FinCEN Alerts Financial Institutions About Fraud
Tuesday, April 21, 2020
The Financial Crimes Enforcement Network (FinCEN) advises financial institutions to remain alert about malicious or fraudulent transactions related to COVID-19, similar to those that occur in the wake of natural disasters.
FinCEN is monitoring public reports and Bank Security Act reports of potential illicit behavior connected to COVID-19. The agency notes the following emerging trends:
- Imposter Scams – Bad actors attempt to solicit donations, steal personal information, or distribute malware by impersonating government agencies (e.g., Centers for Disease Control and Prevention), international organizations (e.g., World Health Organization), or healthcare organizations.
- Investment Scams – The Securities and Exchange Commission urged investors to be wary of COVID-19-related investment scams, such as promotions that falsely claim that the products or services of publicly traded companies can prevent, detect, or cure coronavirus.
- Product Scams – The Federal Trade Commission and Food and Drug Administration have issued public statements and warning letters to companies selling unapproved or misbranded products that make false health claims pertaining to COVID-19. Additionally, FinCEN has received reports regarding fraudulent marketing of COVID-19-related supplies, such as certain facemasks.
- Insider Trading – FinCEN has received reports regarding suspected COVID-19-related insider trading.
In addition, please see FinCEN’s advisory, FIN-2017-A007 “Advisory to Financial Institutions Regarding Disaster-Related Fraud” (Oct. 31, 2017) for descriptions of other relevant typologies, such as benefits fraud, charities fraud, and cyber-related fraud.
For suspected suspicious transactions linked to COVID-19, along with checking the appropriate suspicious activity report-template box(es) for certain typologies, FinCEN also encourages financial institutions to enter “COVID19” in Field 2 of the SAR-template.
Financial institutions are encouraged to review information from other relevant functional regulators as updates are available. FinCEN will continue to monitor this situation and will release updated information for financial institutions as appropriate.