FinCEN provides institutions with information on fraud and theft related to Economic Impact Payments as well as red flags and SAR key terms and filing instructions.
The Financial Crimes Enforcement Network (FinCEN) has issued an advisory warning financial institutions about crimes associated with COVID-19 relief payments, termed Economic Impact Payments (EIPs). The advisory (FIN-2021-A002) contains descriptions of EIP fraud, associated red flag indicators, and information on reporting suspicious activity. The advisory, part of a series published by FinCEN on COVID-19-related frauds and criminal activity, is based on FinCEN’s analysis of COVID-19-related information obtained from Bank Secrecy Act (BSA) data, public reporting, and law enforcement partners. FinCEN also released a notice (FIN-2021-NTC1) to consolidate filing instructions and key terms for fraudulent activities, crimes, and cyber and ransomware attacks related to COVID-19.
According to FinCEN, U.S. authorities have detected a wide range of EIP-related fraud and theft. Included in the list of crimes are fraudulent, altered, or counterfeit checks, EIP theft, phishing schemes, and inappropriate seizure of EIP—for example, a private company seizing an EIP for wage garnishment.
Red flags. FinCEN provided for institutions a number of red flags indicating EIP-related financial crimes. The agency noted that because no single financial red flag indicator is necessarily indicative of illicit or suspicious activity, financial institutions should consider all surrounding facts and circumstances before determining if a transaction is suspicious or otherwise indicative of potentially fraudulent activities related to COVID-19. In taking a risk-based approach to compliance with the BSA, financial institutions also are encouraged to perform additional inquiries and investigations where appropriate. The red flags target fraudulent, altered, counterfeit, or stolen EIP checks, Automated Clearing House deposits, prepaid debit cards, EIP theft, and other associated frauds.
Notice. The notice to consolidate filing instructions and key terms for COVID-19-related fraudulent activities and crimes also requests that financial institutions consult the tables in the notice when filing suspicious activity reports (SARs) for COVID-19-related activity. Financial institutions should consult previously published advisories and notices for additional SAR filing instructions related to the advisories and notices included in the current notice.
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