The Rise of Money Mules in The Philippines

How COVID-19 became a catalyst for financial crime

The COVID-19 pandemic has reshaped global economies and left millions unemployed. During the peak of the pandemic, unemployment rates in the Philippines hit a 30-year record high. While things have since improved, this ongoing economic stress will likely make more people susceptible to the siren song of money muling, especially with movement restrictions that severely limit work opportunities.

Those desperate for work and financial stability are at risk of being lured by false work-from-home job listings that promise easy money for little to no effort. Unbeknownst to them, these jobs will unwittingly turn them into money mules.

Just last month, the Bank of the Philippine Islands flagged rising cases of criminals using another person’s bank account to launder money. The growing problem of money mules in the Philippines now has bankers and experts calling for additional regulations to criminalize the misuse of bank accounts and e-wallet accounts to try and stamp out the issue.

What Exactly Is Money Muling?

According to the FBI, a money mule is someone who transfers or moves illegally acquired money on behalf of, or at the direction of another. Consumers are typically tricked into depositing a fraudulent check into a bank account, or into receiving money from accounts without authorisation of the account owner, although there are also complicit money mules who intentionally move stolen funds in exchange for a portion of the money.

Money mules are inherently dangerous as they add layers to the money trail from a victim to a criminal actor, which complicate and hinder the ability of regulators to accurately identify the source of these illegal funds. They are often moving chess pieces in a much larger, elaborate international criminal operation such as human and drug trafficking. To complicate things further, money mules are sometimes victims of scams themselves.

In this clip from ABS-CBN, I discuss the rise of money mules in the Philippines:

Faster Payments Accelerate Problem

Transaction behaviors have also evolved during the pandemic. Consumers are increasingly using their phones for almost everything, from mobile deposits, to contactless payments and person-to-person payments, a trend that will likely remain as the “new normal” even after the pandemic. While these real-time payment transfers make it much more convenient for people to move money around, they also create opportunities for criminals looking to introduce ill-gotten funds into the legitimate banking system through money muling. Real-time payments allow money to be moved across multiple accounts nearly instantaneously, into the control of the criminals and out of the reach of law enforcement, making the funds more difficult to trace. 

Kicking Back Against Mules

To fight money mules — a likely fixture in the post-pandemic world of financial crime — it is important for banks to continuously improve their detection capabilities to reduce fraud losses and keep their reputations intact.

One method is to leverage network analytics to identify behaviors typical of mule activity, such as when several customer accounts are sending money to the same account. Network analytics can also identify cases where a customer's account is receiving money from an unusually large number of people or for atypical transaction amounts.

Given that money laundering follows some form of criminal act, banks recognize the importance of a holistic approach. In one of our recent FICO surveys it was revealed that 71% of APAC banks believe that the convergence of their fraud and AML compliance functions will improve the ability to stop fraud and financial crimes. 

Banks with an enterprise-wide customer view can monitor all inflows, outflows, banking channels and devices down to the customer level. They can also use link analysis solutions to group and compare suspected mules with each other, and with entities suspected of money laundering.

Given that many people can be attracted to the dollars offered by criminal syndicates to participate in what can seem like a ‘victimless’ crime, governments and banks need to deploy regulation and technology to try and curb this trend. Otherwise, it will continue to facilitate cybercrime, online fraud, drugs, human trafficking and more, both in the Philippines and around the world.

How FICO Can Help You Prevent Financial Crime

• Learn more about how to fight money muling
• Explore our AML solutions