AUD$1 Billion Fine

Westpac, the embattled Australian bank, has set aside AUD$900 million in preparation for a settlement with Australian regulator AUSTRAC.

The financial planning has come in the wake of a money laundering scandal that saw 23 million breaches made and accusations of allowing a pedophile ring to operate unfettered.

It would be a record-breaking fine for AML breaches in Australia, with the previous highest fine reaching AUD$700 million. That was paid by Commonwealth Bank of Australia for 53,000 AML breaches, significantly fewer than the 23 million made by Westpac.

AUSTRAC will issue the fine as part of AUD$1.43 billion in charges. The fine comes at an unfortunate time for Westpac. Like most businesses, earnings at Australian banks are set to plummet this year due to the COVID-19 outbreak shuttering significant parts of the global economy. The regulator has also urged banks to focus on gathering capital and to reduce dividends for retail shareholders to weather the economic downturn.

Handling the global economic and pandemic crisis would be difficult at the best of times. But having to deal with it during a money laundering scandal makes business that much harder for Westpac. CEO Peter King commented that there is still “considerable uncertainty” around the settlement and has set aside the AUD$900 million for the fine plus AUD$103 million for costs to improve its financial crime solution.

FBI Issues Money Mule Warning

The FBI issued a warning to US citizens on April 6 about a rise in fraudsters’ use of money mule scams during the COVID-19 pandemic.

Preying on fears and using the heightened uncertainty caused by the global health crisis to their advantage, criminals wishing to launder ill-gotten gains are tricking people into helping them. This is frequently done through an electronic money transfer of some kind, and requests often appear as job postings offering easy money or calls to send money to someone (or a group of someones) in need of assistance due to the coronavirus.

This warning is one of many issued by the FBI in recent days. Other warnings urge vigilance in watching for money laundering scams using cryptocurrencies and business email compromise attempts.

Cryptocurrency scams may, for example, take the form of emails or letters that blackmail the recipient with the threat of exposing personal information, work-from-home schemes or payment for COVID-19-related treatments. Business email compromise scams, on the other hand, may come from fraudsters pretending to be a customer or company requesting a change in payment method, recipient and date.

These warnings are warranted too: the Federal Trade Commission reported on March 31 that it had received over 7800 coronavirus-related reports since January 1 of this year, with that total doubling in about a week’s time. In total, consumers have lost $4.77 million so far.

The pandemic is far from over, and its impact on the global economy will continue to be felt for quite some time. So that amount will surely increase. Financial institutions must carefully monitor for these types of suspicious transactions and adjust their alert thresholds accordingly — a task that will only get harder given that normal customer behavior will inevitably shift as a result of the pandemic.