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Lately all the banks around here (Latvia) have been sending out warnings about scammers that try to get access to your online banking. Fair enough. But what confuses me is - so, what can they do after that? I mean, obviously they can transfer my money wherever, but... those transactions will be traceable. They'll just be leaving a trail of breadcrumbs leading straight to them. Sure, if they hoodwink just one or two people the bank might not notice (and not believe the victims, since all the operations will be properly authorized), however it's obviously gotten to the point where the banks are quite annoyed and would probably be very interested in tracking them down. So why don't they? What can the scammers do that can get them money yet leave them untraceable?

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  • 2
    While it's relatively small-scale, my personal experience involved the scammer withdrawing money from an ATM. They couldn't withdraw large amounts at a time, but it was one of my less used accounts, so I didn't notice at first, and they made off with a few thousand dollars (which was largely covered by the bank... I think I had to eat an overdraft fee or two from my own purchases on an unexpectedly empty account) by withdrawing the maximum at several grocery store machines. Nov 22 at 13:27
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    @SeanDuggan - But wouldn't they need your physical card for that?
    – Vilx-
    Nov 22 at 14:40
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    Apparently not. I still had my card, and they made their withdrawals several states away. My bank claims they didn't issue a new card in the interim, so I suspect they knew someone who could construct fake cards that could convince the ATM. Nov 22 at 14:53
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    Some banks let you do it with an app.
    – mckenzm
    Nov 23 at 2:34
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    "those transactions will be traceable" - have you seen all those ads on social media (or in spam mails) who are recruiting people to "work from home", who will then receive bank transfers into their own accounts, have to withdraw it as cash, and forward it as bitcoin or gift cards or other untraceable way? Those are the "mules" who will withdraw the money and later take the blame if transaction is traced.
    – vsz
    Nov 23 at 7:45
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This is the "problem" that all of the myriad money laundering schemes attempt to solve. One of the fastest and most common ways to steal money and get away with it is by purchasing online giftcards to merchants like Amazon, Best Buy, Google Play, iTunes, etc. There are several online platforms where owners of giftcards can sell them to others. Typically they're sold at a discount to their face value. This is essentially the "fee" the criminals pay to launder their stolen money. In many cases, they will exchange the giftcards for cryptocurrencies such as bitcoin. The crypto can then be sent to a coin mixing service, which essentially disconnects the proceeds from the previous sequence of transactions beginning with the stolen money. They now can move this laundered crypto to their own accounts or sell it to get fiat currency back. The stolen money cannot be traced back to them.

So to summarize, the steps are as follows:

  • Using the compromised banking information, purchase online giftcards.
  • Find a buyer and sell the giftcards online in exchange for cryptocurrency.
  • Send the crypto to a mixing service to disconnect from the previous chain of transactions
  • Transfer the crypto to your own custody or sell it on an exchange for fiat.

If you're familiar with the three steps of money laundering, the first bullet point above is the "placement" step. The second and third bullet points are "layering." And the final bullet is "integration."

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    Is there any legal liability for the purchaser of the gift cards (which could possibly be traced back to that purchaser)?
    – Bart
    Nov 22 at 20:07
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    @Bart I'm not entirely sure, but probably not. I think receipt of stolen property convictions generally require the receiver to know the property was stolen. They may be required to hand the giftcards over, but in the event they'd been passed on or spent probably nothing is recoverable.
    – Daniel
    Nov 22 at 23:56
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    buy gift cards online from someone you don't know and paying in crypto might be a red flag for people familiar with this kind of scheme.
    – Jungkook
    Nov 23 at 13:41
  • @Jungkook I think in many cases it's very much a "don't ask questions" arrangement. They maintain plausible deniability.
    – Daniel
    Nov 24 at 2:07
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    @dsollen see my comment above: "Buying crypto directly is somewhat harder because exchanges have KYC requirements that make the process slow even in the best case scenario". It's also risky for the thief transacting with a regulated institution using stolen money.
    – Daniel
    Nov 24 at 21:27
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Compromised accounts are the backbone of a common "overpayment" scam. It works like this:

Scammer takes control of Person A's bank account and uses it to overpay for something they buy from Person B on eBay, Nextdoor, etc.

"Oops I accidentally sent you too much money. Please send the difference back to me with Western Union or Bitcoin or Apple gift cards or another non-reversible form." Person B complies.

Person A discovers the fraudulent payment and reports it. Banks reverse it, money drains out of person B's account. But Person B's payment is gone forever.

Person A has a major hassle to get their money back. Person B has no hope. They may additionally have overdrafts if they've moved money out of their account in the meantime. And technically they may fall afoul of money laundering rules.

So the scammer gets paid without actually directing any money from Person A's account to themself.

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Some transfer methods are NOT reversible.

They transfer your money to another victim, and trick them into sending Western Union or Bitcoin.

Scammers work as teams and are running several scams at once. The other victim is in a scam like:

  • Overpayment scam: "I want to buy your €300 boogie board. Oops, I accidentally sent you €3000. Can you send the €2700 back Western Union?"
  • Employment scam: "We do QA testing of Bitcoin ATMs. Your job is to physically go to Bitcoin ATMs and make test deposits. We have sent you €3000. Deduct your €300 salary, then make this list of deposits summing to €2700".

The other victim cannot reverse the money forwarding they did, because Western Union, Bitcoin, Venmo and several other transfer methods are non-reversible.

Now you are in a "victim vs. victim" situation. One of you is left holding the bag.

3

I can tell you about a specific case in Europe and how it was done (from the victim's point of view).

In this case, an email account was hijacked (likely through a stolen wallet) and with the data in it a bank clerk was convinced that 8000 Euros should be transferred to another EU country. The claim was that the account owner was stranded in that country and needed the money badly. This was done on a Friday afternoon.

When the owner noticed the withdrawal (Monday), the police were notified, but the money was already in the new account. From there it was immediately transferred to another account in Moldova. From there the trace is lost. I guess it is possible that the account holder in the intermediate country (inside the EU) was questioned, but as the amount was big, I guess that it was worth the risk

Anyways, the account holder was reimbursed, as the bank took responsibility for not following procedure. But it is clear that a big hit can be scored without any degree of sophistication.

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  • You can't just follow through to banks outside of EU?
    – Vilx-
    Nov 22 at 13:10
  • @Vilx for just $8000 euro it probably wasn't worth the bank's effort to follow through when they could just eat the loss and satisfy the account holder by reimbursing them. For a more significant amount of money, surely they could continue to follow the trail.
    – Daniel
    Nov 22 at 13:29
  • Although by the time they did, it would likely already have been moved again and laundered. Which could be part of why they didn't bother in the first place
    – Daniel
    Nov 22 at 13:42
  • I don't really know, that is what the account holder was told. I suspect the reason is that Moldova has close links to the intermediary EU country, but essentially zero links to the victim's country, so it was relatively easy to transfer the money there, but very difficult to recover it from the original country.
    – m e
    Nov 22 at 13:43
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    @ttbek I don't think there's any evidence here that this didn't happen. Naturally, this information wouldn't be shared with the accountholder because it's not relevant to them.
    – Daniel
    Nov 22 at 16:06
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There are wagonloads of schemes for making unsuspecting victims convert money from stolen accounts to real money, making others hold the bag. You can combine this with a dating scam: an online acquaintance in Russia becomes totally infatuated with you and wants to come over for a visit or marriage or whatever. But she insists on doing it on her own dime and transfers visa fees/ticket price/bribes/whatever to your bank account and needs you to pass this on to embassy/travel agency/officials/whatever with the account number and credentials she sends you. So it's "her" money; can't be a scam, can it?

The police going after money transferred from an account via stolen credentials begs to differ.

There are also online ads offering well-paying "jobs" for doing "payment processing" for a "foreign company". You receive money to your account and pass it on for a "fee". Again, until the police comes calling and you have to return the money (which you no longer have) that you sent elsewhere with a service that cannot be traced.

Then there is "overpayment" for wares or services where you are to pass on the majority for "convenience" or whatever.

There is no serious shortage of gullible fools for converting traceable money to untraceable money.

1
  • A new bagholder is born every minute, isn't that how the saying goes? Nov 24 at 15:17
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Your doubts should be shared by everyone who comes to this afresh: the money trail should be traceable.

May I assume everyone here understands the concept of a "burner" phone; one used for a very few calls - sometimes, only one - then thrown away?

It's much harder to get a bank account than a phone subscription but when we compare "much harder" to "imposible", which one wins?

At the end of a trail, the bad guys convert electric currency into either cash, or cashable vouchers, then close - or simply for evermore ignore - that account.

Separately, this whole Question is one of the reasons no-one should be allowed an on-line banking account without first passing an industry-standard exam…

Does anyone doubt that?

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  • And there is no automated method to discern ahead of time the users potential random intent; Deep learning holds a promise by looking at pattern matching: time of use, geo + IP address, amount, product category, merchants etc. And no way to prevent users from being foolish with their credentials, or becoming too trusting of a keyboard at an internet cafe. The best it could do is fire off notifications to email + mobile of the new transaction.
    – Tomachi
    Nov 24 at 19:58
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In the United States, at least from my personal experience around 2017, they take the banking information, get an ATM card, and then start pulling cash from ATMs at convenience stores. Cash is harder to trace and easy to convert, and circumventing the security cameras on the ATMs basically comes down to wearing a hat and sunglasses such that you look like everyone else.

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In addition to the many other cases described in the other answers:

  • If they managed to get an ATM card or other means of making withdrawals on an account (which is not theirs, obviously, or one they managed to create in the name of someone else), then they just transfer money from your account to that account, withdraw the money, and the trail ends.

  • They (directly or indirectly) transfer money to accounts in not-very-cooperative jurisdictions. Possibly add a few hops, and the trail becomes very difficult to trace.

  • They fund prepaid cards, and withdraw the money. Note how prepaid cards have become a lot less prevalent over the last few years, this is due to the headache for them to remain compliant with KYC/AML/CTF (Know Your Customer, Anti-Money Laundering, Counter Terrorism Financing) rules.

Basically, the goal is to end up with the money in a form that is out of reach of the good guys. Cash, bitcoin, anonymous prepaid cards...

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The answer is sometimes not much.

Once in any of my (French) bank accounts, the hacker can obviously see what I have. In order to make a wire transfer

  • either the target account is "verified" and no extra steps are needed → but in order to "verify" an account there is an extra factor that is needed (an SMS to the registered number)
  • or the extra step above must be done ad-hoc.

This means that, in theory at least, there is a "multifactor authentication" done on the wire transfer.

Why "in theory"? Because there is the social engineering case @me mentions in another question, though access to the bank account ma help but is not the core of the fraud (some banks will ask you how much money you have with them as a "security question").

If you consolidated your accounts information in the hacked account, this can be used to prepare an attack on the other ones (also via social engineering, or hoping that the password is the same)

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