Cyber Wars / Job-seeker turned into 'money mule'

Information technology deeply permeates our daily lives, from banking transactions to shopping to photography to chatting with friends, to name only a few ways.

This constant state of connectedness has been accompanied by a growing number of cases in which people become unknowingly involved in crimes and other trouble. This series of articles, "Cyber Wars," will examine some of these hidden dangers that impinge on our lives.

This is the first installment.

While cases of illegal money transfers via online banking services have risen astronomically, another scam designed to hinder police investigation has been spreading under the radar. These schemes launder money through the use of "money mules"-unwitting victims often recruited online and used to transfer proceeds from such Internet fraud as phishing scams.

These fraudsters attempt to escape the reach of investigative authorities by having their mules transfer money acquired illegally via overseas remittance services, which are less stringent in their identification requirements than commercial banks are.

In Japan, the first money mule operation was confirmed to have been conducted last year. By the end of November, 224 money mules were found to have been involved in transferring illicit funds totaling ¥260 million (S$3.1 million). Of the 224, 149 were Japanese.

The Yomiuri Shimbun examined the operations of one such criminal scheme that recruited victims through e-mail and online job advertisements that appeared legitimate, but actually hired them to work as "disposable" money mules.

In September, a 57-year-old man living in Yokohama received a job offer from a food-related firm in Britain through LinkedIn, a social media site targeting job seekers.

After the man lost his job in December 2012 at a foreign-owned company, where he had worked for many years, he sent his resume to more than 400 companies, but to no avail. The day when his unemployment benefits would be terminated was approaching.

Soon after he contacted the British firm, he received a phone call from a woman identifying herself as the personnel director. The telephone number that registered on his phone's call log showed the country code for Turkey, not Britain. He thought that was slightly strange. But as he was offered "monthly pay of ¥500,000 during the trial period and ¥700,000 after becoming a regular employee," the sense of relief that he could at last support his family dispelled such misgivings.

He agreed to work for the company in late September, and was instructed to perform some tasks via an e-mail sent by a person who was identified as his boss. The first assignment was easy, requiring him to conduct a survey on the food market. After he sent the survey results, he received a second assignment.

"Money will be transferred into your bank account within the next 48 hours. Immediately withdraw the money and transfer it," the e-mail said.

The remittee was a person living in Kiev. A thought crossed his mind that the money could have dubious origins. But when he thought, "By rejecting the offer, I might not be employed as a regular worker," his anxieties over his future employment outweighed his reservations, he recalled.

Shortly afterward, ¥850,000 was transferred into his bank account, under the unfamiliar name of a Japanese man.

The overseas remittance service that he was instructed to use to transfer money was Western Union Holdings, Inc., a US-based money transfer service company with agents in more than 200 countries and territories. Its allows money to be sent worldwide, requiring the remitter only to present an ID card, without opening an account.

He handed over the money and filled out the name of the remittee at an agent in his neighborhood, following all the steps necessary to complete the transaction. When he informed his "boss" of the 10-digit code needed to receive the transferred money, he received an e-mail in reply, saying, "Great job."

He was instructed to make similar transfers on two later occasions, sending ¥490,000 to Kiev each time.

Soon after he received his fourth order to transfer money, investigators from the Kanagawa prefectural police came to his house. They informed him that he was a "perpetrator" in a money mule scam.

The money he transferred to Kiev had been stolen from bank accounts they had been transferred from. The account holders included a man living in central Tokyo, whose computer had been infected with a virus.

"Due to my anxiety over finding a job, I was exploited and completely used," the man said, regretting his involvement. Some of his bank accounts remain frozen. He has not received any remuneration from the fraudsters, either.

Losses from illegal money transfers via online banking services have been soaring. As of the end of November 2013, these losses totaled ¥1.18 billion, compared to ¥48 million for the whole of 2012. More than 20 percent of these cases used money mules.

Such money mules' actions may violate the Anti-Organized Crime Law, but the police have not yet filed papers against any of them. "They were hardly aware that their actions were a crime," a police official said.

Shortly afterward, ¥850,000 was transferred into his bank account, under the unfamiliar name of a Japanese man.

The overseas remittance service that he was instructed to use to transfer money was Western Union Holdings, Inc., a US-based money transfer service company with agents in more than 200 countries and territories. Its allows money to be sent worldwide, requiring the remitter only to present an ID card, without opening an account.

He handed over the money and filled out the name of the remittee at an agent in his neighborhood, following all the steps necessary to complete the transaction. When he informed his "boss" of the 10-digit code needed to receive the transferred money, he received an e-mail in reply, saying, "Great job."

He was instructed to make similar transfers on two later occasions, sending ¥490,000 to Kiev each time.

Soon after he received his fourth order to transfer money, investigators from the Kanagawa prefectural police came to his house. They informed him that he was a "perpetrator" in a money mule scam.

The money he wired to Kiev had been stolen from bank accounts that it had been transferred from. The account holders included a man living in central Tokyo, whose computer had been infected with a virus.

"Due to my anxiety over finding a job, I was exploited and completely used," the man said, regretting his involvement. Some of his bank accounts remain frozen. He has not received any remuneration from the fraudsters, either.

Losses from illegal money transfers via online banking services have been soaring. As of the end of November 2013, these losses totaled ¥1.18 billion, compared to ¥48 million for the whole of 2012. More than 20 percent of these cases used money mules.

Such money mules' actions may violate the Anti-Organized Crime Law, but the police have not yet filed papers against any of them. "They were hardly aware that their actions were a crime," a police official said.

In the money mule scam, who actually took the money stolen from Japanese Internet banking accounts?

A Yomiuri Shimbun reporter visited the building in Kiev that was given as the address of a man and women who were recorded as receiving the money. The address turned out to be a four-story office building, housing the South Korean Embassy, about 600 meters from Independence Square in the city center.

The Yokohama man had been instructed to transfer the money to Igor Platonov and Yuliya Polzuna at that address, but when the reporter asked people entering and leaving the building about the couple, the answer was always the same: "Ne znayu" (I don't know).

By presenting some kind of identification to Western Union Holdings, Inc., anyone can send money to 510,000 points around the world in minutes. The Yomiuri reporter went to a Kiev bank that engages in money transfers and informed a bank employee in charge of such transactions about the possibility that profits from a crime have been sent to the two people in question. However, the employee only said: "We don't know anything about that. We don't usually take copies of IDs."

A Western Union official said the company changed its procedures to more carefully confirm the identity of users in other countries, including Ukraine, at the request of police. But the official said responses vary depending on the country.

Money laundering on rise

Money laundering cases using money mules are on the rise. Criminals deposit profits from their crimes into the accounts of people recruited through Internet job-seeking sites and social networking sites, who are then asked to withdraw the money and transfer it to other countries. In Japan, 495 cases were confirmed between March and late last year. In the largest number of cases, 239, money was sent to Ukraine, followed by 134 to Russia and 19 to Moldova.

In Japan, overseas money transfer services were approved for nonbank institutions in 2010. As of the end of November, 35 fund transfer companies have been registered. The amount of money transferred was ¥14 billion in fiscal 2010, but it jumped to ¥188.5 billion in fiscal 2012.

A senior police official said: "Since the Sept. 11, 2001, terrorist attacks in the United States, countries started to strengthen their monitoring of international money transfers. However, there are crimes that cannot be detected through this method."

In Japan, the law to prevent the transfer of criminal proceeds obliges fund transfer business operators to keep ID records of customers. However, many foreign countries and regions are poorly equipped to handle such records.

Investigations of cybercrimes, in which money crosses national boundaries in an instant, is a race against time. Unfortunately, cooperation among police investigators has been sluggish.

"Even when we made inquiries with other nations, it sometimes takes several months to get a response," the senior police official said. "In many cases, even after we have waited for months, the response is, 'Sorry, no records.'"

No one has been arrested in the 495 illegal overseas transfer cases involving money mules.

Old brick house

The British firm that instructed the Yokohama man to transfer money to Kiev gave its name as Union Foods Ltd. However, only a ringing tone was heard when The Yomiuri Shimbun phoned the company. The domain of the company's website was obtained in Australia. When a Yomiuri reporter visited the address registered as its headquarters in Northampton, England, he found only an old brick house. Some windowpanes were smashed, and there was no signboard or nameplate.

According to the company's registration, it was founded in 2009 with a capital of £100 (¥17,000). The firm's main business was the "processing and preservation of meat," but no such facility was found there.

Like the Yokohama man, one of the reporters in this series' investigation team applied for a job with the company. Notification that he had been "hired" came on Dec. 5. After several exchanges of e-mails, the reporter received an e-mail on Dec. 9 instructing him to transfer ¥1 million through Western Union as the company would deposit the money into the reporter's account. The e-mail, written in English, read, "You need to visit nearest Western Union branch and transfer money to the address mentioned in invoice."

When the reporter sent an e-mail asking to talk to someone on the telephone, a man called the reporter on the night of Dec. 10.

The reporter identified himself as a Yomiuri Shimbun reporter and asked, "Isn't this money going to be illegally transferred?" The man asked in a rough voice: "Do you want to work or not? If you want the job, just finish this duty." There has been no further communication from the man.

However, Union Foods has appeared on various social networking sites, apparently looking for Japanese money mules.

The original story appeared in the Dec. 16 issue of The Yomiuri Shimbun.

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