The 2020 ACAMS Annual AML & Anti-Financial Crime Conference was held this week, and Financial Crimes Enforcement Network (FinCEN) Director Ken Blanco was among the presenters. Blanco acknowledged the COVID-19 crisis has placed credit unions, banks, and financial regulators in untraversed territory, which requires them all to adapt and evolve. He spoke about FinCEN’s response to the global health crisis, some of the latest fraud, scam, and cybercrime tactics, and about trends they have observed in recent Suspicious Activity Reports (SARs) filed.
“As the pandemic began to unfold earlier this year, we all had to pivot, and quickly,” said Blanco. “I know all of you are working hard to serve your customers and keep your workforce safe in the unprecedented environment in which we are all operating.”
Blanco noted that FinCEN has been adapting and evolving as well. They are tracking scams, fraud, and cybercrime, and have released a number of advisory updates as these trends emerge.
Fraud, Scam, & Cybercrime Advisories
The goal for banks, credit unions, and FinCEN, according to Blanco, is “to get funds to the intended recipients—many who badly need it for their financial survival—not to exploitive criminals and fraudsters.”
Blanco encouraged financial institutions to remain vigilant and, if they haven’t already, to read the advisories, which can be found below.
Imposter Scams and Money Mules
Cybercrime and Cyber-Enabled Crime
Financial institutions filed more than 91,000 COVID-19-related SARs from February 1st to September 12th. Through FinCEN’s tracking efforts and review of SAR submissions, these common trends have emerged:
- Fraudsters are targeting multiple COVID-19-related government stimulus programs, employing money mules and cyber techniques.
- For federal and state stimulus programs, they are seeing multiple Automated Clearinghouse (ACH) payments disbursed to a single account
FinCEN needs a clearer picture of suspicious activity and is calling on banks and credit unions to be as specific as possible when submitting SARs relating to COVID-19.
How Credit Unions Can Help
“Different law enforcement teams are investigating fraud in the different government programs, and vague references to ‘stimulus’ or ‘CARES Act’ or ‘benefit’ in SARs hinder our ability to get the information into the hands of the right team,” said Blanco. “The more specific you are in your SAR narrative, the faster it will get to the right investigators.”
Blanco’s presentation included the following examples as well:
- If the suspicious activity is related to an ACH payment from a state unemployment insurance program, please clearly mention COVID19 UNEMPLOYMENT INSURANCE FRAUD in field 2 of the SAR (Filing Institution Note to FinCEN) as well as in the narrative. This will make it much easier for your SAR to get to law enforcement teams working with the states on unemployment fraud.
- Or if the activity involves a counterfeit check or ACH payment for the EIDL program, please also clearly mention COVID19 EIDL FUNDS FRAUD in field 2 of the SAR (Filing Institution Note to FinCEN) and state this in the narrative, as there are specific prosecutorial teams working on EIDL fraud.
FinCEN has a dedicated webpage for further information and updates regarding COVID-19. They also released an alert in July regarding a Twitter scam, published a statement in August on BSA requirements for customers who may be considered politically exposed persons, and issued guidance on BSA/AML requirements for hemp-related businesses in July and August.
ARB’s Credit Union Services Group is dedicated to your industry. We will continue to monitor these developments, and we are available to assist with understanding new and changing standards and requirements. Contact us for more information, and visit our COVID-19 Financial Resource and Tax Center for additional information on related matters.
by Samantha Pedersen, CPA