Treasury Unit Warns Banks of Unemployment Fraud
U.S. unemployment claims, which have surged during the coronavirus pandemic, are amplifying a compliance risk for financial institutions: unemployment insurance fraud.
The Treasury Department’s Financial Crimes Enforcement Network issued an advisory Tuesday, alerting banks to red flags that could indicate illicit activity, including emerging schemes exploiting vulnerabilities created by the pandemic. In particular, U.S. authorities and financial institutions have spotted instances of fraud related to unemployment payments, according to FinCEN.
Unemployment insurance is a prime target for fraudsters, given the high volume of people who have lost their jobs due to the pandemic, according to Raymond Dookhie, a managing director at compliance advisory firm K2 Intelligence LLC.
合规咨询公司K2 Intelligence LLC的董事总经理雷蒙德·杜基(Raymond Dookhie)表示，鉴于由于疫情而失去工作的人数众多，失业保险是欺诈者的首要目标。
“The financial systems that are set up to monitor fraud in this current environment are being overloaded,” he said.
Smaller financial institutions, which often have less sophisticated monitoring systems or fewer resources to investigate suspicious activity, are particularly vulnerable, Mr. Dookhie said.
Pandemic-related unemployment fraud could include the use of fake or stolen identities, misrepresentation of income, false claims of having worked for a legitimate company or, in some cases, for a fictitious one, using falsified employee and wage records, FinCEN said.
Schemes also could involve collusion between employers and employees, in which a worker receives unemployment payments as the employer continues to pay the person a reduced wage under the table, according to FinCEN.
The Treasury’s financial crime unit encouraged financial institutions to conduct additional investigations when appropriate and highlighted possible indicators of illicit activity, such as customers who receive unemployment insurance payments from a state other than the one where the customer claims to reside or have previously worked.
Other indicators of fraud could include unemployment insurance payments from multiple states within the same disbursement time frame and payments that are quickly sent via wire transfer to foreign accounts, particularly in countries with weak anti-money-laundering controls, FinCEN said.
FinCEN also warned of customers who send unemployment insurance payments to a peer-to-peer application or app, then wire the funds to overseas accounts or deposit checks in accounts held by a suspected front company.
Financial institutions are required to file reports that identify suspicious transactions. Such suspicious activity reports, or SARs, are intended to help federal authorities disrupt the flow of money to terrorists, drug traffickers, arms proliferators and other bad actors.
“Financial institutions are effectively at the front lines against the fight against fraud,” Mr. Dookhie said, adding that the guidance would help banks update monitoring systems as fraudsters’ methods evolve.
“For any surveillance program to be effective, it needs to be periodically updated to reflect the current environment,” he said. “Given the pandemic, it’s important for those financial institutions to consider all of the types of fraud schemes that can occur.”