Keeping an eye out for money mules: CPAs can help clients avoid schemes that funnel ill-gotten gains into bank accounts.

Author:Ovaska-Few, Sarah
 
FREE EXCERPT

The FBI and other law enforcement agencies have recently stepped up efforts to crack down on money mule schemes that rope in victims unaware that the money they're sending is part of an elaborate money laundering operation.

In March 2019, the U.S. Department of Justice announced a major initiative against elder fraud and said that the FBI, U.S. Postal Inspection Service, and U.S. Secret Service had taken actions against 600 money mule perpetrators by interviewing victims and conspirators, issuing warning letters, and filing civil and criminal cases, according to a news release.

"We will continue to use creative solutions to protect our nations seniors from fraud; financial security is critical to homeland security," Derek Benner, the acting deputy director of the U.S. Immigration and Customs Enforcement agency, said in a statement.

Money mules, unlike their drug-trade counterparts, aren't shuffling illicit goods over a physical border. Instead, they take part in criminal activity by accepting illegal proceeds in bank accounts and sending them off to a third party.

CPAs sit in a unique position to spot these schemes and help those who may have fallen prey or to warn their clients beforehand.

"Money mule fraud has been around for a long time, but it is spreading as the bad actors, often based overseas, become more sophisticated in how they seek targets through the internet or otherwise," said Steve Baker, a former Federal Trade Commission director for the Midwest now working for the Better Business Bureau. Older adults are particularly susceptible to the schemes, he said.

"When an elderly person doesn't have relatives or friends they can talk to, then they're particularly vulnerable to all sorts of schemes," Baker said.

In some money mule schemes, the bad actors will pose as lonely American servicemen or servicewomen looking for love connections on online dating websites, but they actually are working to lure in vulnerable singles. Other setups include work-from-home offers where the job involves setting up bank accounts to accept money from supposed clients and then sending it off to mysterious bosses overseas.

But the middlemen--whether they know it or not--are actually laundering money, a crime.

The Better Business Bureau estimates there may be a million romance fraud victims in the United States alone, with $1 billion in losses reported in the United States and Canada over a three-year period, according to a 2019 report Baker prepared for...

To continue reading

FREE SIGN UP