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Fifth District Banks Help to Fight COVID-19 Related Fraud

Supervision News Flash
January 2021
mystical fraud word

The Enforcement and Legal Risk Unit (ELRU) of the Federal Reserve Bank of Richmond is monitoring Financial Crimes Enforcement Network (FinCEN) suspicious activity reports filed by Fifth District state member banks to identify upticks in fraud, and illegal and other unusual activity related to the COVID-19 pandemic. As partners in ensuring fraudsters do not infiltrate the U.S. payment systems, FinCEN, law enforcement agencies, regulators and banks work together to share COVID-19 fraud red flags, typologies and trends. ELRU’s review indicates financial institutions within the Fifth District are experiencing similar national COVID-19 related fraud trends targeting consumers and government programs, particularly state unemployment programs. Below are the top COVID-19 trends identified by Fifth District state member banks.

Top COVID-19 Suspicious Activity Report Filings for Fifth District SMBs*
 Unemployment FraudSBA FraudPPP Fraud
Total of COVID suspicious activity reports filed
Percentage of suspicious activity reports49.33%16.25%14.34%
Average transaction amount$199,217$608,492$1,101,442
Average reported losses to FIs$8,958No losses reportedNo losses reported

*Aggregate COVID-19 suspicious activity reports filed through October 30, 2020.

FinCEN publishes numerous advisories and shares them on a dedicated COVID-19 website. Law enforcement agencies communicate red flags and priorities via the FinCEN Securing Information Sharing System in the “What’s New!” or “Law Enforcement Releases” sections.

As partners in preventing money laundering, the Richmond Fed wants to share a few monitoring practices observed by or shared with us. These are NOT supervisory guidance nor requirements.

  • Increase monitoring and review frequency of ACH and wire activity.
  • Evaluate system alert rules for effectiveness in identifying noted government program frauds.
  • Establish enterprise-wide communications of red flags associated with government program frauds.
  • Establish relationships and notify law enforcement, such as local law enforcement, the FBI, Department of Labor, Homeland Security and the Secret Service about suspicious activity reports that may be of interest.

We will continue to share trend analysis as we learn more. We would love to hear how your bank is actively identifying COVID-19 fraud and helping to keep consumers safe! If you would like to talk with our Bank Secrecy Act specialists, please reach out to your Richmond Fed central point of contact to set up a meeting.