'Money muling' an increasing problem among youth in Latvia

Take note – story published 2 years and 3 months ago

In recent years, more and more fraudsters engage young people in their illegal activities as so-called 'money mules': helping fraudsters to legalize and transfer money, Latvian Radio reported February 2.

Last year €11 million was defrauded by various fraud schemes, according to the Finance Latvia Association, and almost all of these schemes are linked to the use of money mules.

Most commonly, young people are recruited as money mules at higher education level or soon afterwards, said Toms Platacis, deputy chief of the Financial Intelligence Unit of Latvia.

“So from 20 to 24 years old and then 25 to 29 years are the ones we most actively see in reports related to these scams. It's not that exclusively young people are money mules and no one else is offered this chance to earn.  There are also older people who are mostly socially disadvantaged,” Platacis said.

The Bank of Latvia's senior financial literacy specialist, Aija Brikše, stressed that although she does not have accurate data, it is certainly not that the majority of young people get involved in such transactions. 

“But what is very worrying: the trend is that more and more young people agree to become these money mules [..] This problem is not new in general. We have been hearing about money mules for quite a few years, but it was the second half of last year that new cases were beginning to emerge, and the State Police also [..] drew attention to the fact that this problem and trend were becoming more frequent,” said Brikše.

The head of the Finance Latvia Association's Anti-Fraud Task Force, Luminor's senior fraud prevention specialist Anrijs Šmits said that it is easy for banks to see who has fallen into the trap of fraudsters.

“Banks very often spot when an uncharacteristic activity takes place in youth accounts. Then, by conducting in-depth research, raising questions, we come to the conclusion that these young people are more likely to be money mules. Similarly, when a relationship with a new client is established, a number of questions can often show the purposes for which a young person wants to open an account,” he explained.

Reinis Jansons, head of Swedbank Finance Institute, stressed that young people's financial literacy is at a low level and they often do not know what the consequences of such illegal activities may be.

“Every time a victim complains that someone stole money from him, that 'money mule' is caught. If the 'money mule' cooperates and understands what has been done, then the consequences are smaller, but usually, the bank blocks the account and then quite a lot of trouble appears. Consequently, there are difficulties in getting a salary because the employer has no place to transfer [the money]. Can't borrow money. There may be difficulties getting benefits. A reputation, too, of course. If a young person has a criminal past, it is a reputation and there will be certain areas and sectors where the young person will never be able to work,” said Jansons.

The Bank of Latvia's expert, Aija Brikše, said that the financial literacy of people aged 15 years is average compared to other countries of the Organisation for Economic Cooperation and Development (OECD). 

“One of the big challenges is that 95% of these Latvian 15-year-olds indicate that information on money matters is obtained in the family. And the challenge begins here – if the family has low financial literacy, it can also affect the attitudes, skills, behavior of the young. At school, we teach young people to plan budgets or earn money fairly, but in the family they see that attitudes and realities on these issues are different.”


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