Money transfer providers are facing increasing scrutiny from regulators and law enforcement as financial fraud and cybercrime continue to evolve. A recent U.S. Justice Department ruling against MoneyGram highlights growing concerns over how remittance networks can be exploited by scammers and cybercriminals to move stolen funds across borders. Beyond traditional consumer fraud schemes, security experts warn that money transfer services have become a critical link in sophisticated cyber theft operations involving hacked bank accounts, payroll fraud, and international money mule networks.
A post on infosec blog Krebs on Security details the recent U.S. Justice Department ruling against MoneyGram that resulted in a fine of $100 million. Krebs begins by honing in on the core of the DOJ complaint—that MoneyGram failed to terminate agents it knew were involved in scams—and compares the amount of the fine to the volume of remittances that MoneyGram processes:
The company doesn’t say how much money it moved last year, but an older version of that page said that in 2010, approximately $19 billion was sent around the world using MoneyGram transfer services. The same page notes that MoneyGram is the second-largest money transfer company in the world. Second only to Western Union, no doubt, which has long struggled with many of the same anti-money laundering problems.
Krebs’s central opinion, however, is not that MoneyGram is turning a blind eye to social engineering scams that bilk elderly folks out of their savings. It’s that MoneyGram and other cash remittance services are used on a much greater scale by cyber thieves who hack online banking services to defraud consumers, businesses, and banks:
Each week, I reach out to or am contacted by organizations that are losing hundreds of thousands of dollars via cyber heists. In nearly every case, the sequence of events is virtually the same: The organization’s controller opens a malware-laced email attachment, and infects his or her PC with a Trojan that lets the attackers control the system from afar. The attackers then log in to the victim’s bank accounts, check the account balances – and assuming there are funds to be plundered — add dozens of money mules to the victim organization’s payroll. The money mules are then instructed to visit their banks and withdraw the fraudulent transfers in cash, and wire the money in smaller chunks via a combination of nearby MoneyGram and Western Union locations.
Krebs goes on to provide an interesting example of this kind of activity that involves the addition of money mules to a victim business’s payroll. The mules then wired the funds to Russia and Ukraine via MoneyGram and Western Union.
Click here to read more from Krebs on Security.
