The Financial Crimes Enforcement Network (FinCen) has issued what it says will be the first of a series of guidance it intends to release on financial crimes related to the COVID-19 crisis. The guidance is aimed for financial institutions.
Some of the medical-related scams FinCen identified include: (1) fraudulent cures, tests, vaccines, and services; (2) non-delivery scams; and (3) price gouging and hoarding of medical-related items, such as face masks and hand sanitizer.
The guidance includes examples of red flags for each of these illicit activities but notes that no one red flag is dispositive, and FIs should consider additional contextual information, such as a customer’s historical financial activity, whether the transactions are in line with prevailing business practices, and whether the customer exhibits multiple indicators, before determining if a transaction is suspicious or indicative of fraudulent COVID-19-related activities.
Although there are some unique indicators listed out in the guidance, many are also similar to typical red flags of fraudulent merchant activity committed by shell or fraudulent retail or wholesale business operators.
FIs should review the red flags and case studies in the FinCen guidance and incorporate as appropriate into their training for staff, policies, and transaction monitoring procedures.
Detecting, preventing, and reporting COVID-19-related scams and illicit activity is critical to our national security, safeguarding legitimate relief efforts, and protecting innocent people from harm.