Financial Crime World

FinCEN Advisory: Alerting Financial Institutions to COVID-19 Scams and Money Laundering Schemes

Introduction

On March 31, 2020, FinCEN issued an advisory to alert financial institutions to potential suspicious activity related to COVID-19 scams and money laundering schemes. This advisory highlights several red flags that may indicate fraudulent or illicit activities.

Red Flags for Suspicious Activity

The following are some common red flags that may indicate COVID-19 related scams and money laundering schemes:

  • Unusual Transaction Patterns:
    • Large transactions
    • Frequent transfers
    • Deposits from multiple sources
  • Suspicious Account Behavior:
    • Customers opening multiple accounts at different banks
    • Receiving unemployment insurance payments to multiple accounts
    • Depositing funds from an unexpected source (e.g., foreign countries)
  • Atypical Transactions:
    • Wire transactions to foreign accounts, especially in countries with poor anti-money laundering controls
  • Imposter Scams:
    • Customers receiving emails or requests for financial assistance from individuals claiming to be in need due to the COVID-19 pandemic
  • Unusual Documentation:
    • Customers providing information that their employer asked them to receive funds into their personal bank account

Reporting Suspicious Activity

Financial institutions are instructed to report suspicious activity by:

  1. Referencing this advisory in SAR field 2 (Filing Institution Note to FinCEN) and including the key term “COVID19 MM FIN-2020-A003”.
  2. Selecting SAR field 34(z) (Fraud - other) as the associated suspicious activity type.
  3. Including the type of fraud and/or name of the scam or product in SAR field 34(z).
  4. Considering reporting imposter scams and money mule schemes using fields such as SAR field 34(l) (Fraud-Mass-marketing), or SAR field 38(d) (Other Suspicious Activities-Elder Financial Exploitation).

Additional Guidance

Financial institutions should also refer to FinCEN’s Notice Related to the Coronavirus Disease 2019 (COVID-19) and follow their BSA obligations.

Contact Information

If you have any questions or comments regarding this advisory, please contact the FinCEN Regulatory Support Section at frc@fincen.gov.