FinCEN Releases COVID-19 Advisory on Imposter Scams and Money Mule Schemes

July 16, 2020

The Financial Crimes Enforcement Network (FinCen) recently issued an advisory warning financial institutions of imposter scams and money mule schemes, which are two kinds of consumer fraud that U.S. authorities have observed during the COVID-19 pandemic.

The alert provides specific instructions on how to file Suspicious Activity Reports (SARs) related to the COVID-19 pandemic.

FinCEN outlines the basics of imposter scams in which criminals impersonate organizations such as government agencies, nonprofit groups, universities, or charities to offer fraudulent services or otherwise defraud victims. According to FinCEN, imposter scams follow this methodology:

    1. An actor contacts a target under the false pretense of representing an official organization; and
    2. The actor coerces or convinces the target to provide funds or valuable information, engage in behavior that causes the target's computer to be infected with malware, or spread disinformation.

The advisory goes on to say that possible COVID-19 schemes could involve imposters posing as officials or representatives of the Internal Revenue Service (IRS), the Centers for Disease Control and Prevention (CDC), the World Health Organization (WHO), or other healthcare or nonprofit groups, and academic institutions. FinCEN notes that imposters may try to defraud and deceive vulnerable populations, such as the elderly and unemployed, by telling individuals that they need to provide personal information or send payments in order to receive relief or benefits, such as Economic Impact Payments (EIP) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The alert includes seven red flag that may suggest an imposter scam is taking place.

FinCEN then details money mule schemes, which occur when a “person who transfers illegally acquired money on behalf of or at the direction of another."

The alert indicates that there are three types of money mules:

    1. Witting – meaning an individual who "chooses to ignore obvious red flags or acts willfully blind to his/her money movement activity";
    2. Unwitting or unknowing – meaning an individual who is "unaware that he or she is part of a larger criminal scheme"; and
    3. Complicit – meaning an individual is "aware of his/her role as a money mule and is complicit in the larger criminal scheme."

The alert includes 11 red flags that could suggest a money mule scheme is taking place.

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