Money laundering through money remittance ... - Council of Europe

Money Laundering through Money Remittance and Currency Exchange Providers - 2010
65. In countries where there are many MR/CE service providers, it is difficult to cross-match
data, and the risk of being involved in “smurfing” schemes is therefore typically higher than in
countries where there are few service providers. The abundance of MR/CE service providers makes
structuring a relatively “safe” choice for the criminals in most countries and minimises the possibility
that law enforcement agencies might detect such activity unless there is well-functioning co-operation
at the national level that then helps to identify smurfing schemes that may be using multiple service
providers.
66. It is often very difficult to find a link between persons using money remittance services for
the transfer of funds because the transaction paper trail is often lacking. The nature of MR/CE
business is that service providers often carry out one-off transactions with occasional customers, and
many of the customer relationships that do exist are not of a durable nature. In the case of one-off
transactions, some MR/CE service providers are not able to monitor the financial behaviour of their
customers in the same way as a traditional bank is able to do with its customers.
67. As a consequence, due diligence measures applied by some MR/CE service providers in less
developed markets are usually at most confined to identification and verification of the identity of the
person, without the possibility of ongoing monitoring of the customer‟s activities. In addition to the
name of the customer, the indication of the beneficiary (sender or receiver), the destination or origin of
the funds, limited additional information is typically available for MR/CE providers.
68. Another method commonly identified in money laundering schemes is the use of straw men
(so-called „money mules‟). A money mule is a natural person who makes his (bank) account available
to a criminal or criminal organisation receiving some form of remuneration in return. A money mule is
often solicited via a spam e-mail to accept a transfer of money –received from the victim(s) of a
criminal or of a criminal organisation – which he/she then is instructed to transfer to the account of
another person, whose personal details the money mule also receives via e-mail. The money mule is
allowed to retain a part of the money for the services rendered to the criminal or criminal organisation.
Customer: individual
Mechanism: money remittance
Box 2. Use of „money mules‟
Red-flag indicators: use of straw men, organised criminals involved
Case description: An FIU from country A received a request for information from country B that
involved among others company X, known to be alleged to have laundered funds by making multiple
wire transfers to launder fraudulent card billing proceeds. According to this request a criminal network
involved in credit card fraud schemes was using mules to transfer the profits of the illegal business to
different parts of the world. The mules were instructed to send money only via money remittance
services to hide the origin of the profits.
The undercover agent of country A succeeded to come in contact with one of the leading persons of
this network (person C). The undercover agent convinced person C that it is better to use wire
transfers through banking institutions instead of money remittance offices. This was done because the
authorities of country A were trying to identify persons behind bank accounts instead of mules sending
money via money remittance services.
Person C instructed the undercover agent to send money to company‟s X account in country A. From
analysis carried out, it appeared that the money was transferred from country A to country B and most
probably to accounts owned by the leaders of organised crime in that country.
Source: Cyprus.
69. The ultimate purpose for structuring transactions is to conceal the true beneficiary of the
transaction and the origin of the money. Therefore, another potential risk for the MR/CE provider
© 2011 MONEYVAL and FATF/OECD - 23