FinCEN Advisory on COVID-19-Related Imposter Scams and Money Mule Schemes Posted by AVCU on 9:21 AM

The Financial Crimes Enforcement Network (FinCEN) issued an advisory (FIN-2020-A003) to alert financial institutions to potential indicators of imposter scams and money mule schemes --  two forms of consumer fraud observed during the COVID-19 pandemic. The advisory contains descriptions of imposter scams and money mule schemes, financial red flag indicators for both, and information on reporting suspicious activity.

Imposter scams: criminals impersonate organizations such as government agencies, non-profit groups, universities, or charities to offer fraudulent services or otherwise defraud victims. Some examples of red flag indicators of imposter scams include:

• Requests via phone/e-mail/text requesting verification of personal information in connection with COVID-19-related stimulus payments or benefits, including Economic Impact Payments (EIP).
• Unsolicited communications from purported trusted sources or government programs related to COVID-19, instructing readers to open embedded links or files to provide personal or financial information, including account credentials.
• Solicitations where the person, email, or social media advertisement seeks donations on behalf of a reputable organization, but the hyperlink points to an unaffiliated website.

Money mule schemes: involve “a person who transfers illegally acquired money on behalf of or at the direction of another.” During the COVID-19 pandemic, U.S. authorities have detected recruiters using money mule schemes, such as good-Samaritan, romance, and work from-home schemes. U.S. authorities also have identified criminals using money mules to exploit unemployment insurance programs during the COVID-19 pandemic. Some examples of red flag indicators of money mule schemes include the following:

• A member who typically maintains a low account balance starts to receive transfers that do not fit his or her transactional history profile, including overseas transactions, purchases of large sums on convertible currency, etc.
• A person opens a new account in the name of a business and, shortly thereafter, someone transfers the funds out of the account.
• A person opens accounts at multiple institutions in order to receive money from various individuals and business, then moves the money to other accounts at the direction of the member’s purported employer.

SAR filing guidance: When reporting these schemes, FinCEN requests that financial institutions:

• Reference this advisory by including the key term “COVID19 MM FIN-2020-A003” in SAR field 2 (Filing Institution Note to FinCEN) and the narrative to indicate a connection between the suspicious activity being reported and the activities highlighted in this advisory.
• Select SAR field 34(z) (Fraud - other) as the associated suspicious activity type to indicate a connection between the suspicious activity being reported and COVID-19.
• Include the type of fraud and/or name of the scam or product (e.g., imposter scam or money mule scheme) in SAR field 34(z).
• Report certain types of imposter scams and money mule schemes using fields such as SAR field 34(l) (Fraud- Mass marketing), or SAR field 38(d) (Other Suspicious Activities- Elder Financial Exploitation)