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New FinCen Guidance for Financial Institutions Relating to COVID-19

The first of a series of guidance it intends to release on financial crimes related to the COVID-19 crisis

The Financial Crimes Enforcement Network (FinCen) has issued a guidance aimed at financial institutions, for what it says will be the first of a series of guidance it intends to release on financial crimes related to the COVID-19 crisis. The guidance includes examples of red flags for each of these illicit activities, some are unique indicators but many are also similar to typical red flags of fraudulent merchant activity committed by shell or fraudulent retail or wholesale business operators. FinCen notes that not one red flag is dispositive, and financial institutions should, before determining if a transaction is suspicious or indicative of fraudulent COVID-19 related activity, consider additional contextual information, such as:

· A customer’s historical financial activity;

· Whether the transactions are in line with prevailing business practices; and

· Whether the customer exhibits multiple indicators.

Some medical-related scams FinCen identified include: (1) fraudulent cures, tests, vaccines, and services; (2) non-delivery scams; and (3) price gouging and hoarding of medical-related items, such as face masks and hand sanitizer.

Financial institutions should review the red flags and case studies in the FinCen guidance and incorporate as appropriate into their training for staff, policies, and transaction monitoring procedures.

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