FinCEN warns of Covid-19 unemployment insurance fraud
On October 13, the Financial Crimes Enforcement Network (FinCEN) issued an advisory for financial institutions to assist in detecting and preventing Covid-19-related unemployment insurance (UI) fraud. The advisory highlights specific ways illicit actors are exploiting the pandemic to engage in UI fraud, including, among other things, employees receiving UI payments while still being paid reduced, unreported wages from their employer, and the submission of UI claims using stolen or fake identification information. The advisory includes a specific list of red flag indicators for financial institutions to be aware of, such as (i) UI payments from a different state from the one in which the customer resides; (ii) multiple state UI payments within the same disbursement period; (iii) UI payments in a different name from the account holder; (iv) the withdrawal of UI funds in lump sums by cashier’s check or prepaid debit card; (v) multiple accounts receiving UI payments being associated with the same free, web-based email account; and (vi) a newly opened account that starts to receive numerous UI deposits. Financial institutions are encouraged to perform additional inquiries and investigations where appropriate, consistent with a risk-based approach for compliance with the Bank Secrecy Act. Lastly, should financial institutions need to report any UI fraud in a suspicious activity report, FinCEN encourages the institution to reference the advisory.