You may have noticed that FinCEN has been especially busy over the past 12 months and the last couple weeks have been no exception!
At the end of January, FinCEN published a notice and request for comments on its proposed renewal of rules that allow financial institutions to file a Designation of Exempt Person (DOEP) to avoid filing Currency Transaction Reports (CTRs). While nothing significant is changing with respect to DOEPs or CTRs, FinCEN is requesting comments on future expansion of the rule and the cost associated with the regulations. The comment period ends after March 26, 2021.
On February 1, 2021, FinCEN updated its Paycheck Protection Program (PPP) Frequently Asked Questions (FAQs). Fortunately, the previous FAQs from the first round of PPP FAQs from back in April 2020 remain applicable to second-draw PPP loans. If the PPP borrower is an existing customer, lenders are allowed to rely upon the information obtained from the borrower during the first-draw application for the second draw. That being said (and in light of all of the fraud related to the PPP loans) institutions should still follow existing guidance on updating customer due diligence (CDD) and verification/updating beneficial owner (BO) information pursuant to your risk-based procedures. Lenders should be on the lookout for anomalies in the information provided during the second round (mismatched data, ownership changes, eligibility concerns, or other suspicious activity) and be prepared to respond appropriately.
On February 2, 2021, FinCEN issued an Advisory on COVID-19 Health Insurance and Health Care Related Fraud (Health Fraud). The Advisory outlines several types of health fraud encountered by law enforcement and financial institutions. These include:
- Unnecessary Services
- Billing Schemes
- Health Care Technology Schemes
- Telefraud and Telehealth Schemes
- Fraudulent COVID-19 Health Care Relief Funds
- Identity Theft
FinCEN included 16 Red Flags for fraudulent activity that your program should be watching out for, as well as, two case studies using real-world examples. The first case study relates to pharmacies involved in a complicated money laundering scheme to hide funds obtained through COVID-19 related fraud. The second had to do with the president of a medical technology company working with a variety of medical professionals to fraudulently charge patients for unnecessary medical services.
Finally, the Advisory includes specific instructions for Suspicious Activity Reports (SARs) related to these types of scams. In addition to referencing the Advisory (FIN-2021-A001) in field 2 and the narrative section, FinCEN requests that Field 34(g) also be selected (health care-public or private insurance). Financial institutions should also include detail about the type of fraud encountered in the narrative.
If you are having trouble juggling all the COVID-19 related alerts, advisories and notices coming from FinCEN, they have also updated their website to help you keep it all straight! In addition, we offer a wide range of BSA Webinars and free Tools to help you keep up in these turbulent times!
Amy brings many years of banking and compliance experience to Banker’s Compliance Consulting. She has worked for both large and small financial institutions and spent time working in every area of a bank. She started out as a teller in college and eventually became a branch manager.
Her love, however, was always compliance. Amy began her career with Banker’s Compliance Consulting in 2000. Her knowledge and experiences have allowed her to develop a well-rounded and practical approach to regulatory compliance. Amy is CRCM certified, has a Bachelor’s Degree in Business Administration, and is a graduate of the ABA Compliance School.
Amy & her husband have two children at home and stay busy following their activities. They spend a lot of time in the bleachers!