On July 7, 2020, FinCEN released the second in a series of advisories related to the COVID-19 pandemic. As provided in our Collection of FinCEN Guidance in Response to the COVID-19 Pandemic, FinCEN expects to release multiple advisories highlighting common typologies used in fraud, theft, and money laundering activities related to the pandemic. A summary of the July 7, 2020 advisory is below. This advisory will be added to the Collection for ease of reference. Please contact the authors with any questions you might have.
- Warns 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, and provides specific instructions on how to file Suspicious Activity Reports (SARs) related to the COVID-19 pandemic.
- 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.
- Sets forth the following basic methodology of most imposter scams:
- An actor contacts a target under the false pretense of representing an official organization; and
- 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.
- Provides alerts 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.
- 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.
- Also notes that imposters may impersonate contact tracers and imply that their targets must supply personal information as part of contact tracing efforts.
- Lists seven "red flag" indicators that may suggest an imposter scam is taking place.
Money Mule Schemes:
- Defines a money mule as "a person who transfers illegally acquired money on behalf of or at the direction of another."
- Provides that there are three types of money mules:
- Witting – meaning an individual who "chooses to ignore obvious red flags or acts willfully blind to his/her money movement activity";
- Unwitting or unknowing – meaning an individual who is "unaware that he or she is part of a larger criminal scheme"; and
- Complicit – meaning an individual is "aware of his/her role as a money mule and is complicit in the larger criminal scheme."
- Advises that during the COVID-19 pandemic, U.S. authorities have detected recruiters engaging in money mule schemes following common typologies, such as good Samaritan, romance, and work-from-home schemes.
- Lists eleven "red flag" indicators that could suggest a money mule scheme is taking place.