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The Commodity Futures Trading Commission (CFTC) has issued a stark warning, including cryptocurrencies, to students and young job seekers: beware of becoming an unwitting “money mule.”
In a recent advisory, the CFTC’s Office of Customer Education and Outreach (OCEO) cautioned that criminal organizations target young people with seemingly easy, stay-at-home job offers that involve moving money through bank accounts or digital wallets.
Although the CFTC’s warning primarily concerns the phenomenon of “money mules,” it largely also pertains to cryptocurrencies. The agency suggests that their decentralization and anonymity make them frequently used for potentially illegal transactions.
“During this year’s Money Mule Initiative campaign, the U.S. Department of Justice reported that agencies took action against more than 3,000 money mules, including criminal charges against 24 individuals,” CFTC stated in its announcement.
According to the CFTC description, unwitting individuals are asked to transfer funds between cryptocurrencies or blockchains, helping criminals avoid detection and exposing themselves to legal consequences.
“An estimated $75 billion has moved through digital wallets connected to these frauds,” noted CFTC, citing a University of Texas study. “Law enforcement is getting better at tracing and seizing stolen assets on blockchains, so criminals are motivated to ‘off-ramp’ or convert their tokens to dollars, and may recruit unwitting accomplices to do so.”
.@CFTC released a new customer advisory to warn students and jobseekers from becoming “Money Mules.” It recommends refusing requests to send/receive money to their bank accounts or crypto wallets as work duties. Read the advisory: https://t.co/s5VY4Rnlaj #MoneyMuleInitiative pic.twitter.com/wbjHhpZoxH
— CFTC (@CFTC) May 13, 2024
How the Money Mule Scams Work
The job offers often appear straightforward – set up accounts, send or receive funds, convert dollars to crypto-assets, or buy and deliver goods. In return, the “employee” keeps a portion of the money. However, in reality, transnational crime rings are using these unsuspecting individuals to obscure the trail of funds obtained through fraud, human trafficking, drug sales, and other crimes.
Besides fake job postings, the CFTC warns that some may be roped in thinking they are helping an online friend in need but are actually victims of “pig butchering” – a type of romance or confidence scam used to fuel money laundering networks. Common red flags include:
- “Off-ramping”: Converting crypto-assets sent to your digital wallet into dollars to send elsewhere
- “On-ramping”: Using cash to buy crypto, often at a Bitcoin ATM, to forward to another wallet
- “Smurfing”: Receiving a large sum of crypto and sending smaller amounts to multiple wallets
Another day, another regulatory advisory that’s focused on #crypto. This time it’s money mule scams. I look forward to the day when our tech isn’t immediately & wrongfully associated with bad actors. https://t.co/9zuvAwj0lV
— Katherine Kirkpatrick Bos (@kkirkbos) May 13, 2024
Steep Consequences for Participants
While some money mules are knowing accomplices, many are unaware they are facilitating crime. But the CFTC underscores that participating in money laundering, even unwittingly, can lead to criminal charges and destroyed trust in one’s identity.
“Young people looking for summer jobs may be just looking for part-time income and could be attracted to offers that require being online a few hours a day,” said Melanie Devoe, the director of OCEO. “Unfortunately, they could become unwitting accomplices to money laundering or what the criminals call ‘money mules,’ and that association could land them in jail.”
The CFTC advises that if approached online to move money, immediately cease communication. If you’ve already received funds from someone met online, notify your bank and consider changing accounts. Most importantly, do not forward the money and immediately alert the authorities, including filing reports with the police.
Last month, the CFTC, together with federal prosecutors, took another crypto action and charged KuCoin and two of its founders with breaching anti-money laundering (AML) regulations. The charges state that KuCoin was functioning within the United States without the necessary registrations and did not uphold a sufficient AML program.
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