Smurfing

Smurfing describes deposit money gained by criminal means into multiple bank accounts to reduce suspicion from authorities. Smaller sums can then be transferred to the ones responsible for the theft, rather than large sums which tend to alert suspicion.

The term likely derives from the ways in which smurfs are small, similar-looking creatures who are difficult to tell apart when grouped all together.

Smurfing may involve depositing money to other smurfs who are in on the scheme, or it could involve one smurf depositing money to bank accounts at random. They would then employ manipulation tactics to incriminate the unsuspecting person and use them to send the money back or hold onto it.

Just as an excursus: Smurfing is also used to describe an online gaming scenario, whereby an experienced player creates a profile they then use to dominate lower-level players. The name there derives from two players in a game called Warcraft II, who used the terms ‘PapaSmurf’ and ‘Smurfette’ to avoid detection from players who knew their skill level.

A smurf is simply a person engaged in the act of smurfing. It is usually reserved for the person who instigates the money laundering scheme from the beginning and selects the accounts to transfer money into, but it could be used interchangeably with those receiving the funds.

Understanding smurfing means understanding money laundering. There are three stages to any money laundering scheme, also called the money laundering cycle. To grasp how it works and at which point smurfing enters the scheme, let’s break down each one.

The placement stage sees the introduction of illegally obtained funds into the country’s legitimate financial system. At this point the idea is to get the money circulating without attracting attention.

Ways to do this include:

• Structuring small deposits into a bank account
• Converting the funds into legitimate assets (real estate, shopfronts etc.)
• Buying casino chips with the illegally obtained money and then cashing the chips
• Transferring the money to a country with weaker money laundering laws

Once this is done, the true nature of the money needs to be further concealed.

Layering is all about covering tracks. Once in circulation, the money can then be split up, moved, or dispersed, making it more difficult to track the full sum and identify the smurfs. This essentially adds ‘layers’ on top of the money, further disguising it.

Layering techniques are usually done with the appearance of legitimacy, distancing the criminals from their source:

• Electronically transferring money overseas between offshore accounts
• Moving funds between banks
• Reselling expensive goods: artwork, jewelry, etc.
• Setting up or using dormant ‘shell’ companies

After layering the money, the appearance of legitimacy must be further established.

In the final stage of money laundering, the money is integrated into the financial system, its nefariously obtained means now harder than ever to detect.

After successful integration, investors can use the money to invest, it can be stored for savings, or spent legitimately.

Integration techniques include:

• Paying off credit card debt
• Using consultants to handle the money
• Business loans
• Purchasing and selling assets

In banking, there are two distinct types of smurfing: money mules and cuckoo smurfing. Understanding the distinction between them is important to identify and protect yourself from perpetrators.

The ones who transfer the funds, the money mules are not usually involved in the criminal activity conducted to obtain the money. Money mules help to transfer and disguise the funds, and are a necessary part of a successful smurfing operation.

Criminals usually recruit money mules by deceptive means, posting job ads for financial advisors or sign ups to services that require targets to put in their domestic bank account details.

Data finds that the majority of money mules are in countries like the US, UK, and Australia. The money is most commonly obtained and ultimately received outside of these countries, in places where the laws are less strict or the infrastructure less equipped to detect it.

The process of muling usually progresses something like this:

1. You see a job ad for ‘financial advisor’ or something similar
2. You apply for the job and, in the process, provide your bank details
3. Smurfs, after obtaining money from victims, transfer funds to your account
4. You, by instruction, transfer the money to another account overseas
5. You receive commission for the transfer
6. You are liable for prosecution when the case is investigated as a money laundering scheme

Cuckoo smurfing is another word for smurfing. It describes the money laundering process of splitting large transactions into smaller ones to avoid detection.

Most banks are required to produce reports of transactions exceeding a certain amount, for example €10,000 or more may require reports from an outside organization. This makes it much more difficult to pass through large transactions, so criminals perform cuckoo smurfing to bypass these regulations.

Statisticians report that money laundering is difficult to measure due to its clandestine nature. This makes it difficult to produce numbers on regions, but the UN department responsible for money laundering reports that between 2 and 5% of the global GDP (up to 1.87 trillion euros) is laundered each year.

To understand smurfing and money mules entirely, it helps to look at real-life cases. A particularly interesting case of smurfing occurred in Australia between 2013 and 2015.

Delania Marvella Marundrury, a makeup artist from India studying in Australia, was receiving money transfers from her mother in Indonesia to her Australian bank account. The money was transferred via an exchanging service in Indonesia which offered lower rates than most.

Marundrury was unaware that the amounts sent by her mother were not reaching her bank account directly. Instead, the fraudulent exchange service was making deposits of less than $10,000. This is the limit before an amount must be investigated by an outside party in Australia.

Once she realized what was happening, Marundrury seeked financial reparations from her bank, the Commonwealth Bank of Australia, however CBA requested to have the case thrown out of court because their anti-money laundering laws do not obligate them to pay damages.

This is what makes smurfing for unsuspecting individuals so dangerous. Once you are incriminated in the scheme, you may be already beyond protection from the law and may owe thousands or even be expected to serve jail time.

Staying safe from smurfing attacks is all about being vigilant from the very beginning. These kinds of attacks can occur in a variety of situations and through different channels.

Make sure also that your financial institution’s security software is advanced enough to alert you of any potential attacks. KYC verification procedures can help with avoiding getting involved with shady organizations.

Devices and platforms on which you can be coerced into a smurfing attack include:

• Your phone (texts, calls, or Whatsapp messages from unknown numbers)
• Emails (received by third parties you have no history with
• Social media (deals, messages, sponsors contacting you privately or publicly)
• Dating apps (matches who request your bank details)
• Job sites (suspiciously generous offers from companies with questionable websites)

Fortunately, there are many signs that point to a clear attempt at smurfing:

• You do not recognize the email address, phone number, contact details
• The person or organization contacting you is from overseas
• You are being asked for your bank details
• There is a story attached to the request for money (helping a wealthy person escape wrongful imprisonment, etc.)

Google offers advice on how to check for suspicious emails. Look for these characteristics when you receive what you suspect might be a phishing email and a potential smurfing scam:

• The email address and sender name do not match
• The email is not authenticated
• The website preview doesn’t match the URL when you hover your cursor over it

Unfortunately, the best course of action is to do all the above and avoid becoming a victim of smurfing in the first place. Once you have sent the funds on, you may already be incriminated in the act.

However, the best thing you can do if you’ve discovered you’ve become a victim of a smurfing attack is the following:

1. Contact your bank and tell them what has happened
2. Freeze your accounts
3. Cease communication with the smurfs
4. Contact the relevant financial authority in your region to see if there’s anything they can do.