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FinCEN Urges Financial Institutions to Be on Alert for Fraudulent Transactions

joseph.moreno@sapns2.com's picture
Commentary by Joseph Moreno

The Treasury Department urged financial institutions to be on alert for malicious or fraudulent transactions, and to notify FinCEN of any potential delays submitting Suspicious Activity Reports ("SARs") and other mandatory Bank Secrecy Act ("BSA") filings.

FinCEN likened the current climate around the coronavirus pandemic to that of a natural disaster in which criminal actors seek opportunities to prey on vulnerable firms and investors with disaster relief schemes involving benefits fraud, charities fraud, and cyber-related fraud. FinCEN identified several emerging trends of illicit behavior connected to COVID-19, including:

  • Bad actors who impersonate government agencies or international organizations to solicit donations, steal personal information or spread malware (imposter scams);

  • Offers of products or services by publicly-traded companies with the false claim of being able to defend against or cure COVID-19 (investment scams);

  • Sales of unapproved or misbranded products that falsely claim to protect a person's health against COVID-19, such as certain facemasks (product scams); and

  • Insider trading related to COVID-19.

FinCEN also encouraged firms to actively monitor public statements, warning letters, and other intelligence provided by the Federal Trade Commission, the Food and Drug Administration, and other relevant functional regulators for the most updated information on these threats.

Commentary

Forewarned is forearmed. While global financial institutions are striving to service their customers during these difficult times, there will inevitably be bad actors trying to take advantage of the situation. We can expect not only offers to sell questionable products such as COVID-19 home test kits and cures, but also fake charities and "GoFundMe" schemes from highly suspicious sources. Also assume that hackers and other cybercriminals backed by hostile state actors will be seeking out vulnerable targets for intrusion, ransomware, and other attacks. Firms that obtain intelligence on cybersecurity and illicit transaction trends will be doing a public service by sharing that information with law enforcement and the financial community. Financial institutions that anticipate needing relief in meeting their BSA reporting obligations should notify FinCEN's Regulatory Support Section without delay.

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