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Australian financial services providers must do more to identify “money mule” activity among international students, which has risen alongside enrolments, the country’s anti-money laundering (AML) regulator has said.
Foreign students are often approached by criminal groups as they are leaving Australia, and are offered payments to hand over access to their accounts, the Australian Transaction Reports and Analysis Centre (AUSTRAC) said in new guidance published last week.
Indicators of suspicious activity include flight ticket purchases and travel-related expenses, followed by unusually high transaction volumes, the regulator said.
“Through profiling and transaction monitoring, financial service providers can target, detect and report financial transactions associated with money laundering via money mules,” said Jon Brewer, AUSTRAC’s manager for law enforcement and industry.
“This new guide provides the latest advice on what financial institutions should be looking for to help protect vulnerable people from criminal exploitation.”
In March 2024, the number of international student enrolments in Australia hit a new record of almost 750,000 — a 16 percent increase on the same period in 2019.
Almost 60 percent of enrolments were from just five countries: China (22 percent); India (17 percent); Nepal (8 percent); Philippines (5 percent); and Vietnam (5 percent).
Foreign student money mules may be legitimate or illegitimate holders of Australian student visas, AUSTRAC said.
Legitimate visa holders are typically paid between A$200 ($132) and A$500 ($330) to hand over access to their account and identity, plus a 10 percent commission for each transaction in their name.
This type of mule may be recruited through online platforms such as social media, video games, chat forums and advertisements. By using these channels, recruiters also give their activities a veneer of legitimacy.
AUSTRAC also notes that some mules with legitimate visas are recruited by “trusted insiders” who have access to business systems, either in Australia or overseas, such as migration agents or staff who assist students with visa applications.
Illegitimate visa holders are those who come to Australia disguised as foreign students but who have “no intention of studying”.
This type of mule has already been recruited before they leave their home country, and upon arrival in Australia, they will set up multiple accounts with financial service providers, which will be used for money laundering purposes after leaving Australia.
Scams, cash, companies and crypto
The number one mule activity flagged by AUSTRAC is the use of accounts and identity to facilitate electronic funds transfers. Having access to multiple mule accounts allows organised crime networks to circumvent daily transaction limits that are imposed on individual accounts.
AUSTRAC notes that students who become money mules in Australia will have “significant funds” flowing through their accounts, relative to the average student.
“These individuals have no declared income, and the funds received are disproportionate to their profile and unable to be accounted for by educational or familial support,” the regulator said.
Some mules are closely tied to Australia’s thriving marketplace for fraud and scams. For example, the guidance includes a case study of a woman in Melbourne who lost almost A$300,000 ($200,000) to a bank staff impersonation scam.
The scammed funds were transferred to 11 mule accounts, most of which belonged to Indian students who had already left Australia.
Their accounts were under the control of members of an organised crime group, who used them to withdraw the funds from ATMs.
Other mules are asked to register shell companies and name themselves as “straw” directors. The shell company is then used to open business accounts to launder illicit funds.
Companies registered in this way are typically registered to a residential address, have no online presence and very few business-related expenses, such as payroll and taxes.
Another typology involves money mules opening crypto exchange accounts or using casino services on behalf of organised crime networks.
A growing concern for regulators
Australia is not the only jurisdiction urging its financial sector to take action against money mules.
In March this year, the UK Home Office published a 22-point plan to fight money mules and financial exploitation, focused on illicit fund flows using bank accounts and crypto exchanges.
In 2023, according to fraud prevention organisation Cifas, around 37,000 UK bank accounts displayed behaviour associated with money muling.
Among individuals who were identified as money mules, about 23 percent were under age of 21 and 65 percent were under the age of 30.
Peter Taylor, fraud protection consultant and former criminal investigations officer at Greater Manchester Police, said the global climate on money mules is “tightening up” in response to new patterns of fraud.
“The growth in fraud and the use of methods such as bank impersonation and pig butchering mean that lots more mules are needed,” he told Vixio. “This change in tactics by criminals also reduces the expertise needed to participate in cyber fraud.”
Moreover, scammed funds are now leaving Western countries, whereas in the past, they would be more likely to be entering. This has forced banks and regulators to act.
“Now the heavy lifting is left to the banks, and they ban the mules from having accounts, which can be devastating for the mule,” he said.
“One positive is that a more holistic view is developing that some mules are victims too, so a lot can be achieved by educating them, with a big focus on students.”
