May 20, 2020

FinCEN issues alert, filing instructions on COVID-19 scams

fraudThe Financial Crimes Enforcement Network (FinCEN) has issued an advisory informing financial institutions of a new trend resulting from the coronavirus pandemic: Medical scams. FinCEN noted that this is the first of several advisories it plans to release on financial crimes related to the pandemic.

The medical scams financial institutions need to be aware of include:

  • fraudulent cures, tests, vaccines, and services;
  • non-delivery fraud of medical-related goods scams; and
  • price gouging and hoarding of medical-related items.

FinCEN provided red flag indicators for each of the scams to help financial institutions detect, prevent, and report suspicious transactions associated with the coronavirus pandemic, as well as case studies for each. However, the agency noted that "no single red flag is necessarily indicative of illicit or suspicious activity" and encouraged financial institutions to "consider additional contextual information and the surrounding facts and circumstances…before determining if a transaction is suspicious or otherwise indicative of fraudulent COVID-19-related activities."

In addition to the scams advisory, FinCEN issued a companion notice detailing filing instructions for financial institutions to use when reporting coronavirus-related criminal and suspicious activity.

The notice outlines need-to-know information related to:

  • Bank Secrecy Act (BSA) reporting obligations;
  • suspicious activity report (SAR) filing instructions;
  • provision of SAR supporting documentation to law enforcement and FinCEN;
  • information sharing;
  • reporting COVID-19-related criminal activity; and
  • response and recovery of funds.

FinCEN previously shared an alert on emerging trends in illicit behavior in the wake of the coronavirus. The agency has also taken some steps to reduce financial institutions' regulatory burden amid the pandemic.

Stay tuned to NAFCU Today as more guidance and relief is provided to credit unions throughout the coronavirus pandemic. Access coronavirus resources here.