Security & Fraud

FIs Advised To Be On The Lookout For Imposter Scams, Money Mule Schemes

FinCEN Warns Of Imposters, Money Mule Schemes

The U.S. Treasury Department’s financial crime unit has alerted financial institutions (FIs) about imposter scams arising during the COVID-19 pandemic.  

On Tuesday (July 7), the Financial Crimes Enforcement Network (FinCEN) issued an advisory to enhance efforts by FIs to stop suspected illegal activity.

Given that many scammers may be targeting customers as opposed to banks, financial institutions should remain on the alert for potential suspicious activities when interacting with their customers, FinCEN noted. 

“Illicit actors can use imposter scams to defraud and deceive the vulnerable, including the elderly and unemployed, through the solicitation of payments, such as digital payments and virtual currency, donations or personal information via email, robocalls [and] text messages,” FinCEN said in a statement.

While cybercriminals try to exploit vulnerabilities created by the pandemic by impersonating federal government agencies, nonprofits or charities, the agency said FIs must be aware of red flags and so-called “money mule” schemes. For example, an imposter may contact potential victims to imply that they must verify personal information or send payments in return for coronavirus-related stimulus benefits under the CARES Act.

In other instances, imposters may pose as government or healthcare representatives engaged in COVID-19 contact tracing activities.

Scammers may also impersonate charities, embezzling donations intended for relief efforts. Criminals use social media accounts, door-to-door collections, flyers, mailings, telephone and robocalls, text messages, websites and emails, mimicking legitimate charities and nonprofits. These communications may include words like “relief,” “fund,” “donation” and “foundation” in their titles to give the illusion that they are legitimate.

In particular, the advisory warns to be wary of communications emphasizing “stimulus check” or “stimulus payment” in solicitations to the public, sometimes claiming that the fraudulent entity can expedite the payment for a fee paid by gift card or prepaid card.

Money mule schemes, where someone transfers illegally acquired cash at the direction of another person, span the spectrum of using unwitting, witting or complicit money mules. An unknowing money mule is an individual who is “unaware that he or she is part of a larger criminal scheme.”

In Preventing Financial Crime Amid the COVID-19 Pandemic, PYMNTS reported that education is a key weapon in banks’ arsenals to protect their customers.

This is not the first time FinCEN has issued a warning. In May, the agency warned that “events with such profound impact” like the coronavirus “routinely create opportunities for financial fraud.”


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.