Financial Crime World

FINCEN Warns of Red Flags in Timeshare Fraud Schemes

Washington D.C. - The Financial Crimes Enforcement Network (FinCEN) has issued a joint notice with the Office of Foreign Assets Control (OFAC) and the Federal Bureau of Investigation (FBI) to help financial institutions detect, prevent, and report potential suspicious activity related to timeshare fraud schemes in Mexico.

Red Flag Indicators

The notice highlights several red flag indicators that may suggest illicit or other suspicious activity, including:

  • Uncharacteristic wire transfers: Wire transfers to Mexico with memo lines indicating “taxes” or “fees”
  • Structured or repetitive transactions: Multiple, structured, or repetitive wire transfers to Mexican financial institutions
  • High volume of transactions: An unusual volume of wire transfers to Mexican banks or brokerage houses despite no previous related transaction activity

Counterparties Involved in Timeshare Fraud Schemes

The notice also flags red flags associated with counterparties involved in timeshare fraud schemes, including:

  • Newly formed companies: New or recently formed Mexican companies with minimal online presence
  • Receiving high-volume wire transfers: Companies receiving repeated or high-volume wire transfers from U.S. accounts with memo lines describing “taxes” or “fees”
  • Previous complaints or law enforcement associations: Companies previously associated with consumer complaints or law enforcement agencies

Combating Transnational Timeshare Fraud Schemes

To combat the transnational nature of timeshare fraud schemes, FinCEN encourages financial institutions to:

  • Increase information sharing: Share information with foreign financial institutions
  • Collaborate with foreign institutions: Work together to prevent and detect timeshare fraud schemes

Reporting Suspected Timeshare Fraud

The notice reminds financial institutions that they may share information under the safe harbor authorized by section 314(b) of the USA PATRIOT Act. Additionally, FinCEN encourages financial institutions to:

  • Refer victims to IC3: Refer customers who may be victims of timeshare fraud to file a complaint with the FBI’s Internet Crime Complaint Center (IC3)
  • Report suspected fraud: Report suspected timeshare fraud to the FBI or DOJ’s National Elder Fraud Hotline

Quote from FinCEN Director

“By being aware of these red flags and sharing information, we can work together to prevent and detect timeshare fraud schemes in Mexico,” said FinCEN Director Andrea Gacki. “We urge financial institutions to take proactive steps to protect their customers and comply with anti-money laundering regulations.”

Full Notice Available

The full notice can be found on the FinCEN website.