Banking and Finance Law Daily FinCEN warns of potential COVID-19 scams
Friday, July 31, 2020

FinCEN warns of potential COVID-19 scams

By Jeff Williams

The agency highlighted red flag indicators that should tip off financial institutions to potential schemes.

The Treasury Department’s Financial Crimes Enforcement Network issued an advisory to alert financial institutions about potential red flags regarding COVID-19-related "malicious cyber activity and scams" they should look out for as the coronavirus pandemic continues. "Detecting, preventing, and reporting illicit transactions and cyber activity will help protect legitimate relief efforts for the COVID-19 pandemic and help protect financial institutions and their customers against malicious cybercriminals and nation-state actors," FinCEN said in the notice.

The advisory details the methods and types of financial transactions cybercriminals and "malicious state actors" are using to exploit the coronavirus pandemic "through malware and phishing schemes, extortion, business email compromise (BEC) fraud, and exploitation of remote applications, especially against financial and healthcare systems." Financial institutions should examine any red flag indicators they see in the context of other activity, such as whether transactions are in line with past activity and whether transactions adhere to prevailing business practices, the agency said.

In addition, FinCEN said, "Given that many scammers may be directly targeting customers, financial institutions should remain on the alert for potential suspicious activities involving their customers." FinCEN said it based the advisory on analysis of information gathered from Bank Secrecy Act (BSA) data, open source reporting, and law enforcement agencies.

Potential vulnerabilities. With many people now conducting much of their business remotely because of the COVID-19 pandemic, cybercriminals, and malicious state actors are "targeting vulnerabilities in remote applications and virtual environments to steal sensitive information, compromise financial activity, and disrupt business operations," FinCEN said. There are also significant security risks posed by criminals trying to "undermine online identity verification processes" by using fraudulent identity documents, the agency said.

In addition, there are attempts at "credential stuffing attacks," in which cybercriminals use lists of stolen account credentials such as usernames and passwords to conduct automated login attempts, FinCEN said. There are numerous indicators of that kind of activity, FinCEN said, including the spelling of names in account information not matching government-issued IDs, attempts to use blurry or low-resolution ID pictures, and pictures that have "visual irregularities" indicating digital manipulation. Additional indicators include a customer refusing to provide supplemental identity documentation, customer logins to multiple accounts occur from a single device or Internet protocol (IP) address, customer logins taking place in a pattern of high network traffic with higher rates of login failures, and increased password reset rates, the agency said.

FinCEN noted that it and law enforcement agencies have seen a "significant" uptick in "broad-based and targeted phishing campaigns" trying to scam companies, especially healthcare and pharmaceutical companies, using offers of COVID-19 information and supplies to try to collect personal and financial data, and possibly download malicious software.

Importance of reporting. FinCEN advised that Suspicious Activity Reports and effective due diligence by financial institutions "is crucial to identifying and stopping financial crimes, including those related to the COVID-19 pandemic." Financial institutions should include "all pertinent available information" when they submit SARs forms and accompanying narratives, the agency said.

MainStory: TopStory BankingOperations BankSecrecyAct ConsumerCredit Covid19 CrimesOffenses

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