Fraud Risks in Turbulent Times

FinCEN encourages financial institutions to remain diligent during COVID-19 crisis

March 20, 2020 by Verafin

As the COVID-19 pandemic continues to spread throughout the world, financial institutions have been encouraged to remain steadfast in their ongoing scrutiny of potentially suspicious behavior and to diligently report suspected fraudulent activity.

On March 16, 2020, FinCEN released a statement encouraging financial institutions to remain alert for potentially suspicious financial activities and to communicate concerns related to COVID-19. In particular, FinCEN has identified imposter scams, investment scams, product scams and insider trading as emerging fraudulent activities related to the COVID-19 pandemic.

The World Health Organization (WHO) and the Federal Deposit Insurance Corporation (FDIC) have both issued warnings that fraudsters are targeting consumers through imposter scams, requesting personally identifiable information (PII) or funds transfers for campaigns related to the COVID-19 crisis.

Industry experts warn that COVID-19-related “scams are a direct threat to banks and their customers” as cybercriminals capitalize on trending news through online malware and email phishing attacks.

“Phishing scams are ever-present and pervasive,” said Steven Silberstein, CEO of the Financial Services Information Sharing and Analysis Center. “Phishers are always looking for topical subjects that will capture a victim’s attention. Nontargeted phishing campaigns using COVID-19 as a lure in the subject line have been observed since January. These cover the range of pre-existing threats out there, including information-stealing malware.”

Customers seeking information on the COVID-19 pandemic can inadvertently compromise their PII, usernames and passwords, or credit card information through such online scams.

In the 2017 Advisory to Financial Institutions Regarding Disaster-Related Fraud, FinCEN identified prevalent fraudulent activities during times of crisis, such as benefits fraud, charities fraud, and cyber-related fraud, and encourages financial institutions to monitor for such illicit behavior and report potentially suspicious activities through Suspicious Activity Reports (SARs).

As the COVID-19 pandemic continues to evolve, financial institutions are encouraged to remain vigilant and continue to monitor for potentially suspicious and fraudulent activities. Heightened awareness of illicit behaviors and fraudulent scams related to the pandemic will help institutions detect and prevent financial crime during this turbulent time.

Verafin is the industry leader in enterprise Financial Crime Management solutions, providing a cloud-based, secure software platform for Fraud Detection and Management, BSA/AML Compliance and Management, High-Risk Customer Management and Information Sharing. Over 3800 banks and credit unions use Verafin to effectively fight financial crime and comply with regulations. Leveraging its unique big data intelligence, visual storytelling and collaborative investigation capabilities, Verafin significantly reduces false positive alerts, delivers context-rich insights and streamlines the daunting BSA/AML compliance processes that financial institutions face today.

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