FinCEN Warns Banks About COVID-19-Related Scams

By Reenat Sinay
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Law360 (July 7, 2020, 5:35 PM EDT) -- The Financial Crimes Enforcement Network warned financial institutions Tuesday about two forms of consumer fraud that have proliferated during the COVID-19 pandemic, issuing an advisory with tips for detecting impostor scams and money mule schemes.

According to FinCEN, impostor scams are when a person pretends to be someone else and convinces a person to send them money, while money mule schemes involve the transfer of illegally obtained funds on behalf of a third party.

Banks should be on the watch for certain red flags, including customers who say they were contacted by a government agency on the phone about expediting stimulus payments, suspicious emails, and scammers seeking donations for charities they are not affiliated with or that don't exist, FinCEN said.

They should also be wary of suspiciously large transactions that don't fit with customers' history and customers who receive several state unemployment payments in a short time frame from different states.

Fraudsters have been posing as officials from the IRS, the Centers for Disease Control and Prevention, the World Health Organization or as coronavirus contact tracers by email, robocalls, texts and other communication methods, the regulator said.

"Scammers may also impersonate legitimate charities or create sham charities, taking advantage of the generosity of the public and embezzling donations intended for COVID-19 response efforts," FinCEN added.

Money mule schemes can be perpetrated either by middlemen who are aware of their criminal activity or completely unwitting, according to the advisory. Throughout the pandemic, U.S. authorities have uncovered "good-Samaritan, romance and work-from-home" money mule schemes, FinCEN said.

As millions of Americans have lost their jobs and begun spending considerable amounts of time at home, fraudsters have been targeting potential money mules through online work scams that promise easy money for little effort, or via dating websites and apps, according to an FBI alert from April. Some scammers claim to be U.S. citizens quarantining abroad and ask the mule to send or receive money for loved ones battling COVID-19, the bureau said.

Financial institutions should be wary of unusual transactions in customer accounts, including large cryptocurrency transactions and large transfers of funds from COVID-19 relief-related or "work from home" opportunities out of newly opened accounts.

The regulator based its advisory on its analysis of information gleaned from Bank Secrecy Act data, law enforcement and open source reporting, it said.

Tuesday's advisory follows a call by Senate Democrats late last month to crack down on impostor scammers taking advantage of the fear and confusion caused by the pandemic to robocall consumers, such as those offering help with IRS stimulus payments or hawking fake COVID-19 remedies.

The Federal Trade Commission also issued a warning in late June about scammers pretending to be coronavirus contact tracers.

--Editing by Alyssa Miller.

For a reprint of this article, please contact reprints@law360.com.

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