FinCEN provides several examples of red flags that may indicate the presence of an imposter scam or money mule scheme. The advisory encourages financial institutions to make additional inquiries and investigations with their customers where appropriate. FinCEN’s focus on consumer fraud is not new. It has previously highlighted what banks can do to prevent consumer fraud targeted at the elderly,3 consumer fraud following natural disasters,4 and fraud associated with third-party payment processors.5 As a result, many banks already have compliance policies and procedures in place to mitigate fraud risks to the public.
Banks should use the same playbook when confronting COVID-19 consumer fraud risks. For example, financial institutions should update their training for customer-facing employees so that they can spot red flags when they are speaking with customers. Bank employees should also be trained to ask additional questions and require additional information when red flags are present. Financial institutions should consider providing proactive warnings to customers about the prevalence of imposter scams and money mule schemes through either direct communications or their websites.
Consumer fraud during the pandemic
The United States is currently facing an unprecedented amount of consumer fraud linked to COVID-19. FinCEN’s advisory underscores an ongoing multi-agency commitment to combatting consumer abuse, including recent consumer fraud announcements by several other federal agencies including the DOJ, the FBI, and the FTC.6 Regulators understand the benefits of requiring banks to get to know their customers and better understand the purposes of their customers’ transactions. This is true more than ever during the COVID-19 pandemic.