This year, the State Police, together with Ukrainian law enforcement agencies, disrupted the activities of an international organised crime network. The criminals caused losses to a foreign payment institution and laundered money amounting to more than €1.6 million. Several hundred specially trained “money mules” and persons associated with them have been identified, 213 of whom are Latvian citizens, Latvian Television reported on 29th December.
An international investigation has uncovered a fraudulent scheme involving the use of the so-called “refund fraud” method. This method involves unjustified requests for or receipt of refunds for goods or services on online trading platforms, using deliberately misleading information or violating the legal return procedure. As a result, significant financial losses have been caused to a foreign payment institution.
“There may be situations where individuals make payments online when purchasing goods or services at a time when they do not have sufficient funds in their own account, but they still make the payment, only to immediately cancel it afterwards. At the moment of cancellation, a mechanism is triggered whereby the refund is not paid by the store that sold the service, but by the mutual settlement system of credit card and payment institutions. And so, money is received back that was not actually in the account in the first place,” explained Svens Kristjansons, Head of the Economic Crime Combating Department of the State Police.
To complicate the traceability of the funds’ origin, the fraudsters carried out structured transactions on cryptocurrency platforms, integrating the criminally obtained funds into the digital asset ecosystem.
Most of those arrested are Latvian citizens
The members of the criminal network operated as an organised criminal group, purposefully recruiting and training “money mules” and organising the circulation of criminally obtained funds in various jurisdictions.
A total of 300 specially trained “money mules” and persons associated with them, including “money mule” recruiters and financial flow organizers, were identified.
“These “money mules” responded to advertisements published on the internet stating that it was necessary to register with certain payment institutions, and in this particular case, it is clear that this response took place on platforms, in chats, and groups where this is a regular opportunity to earn money. Accordingly, the individuals were most likely very aware of the activities they were involved in and did so purposefully. What makes this case special is that a very large number of “mules” were recruited for the purpose of committing a single fraud, and they had to carry out coordinated actions in a very short period of time,” Kristjansons explained.
Most of them are Latvian citizens, and the majority of them are young people between the ages of 18 and 20. They were recruited on social networks. The rest were Ukrainians, Belarusians, and Lithuanians.
The police have currently identified several dozen recruiters of “money mules,” some of whom were also Latvian.
In December, a search was conducted, and information technology devices and communication tools containing data on financial scheme planning and confidential communications in encrypted applications were seized.
Criminal proceedings have been initiated for the legalisation of criminally obtained funds, if this was done on a large scale or by an organised group; for the illegal use of another person’s financial instrument or means of payment, if committed on a large scale or by an organised group, and for the acquisition, transfer or dissemination of data that enables the illegal use of a financial instrument or means of payment. The Ukrainian National Police has launched an investigation into large-scale fraud committed by an organised group. At the same time, the Ukrainian National Police is investigating the legalisation of criminally obtained funds.
The most serious of these crimes are punishable by imprisonment for a term of three to 12 years, with or without confiscation of property, and probation for a term of up to three years or without probation. Several individuals involved in the criminal group had already come to the attention of the police.
The State Police emphasised that the “money mules” involved were not random or misled participants.
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