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Financial Services Law Insights and Observations

FinCEN warns financial institutions of surge in mail theft-related check fraud

Financial Crimes Of Interest to Non-US Persons FinCEN Fraud Anti-Money Laundering SARs Bank Secrecy Act

Financial Crimes

On February 27, FinCEN issued an alert to financial institutions on the nationwide surge in check fraud schemes targeting the U.S. mail. Mail theft-related check fraud, FinCEN explained, generally relates to the fraudulent negotiation of checks stolen from the U.S. postal service, and represents one of the most significant money laundering threats to the U.S. The alert is intended to ensure financial institutions file suspicious activity reports (SARs) that appropriately identify and report suspected check fraud schemes possibly linked to mail theft. The alert highlighted red flags to help financial institutions identify and report suspicious activity, and reminded financial institutions of their Bank Secrecy Act (BSA) reporting requirements. According to FinCEN, BSA reporting for check fraud has increased significantly over the past three years. “In 2021, financial institutions filed over 350,000 [SARs] to FinCEN to report potential check fraud, a 23 percent increase over the number of check fraud-related SARs filed in 2020,” the agency said, adding that in 2022, SARs related to check fraud reached over 680,000. When suspecting this type of fraud, financial institutions are advised to refer customers to the United States Postal Inspection Service in addition to filing a SAR.