Short-Term Rentals & Money Mules
By Ken Shibasaki, Senior Analyst, Riskboss Inc.
Are scammers funnelling illegally acquired money through your condominium community? Smurfing is a form of illegal business where you get other people who each make deposits near to, or under, the $10,000 money laundering threshold. This makes it harder to detect because it looks like a group of different individuals all putting money into the banking system. According to Wikipedia,
“Commonly, mules are recruited with job advertisements for “payment processing agents,” “money transfer agents,” “local processors,” and other similar titles; the real benefit to the criminals is not the work carried out by the mule, but that the criminals are distanced from the risky, visible transfer.”
Short-term rentals such as Airbnb have been on the rise, and there has been a steady drumbeat of predictable outcomes from this. Many short-term renters have little to no regard for the property owners. They have parties, destroy property, and there have been many recorded shootings resulting in deaths. But there are also other criminal activities short-term rentals attract: Money Mules.
Money Mules transfer, launder, or move illegally acquired money on behalf of a third party, and yes, it is a serious crime in Canada. One way they have been moving money is through mail and courier services delivering to a short-term rental.
The Ontario Provincial Police held a live chat on June 8th, 2022, regarding money mules in Canada. During this live chat, David Harding of FedEx Express Canada said, “We also see the use of Airbnb residential addresses… that allows a fraudster or money mule to approach a courier in an open lobby.” A sentiment echoed by Ong Chau of Canada Post, who followed up with, “Similar to what FedEx is experiencing, we are seeing the exact same thing.”
This process involves making a short-term rental booking at a location, most likely for one or two days. The criminals then have their illegally obtained money sent to the rented location, where the money mules wait outside the building or in the main lobby for the courier where the money package is received.
Short-term rentals like Airbnb are ideal for this, as there is no need for in-person contact if the keys are provided off-site, via an intermediary, or through a lockbox. Fake names and contact information can also be used when booking.
The purpose of this is twofold. One is to give their scam the appearance of legitimacy by having people mail money acquired via some legitimate internet address. The second is to ensure the last traceable location the money was sent to is unrelated to their network. And yes, that last traceable location is your condominium building.
The last thing you want to see is a local news reporter on a scammed senior citizen story saying, “According to police, the money was traced back to this residential condominium,” as the picture on your television pans over to your building. The damage to your property’s reputation can be devastating.
Best Practices
As always, the best way to prevent this from happening is to not allow short-term rentals in the first place. Despite the City of Toronto allowing short-term rentals, condominium corporations can prohibit this activity through their by-laws and rules. Communicate your community’s expectations often to help manage illegal short-term rentals and associated criminal activity, especially with new residents.
Enforce Your By-laws
Some condominium corporations, despite having prohibitions against it, still have illegal short-term rental activity occurring at their property. Monitoring and aggressive enforcement of these rules are imperative. As soon as property management is aware of the activity, they should immediately engage the property owner.
Active Monitoring
Property management should take an active monitoring approach rather than a passive or reactive one. Though reports of short-term rentals may trickle in from resident neighbour complaints and attentive staff, these reports will have come in after the damage has already been done.
But where do you find the time to check for this activity, and how do you even start to go about doing this? Riskboss provides weekly illegal short-term rental reports covering over 25 online sources through our comprehensive risk assessment and a regular report to our Samsonshield clients.
To learn more about how to get risk assessment or our regular illegal short-term rental reports, go to :www.riskboss.com/ca