How money laundering works - and how to avoid becoming an unwitting participant who is breaking the law

When we think of money laundering, flashy multi-million dollar offshore accounts or high profile cases like 1MDB come to mind.

However, the truth is that money laundering can take place right in your neighbourhood, and anyone – including you and your loved ones – can be at risk of being an unwitting accomplice who is breaking the law.

What is money laundering and why is it a crime?

Broadly, money laundering is the process of converting money obtained from criminal activities into money that appears to have been obtained from legitimate means.

While cases involving the wealthy, banks, large institutions and shell companies often make the news, you should be concerned about money laundering that takes place on a smaller scale, because that’s where you might become involved as a money mule without realising it.

A money mule is a person who transfers ill-gotten money illegally on behalf of others. To evade detection, scammers are known to use scams to get ignorant or greedy individuals to perform the fund transfers.

Under the law, it is possible to be prosecuted as a money mule for collecting and transferring criminal proceeds.

The offence of money laundering is punishable under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) and carries a jail term of up to 10 years and/or a fine of up to $500,000 for individuals.

Examples of how money mule schemes in Singapore work

You may be in the process of being recruited as a money mule if someone who befriends you online asks to use your bank account to receive money, or to pass money to someone else through your account.

[[nid:457826]]

Scammers may befriend victims on social media sites by posing as lonely individuals seeking companionship and love online. After gaining their trust, ask the victims to open a new bank account or use an existing bank account to receive money.

When the money is deposited into account, the victim is asked to pass or send the money to another person or company, usually based overseas.

Another common scam targeted at job seekers. Scammers may post job advertisements on online job portals or social media platforms for the position of “agent”.

The “agents” will earn commission for receiving and transferring money for a “legitimate” company.

Victims of job scams may also be told that the money being transferred is part of the company’s accounts or regular transactions and their job scope is to maintain the records and make the transfers.

Especially rife during this work-from-home period, the police has issued specific warnings on scams that target work-from-home jobseekers .

What to do to avoid being a victim

Be wary of jobs that sound too easy, such as people offering commission for doing little other than transferring money or employers with no street address or valid business registration.

If your bank accounts or mobile lines are linked to illegal transactions, you will be held accountable as the account owner. Your bank accounts will be frozen and they may be subject to criminal investigation.

To avoid being recruited as a money mule, be careful and take the following measures:

• Do not give out personal particulars or bank account details to strangers;
• Decline any request by acquaintances for money transfers – you might unknowingly be committing a crime by laundering money for another party
• If you suspect that you have received money in your account in the circumstances above, report this to the Police and the bank immediately.
• If you are approached by anyone claiming to be a Police Officer, ask for the warrant card. When in doubt, please call “999” for assistance.

To learn more about money mule scams, you can call the anti-scam helpline at 1800-722- 6688 or visit the Singapore Police Force’s scams portal .

Those who wish to report scams can call the non-emergency Police hotline at 1800-255 0000 or submit a police report online .

This article was first published in Dollar and Sense.