The Bank Secrecy Act and Anti-Money Laundering should continue to be at the forefront of your mind in the new financial services world COVID-19 has brought upon us.
When your institution evaluates suspicious activity, additional factors to take into consideration include looking at the customer’s overall financial activity and noting whether there are red flags present. To ensure staff are bringing suspicious activity to the attention of the BSA officer, educate staff on potential scams and fraudulent activity.
Below is a variety of potential references that can assist you as well as your staff in recognizing scams and fraudulent activity, as well as help avoid your customers avoid these scams.
Federal Trade Commission
The Federal Trade Commission has shed light on new scams that have risen from COVID-19 and gives guidance on how to best avoid fraudulent activity. To start, they say financial institutions and their personnel can avoid scams by:
- Ignoring online offers for vaccinations and home test kits.
- Hanging up on robocalls.
- Using sites like coronavirus.gov and usa.gov/coronavirus for information and not clicking on links from sources you don’t know.
- Not donating in cash, by gift card or by wiring money.
U.S. Department of Treasury
As the Federal Trade Commission identified potential scams from fraudsters acting as part of the government, the U.S. Department of Treasury has pointed out that individuals may receive calls, emails, or other communications. The individuals sending these emails claim to be from the Treasury Department by offering COVID-19 related grants or stimulus payments in exchange for personal financial information or an advance fee or other charge. If you or a customer has received a communication like what has been previously mentioned, the Treasury Department says to contact the FBI at www.ic3.gov. Reporting scammers greatly increases the chances that they can be tracked and stopped.
Financial Crimes Enforcement Network (FinCEN)
FinCEN has also sent out a news release denoting what should be watched out for in the financial institution community relating to COVID-19 and fraudulent activity. “Financial institutions should remain alert about malicious or fraudulent transactions similar to those that occur in the wake of natural disasters,” they wote.
Like the U.S. Department of Treasure and the Federal Trade Commission, FinCEN identified more scams as COVID-19 swept over the nation, including:
- Imposter scams: Soliciting donations, stealing personal information, or distributing malware by impersonating government agencies.
- Investment scams: Promoting false claims that products or services of publicly traded companies can prevent, detect, or cure coronavirus.
- Product scams: Companies selling unapproved or misbranded products that make false health claims pertaining to COVID-19 and fraudulent marketing of COVID-19 related supplies.
- Insider trading: FinCEN has received several reports of insider trading shortly before the outbreak was publicized and since
FinCEN has historically warned of fraud associated with disaster relieve efforts, and COVID-19 is no exception
In FinCEN’s advisory, they also identify other types of fraud to be on the lookout for that not only hurt financial institutions and their customers, but also those who are in need during this time of emergency. One of which includes benefits fraud. This type of fraud involves individuals who apply for emergency assistance benefits they are not entitled to and seek to deposit or obtain cash derived from the emergency benefit payments. They may use wire transfers to deposit funds and then immediately withdraw them. Red flags include:
- Making deposits of multiple emergency assistance checks or electronic funds transfers to the same account.
- Cashing multiple emergency assistance checks by the same individual.
- Making deposits of one or more emergency assistance checks where the account holder is a retail business and the payee/endorser is an individual other than the account holder.
- Opening a new account with an emergency assistance check where the name of the potential account holder is different from that of the depositor of the check.
Another type of fraud that has emerged during the pandemic is charities fraud. This includes fraudulent contribution solicitations and schemes that originate from social media, emails, websites, door-to-door collections, flyers, mailings, telephone calls, and other similar methods. Red flags include:
- Fraudulent transactions where payee organization’s name is similar to, but not exactly the same as, those of reputable charities.
- Use of money transfer services for charitable collections because charities typically do not solicit donations via money transfer services.
The COVID-19 pandemic is upon us, and unfortunately, scammers and fraudsters are out to take advantage of the devastating situation. Potential fraudulent transactions may be coming your way, and your staff should be made aware of them so they know what to watch out for. Now is more important than ever to prepare your institution and personnel for financial crime. For more information on how best to mitigate the risks of fraudulent activity, reach out to a Wipfli representative or visit Wipfli.com/fi.