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  • Writer's pictureNavvir Pasricha

Money Laundering Scams

Although you might have heard or read us talk about why money laundering is a thing in previous videos and articles, it does warrant a quick recap. Money laundering allows people to take their money got via illicit (and probably illegal) methods and “clean” it, thus allowing the funds to be used. Just like how a mafia boss is not going to pay for dinner with his girlfriend with money that is stained in blood because too many questions will be asked, he won’t give his wife a stolen diamond ring. He needs to make it seem like both the money and the ring are clean. So whilst he can intimidate a jeweller into giving him a receipt, he can’t throw the money in a washing machine and still use it. He can, however, launder that money to make it seem just clean enough. We have documented this process before so today, we will focus solely on instances where people can get scammed into assisting with money laundering.

Yes, that is a thing. Often, these victims are innocent and are used as cash mules in the money laundering process. The victims are often lured in by promises of “easy money” and are given tasks that seem easy and effortless so as to disengage the victim’s internal risk to reward logic centre. These victims are used as the money launderer might already be blacklisted by financial institutions or are being observed by the authorities or simply because the launderers want to keep their names and accounts apart from any illegal activity. This week, we will cover 2 instances in which I have seen this happening.

1) The Doremon Pencil Case

Here, an individual received a payment into their account, an abnormality from the pattern of small, payments out. It was identified that the merchant had begun selling items on an eCommerce site and that the receipt of funds was for the sale of such an item. Upon investigating the account, we identified that the merchant had also listed a vintage pencil case for sale. Whilst the item was, generally speaking, unremarkable and online searches did not reveal a similar product available. The pencil case was valued at USD$ 10,000.00, an amount so high that it was dismissed as impossible to sell unless the item was bought by a collector or museum. However, within a few days, the item had in fact been sold. The whole thing was dismissed as an activity of an unusual and very niche market. However, the item was then relisted within 24 hours. This too was dismissed as an instance where the buyer came to their senses and backed out of the deal. A day or two later, the pencil case was purchased again this time from a different buyer and shortly after, the pencil case was relisted again later that day. This pattern repeated itself with each purchase and relisting happening within shorter timeframes. When contacted, the seller claimed that the pencil case was old and in mint condition, making it a rare find thus the high value. However, the seller was unable to provide a receipt. When asked about the relisting, he claimed that the buyers back out or live in countries so far away that they are unwilling to pay for the shipping costs. When the buyers were contacted, they refused to answer any questions at all.

However, it was only when sales of the pencil case happened multiple times in a day was the scheme sniffed out. Previously, the sale item was seen to have entered the seller's account and then gone out without any indication if the sale was reversed or the money withdrawn. Yet this pattern had changed and it was observed that the money was now moving out of the seller's account within minutes of the purchase, significantly shorter than it would take a buyer to contact the seller to back out of a purchase. This confirmed that the seller was withdrawing the money or at least, moving it to another account. With this information, a buyer was contacted and confronted. It was confirmed that the buyer was contacted by a person who offered them USD$100 to buy an item from a specific online store. The buyer received cash and bought the item from the eCommerce site and kept their cut. The money would then be cleaned and the seller (who could be the launderer themselves or another mule) would be able to withdraw the money.

2) The Cashout King

Speaking of withdrawing money, let us cover the case of the Cashout King. This particular victim was a lorry driver who faced severe difficulty during the Covid related lockdowns in Malaysia. He was approached by a launderer who, once again, offered him money for a seemingly simple task. The victim had money enter his bank account randomly throughout the day. The victim almost always withdrew the funds immediately from an ATM. Whilst initially this was assumed to be normal behaviour, the fact that the victim had constantly withdrawn all the relevant funds from his account served as a proverbial smoking gun. This was amplified once these transactions started happening multiple times a day with the value of money entering the victims’ account increasing daily. The victim then started withdrawing the funds from different ATMs another highly suspicious trait. However, the most interesting part of this equation was that the funds were entering the victim’s account from various accounts from multiple banks but never from the same bank as the victim. This meant that the victim’s bank could not reasonably track the origin of the funds nor would any of the regular risk checks return any tangible results.

During the normal course of the investigation, it was revealed that the victim was a spouse of an employee of the bank that he used. As such, the victim was convinced to do the right thing and provide insight as to what was going on. During the interview, the victim informed the bank that he received a WhatsApp from an unknown number asking him if he wanted to make “easy money”. The victim, being desperate said yes. He was told that a prominent businessman was going through a messy divorce and wanted to move money out of his accounts without getting in trouble. The victim was informed that he would get money transferred into his bank account of choice and that all he had to do was to withdraw all the money that was deposited into his account immediately and give it to the businessman’s representative. The victim was told that if he didn’t withdraw the funds immediately, the bank could hold the funds. The victim accepted that explanation at face value and agreed to help out the businessman.

Thus it began. The victim would get a WhatsApp informing him to go to an ATM and he would inform the launderer which ATM he would go to and the launderer would meet him there. The money would enter his account and he would be informed of how much to withdraw. He then withdrew the funds and handed it over to the representative who gave him 1% of the amount. For his troubles, the victim had his accounts closed and is blacklisted from opening new accounts in any bank in Malaysia.

The key takeaway from all this is that launderers, much like fraudsters are always looking at new, innovative ways to bypass established security checks. Things may seem legitimate and legal at first instance but might have a seedy underbelly. This vagueness is done intentionally to throw victims and the authorities off. So if you are unsure if you have been complicit in money launder or if you want to know how we can help your organisation sniff money laundering schemes out, feel free to reach out to us for a free, no-obligation consultancy where we will help you with this or any other issues you may have.

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