Over 100 Money Mules Exposed in B.C. Securities Commission Fraud Crackdown
On a sunny Wednesday in late April, a B.C. Securities Commission official and an RCMP officer knocked on the front door of a home in Richmond, hoping to speak to someone they believed was facilitating the transfer of money from victims of investment frauds to the perpetrators of those schemes.
The resident tried to evade the officials, but they persisted, and eventually he relented and told them a version of a story that Sammy Wu, BCSC manager of investigations, has heard many times.
The resident said he’d met someone at a poker game who had asked him to receive some money in his bank account, withdraw the cash and hand it to someone else. He was paid a few hundred bucks.
The April 29 “knock and talk” was the seventh by the BCSC, which is taking a novel approach to a growing problem: transnational fraudsters are enlisting the help of locals to act as money mules, individuals who, either wittingly or unwittingly, move dirty money on someone else’s behalf.
Since May of 2024, the securities watchdog has identified 116 potential money mules, delivering warning letters to 40 of them.
The letters inform the individuals that the BCSC has identified them as being involved in illegal activity that could result in charges. (The securities watchdog hasn’t delivered letters to all of the suspected mules because in some cases there are continuing investigations, or they haven’t been able to locate their current addresses.)
The purpose of these knock and talks isn’t to arrest the mules, Mr. Wu said. The goal, he explained, is to educate them – some mules might not know that they’re doing something illegal – and dissuade them from continuing the activity.
For those that are knowingly participating in the fraud, the BCSC and the RCMP are looking to establish that fact, so that they can take further enforcement action should they catch the same individuals again in the future.
“We need to establish that they know, because legally, either under the Securities Act for aiding and abetting, or even under the Criminal Code, we have to establish that they’re knowingly laundering proceeds from investment fraud,” Mr. Wu explained.
Several years ago, while investigating investment fraud, the BCSC identified money moving through local bank accounts.
“We got excited that maybe they were actually real suspects living in B.C.,” said Mr. Wu. That’s unusual in investment scams, which are often run by organized-crime groups operating overseas.
“When we start talking to them, we realized that no, they’re just mules,” said Mr. Wu.
Money mules can be enlisted in laundering proceeds of other crimes as well, such as drug trafficking or other types of scams.
According to Canada’s anti-money-laundering watchdog, FinTRAC, organized-crime groups based in India have been recruiting people living in Canada – often vulnerable young men from India on study permits – to launder the proceeds of extortion targeting Canada’s South Asian diaspora. The BCSC only has jurisdiction when the dirty money is linked to an investment fraud, according to Mr. Wu.
Mr. Wu said he got the idea of a knock and talk from a conference he attended in Britain in 2023. The U.S. Postal Service spoke about intercepting envelopes of cash in the mail, which they’d linked to money laundering by mules. After speaking with the mules, they found that the quantity of cash being sent to those addresses had substantially decreased.
During conversations with mules, the BCSC and the RCMP often hear similar stories. A small portion of the mules, maybe about 5 per cent, are truly unwitting, perhaps having been duped into moving money through a fake job ad, said Mr. Wu. The rest exist on a spectrum, ranging from between having suspicions but choosing to turn a blind eye, all the way up to being a willing participant.
Often, mules have a story that sounds like it’s been rehearsed. They and their partner run a business. It might involve selling a product, but often it’s an import-export business, said Mr. Wu.
“It’s almost like a Seinfeld episode,” he said.
The mule will explain that their role is to handle the finances, and that they’re merely acting on their partner’s instructions to move money around.
“But when we started asking them for more specific information about the business, they could never give us detail, because really there was no business,” said Mr. Wu.
Mr. Wu said the frequency of the knock and talks depends on resources and the availability of investigators.
“I wish that we could do more [of them],” he said. “I do feel that this is a very effective way to educate these people, and really to have a disruption effect.”
This article was first reported by The Globe and Mail
