On July 7, 2020, FinCEN issued an Advisory on Imposter Scams and Money Mule Schemes Related to COVID-19. These two types of consumer fraud have been observed to be on the rise during the current pandemic. The advisory provides explanations of how these scams and schemes work, red flags that may help identify such activity, as well as, how to report these types of scams/schemes on the Suspicious Activity Report.
Click on the video to listen to Micaela explain more.
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I’m here today to talk about FinCEN’s new advisory that came out in July 7th, and it relates to imposter scams and money mule schemes as it relates to COVID-19.
What exactly is an imposter scam? An imposter scam is when there’s essentially an actor that targets someone acting in some type of an official capacity. For example, the IRS, the CDC, the World Health Organization, or WHO, and they then use that false position to encourage their target to either provide valuable information, provide money, get them to click on suspicious links or open suspicious attachments in an email, and then their computer would become infected with malware in those situations. And so what FinCEN has been seeing is an uptick in these scams with the COVID-19 fear attached to it. And so they’ve issued seven different red flags that you can use and share with your tellers, your bankers, to help identify this activity and make sure it gets reported.
In general, these red flags relate to the verification, the processing, or the expedition of government payments, so either the stimulus checks, unemployment, that type of stuff. It’s usually trying to get action to happen quickly to essentially expedite those funds into someone’s account. Particularly, the vulnerable are susceptible to this, so the elderly, the unemployed, those that may be a little bit more desperate in this COVID-19 environment that we’re living in that are really needing those funds. And so that’s the imposter scam.
The other side of this guidance touches on money mule schemes. A money mule is someone that either transfers illegally acquired money on behalf of someone or at the discretion of someone else. A money mule can relate or a money mule can be someone that is either unwitting or unknowing all the way up to someone who is entirely complicit and aware that they’re part of a larger criminal scheme.
With the money mule schemes, usually a customer’s account activity becomes atypical quickly and any funds that are put into the account are quickly then taken out of the account either via wire transfer, ACH, something of that nature. It usually happens very quickly and these money mule schemes are definitely seeing an uptick as they relate to the unemployment insurance benefits. For example, there might be a bank customer that receives deposits of what appears to be unemployment insurance income into their accounts. The name or on the benefit of what those insurance checks are supposed to be, or who they’re supposed to be to, that might not match your customer’s name. The state that it’s coming from might not match where your customer lives or works or information that you would otherwise know about your customer. And so that’s an example of where then that customer is being used then to transfer that money elsewhere.
Where we’re seeing these schemes might be with unemployment insurance income, again. It might be with students. They might be working at home schemes, that type of stuff, and this is something that we’ve seen as part of Bankers Compliance Consulting. We’ve seen that some of our clients, these money mule schemes happening and they’re having to report on them. We haven’t quite seen as much of the imposter stuff, but the money mule, we’ve definitely been seeing so keep your eyes peeled for that.
With relation to the money mule, there are an additional 11 red flags that FinCEN issued to help banks identify this. Those can be found in the advisory. Those are on pages six and seven. Go ahead and distribute those to your staff. Make sure your tellers are aware of it as it’s usually your frontline staff that are going to pick up on this most quickly.
Lastly, as it relates to whether it’s the imposter scam or the money mule scam, FinCEN is asking that when you file SARS on this activity, that you follow a set of specific instructions. This is by putting or relating this memo in certain key fields and in the narrative and specific guidance on that can be found in the advisory as well. There’s a short summary on the front page, and then the very last page has a step by step details.
Again, new guidance seems to be there’s no shortage of new guidance in this environment that we’re living in, but keep your eyes open. This is something that’s happening and your customers can be taken advantage of. And so FinCEN’s really looking for your help and getting it identified and getting it stopped. Thanks, everyone.
Kevin brings years of experience and a unique perspective on regulatory matters to our clients. A self-proclaimed geek and accredited CRCM, Kevin is also a recovering attorney with experience as in-house counsel for a large regional bank and one of the leading national title insurance providers. For reasons unknown, Kevin decided to leave the safety and serenity of his desk job to seek fortune and glory as a wandering adventurer. Like a bank compliance version of Kwai Chang Caine, The Man with No Name or Don Quixote, he now travels the land seeking to help those in need and righting compliance wrongs, wherever he may find them.
Kevin lives in Sioux Falls with his two children, who are surprisingly normal after having endured their father’s vivid imagination for their entire lives. He won’t admit to having any hobbies, because apparently “Regulations never sleep.” (While he does say this in his Batman voice, we’re pretty sure he’s joking.) From the looks of his Facebook page, he likes the outdoors and spending time with his large extended family (who seem like relatively normal people).