The U.S. Treasury Deparment’s Financial Crimes Enforcement Network is again warning financial institutions about fraud that is occurring during the pandemic.
In an advisory released Tuesday, FinCEN alerted financial institutions that, as unemployment claims in the United States have surged due to the pandemic, U.S. law enforcement and financial institutions have detected numerous instances of COVID19-related unemployment insurance fraud.
FinCEN cited the following recent examples of unemployment insurance fraud that is occurring:
- fictitious employer-employee fraud, in which filers falsely claim they work for a legitimate company, or create a fictitious company and supply fictitious employee and wage records to apply for unemployment insurance payments;
- employer-employee collusion fraud in which the employee receives unemployment insurance payments while the employer continues to pay the employee reduced, unreported wages;
- misrepresentation of income fraud in which an individual returns to work and fails to report the income in order to continue receiving unemployment insurance payments, or in an effort to receive higher payments, an applicant claims higher wages than previously earned;
- insider fraud in which state employees use credentials to inappropriately access or change claims, resulting in the approval of unqualified applications, improper payment amounts or movement of unemployment insurance funds to accounts that are not on the application; or
- identity-related fraud in which filers submit applications for unemployment insurance payments using stolen or fake identification information to perpetrate an account takeover.
As previously reported, earlier this month, FinCEN warned about ransomware attacks and provided information on the role of financial intermediaries in payments, ransomware trends and typologies and related financial red flags. The Treasury’s Office of Foreign Assets Control also issued an advisory that highlighted the sanctions risks associated with facilitating ransomware payments on behalf of victims targeted by malicious cyber-enabled activities.
FinCEN’s most recent advisory, which also includes red flag indicators of unemployment insurance fraud and instructions on reporting suspicious activity, can be accessed by clicking here.