U.S. financial institutions have filed more than 91,000 SARs on potentially illicit payments related to the novel coronavirus pandemic since February, Ken Blanco, director of the Financial Crimes Enforcement Network, said Tuesday.
The bureau has also received “hundreds of inquiries” related to anti-money laundering compliance issues during the pandemic, including questions about the Paycheck Protection Program, or PPP, a $669 billion federal relief package designed to help struggling businesses pay their employees, Blanco told attendees of the ACAMS Virtual Las Vegas Conference.
Federal prosecutors have charged at least 57 people with attempting to steal at least $175 million from the PPP. FinCEN has published three guidance documents to help private institutions combat pandemic-related financial crime: a May 18 advisory on medical fraud, a July 7 notice on increased money-mule activity and a July 30 release on COVID-19 cybercrime.
But Blanco provided new details about pandemic-related compliance efforts Tuesday. The most common scheme identified among the 91,000 SARs involved fraudsters using stolen identities and money mules to obtain and launder funds from state or federal benefit programs, including via ACH [Automated Clearing House] transactions, he said.
Banks and other depository institutions filed 64,000 of the 91,000 pandemic-related SARs since February, while credit unions filed another 14,000 and money remitters submitted 4,000. Around 1,500 of the reports originated from securities firms and 600 came from the gaming industry, Blanco said.
Fraudsters have purchased complete packages of stolen personal information from online vendors, who often include instructions on how to use them to commit fraud, said Blanco. Conspirators also used social media and dark web chat rooms to recruit money mules and “discuss direct attacks on states with weaker controls.”
Blanco urged compliance officers to describe potential fraud schemes in as much detail as possible in the SARs they file, starting with naming the government program that may have been affected. In addition to the PPP, fraudsters have also targeted the EIDL, or Economic Injury Disaster Loan program. Both are administered by the Small Business Administration.
“Different law enforcement teams are investigating fraud in the different government programs, and vague references to ‘stimulus’ or ‘CARES Act’ or ‘benefit’ in SARs hinder our ability to get the information into the hands of the right team,” he said. “The more specific you are in your SAR narrative, the faster it will get to the right investigators.”
The Justice Department has appointed a team of prosecutors to coordinate investigations into healthcare fraud, including attempts to gouge the price of medical equipment, and tasked a second team with handling pandemic-related schemes against the elderly, Blanco said Tuesday.
He separately urged representatives of the financial services industry to weigh in on the bureau’s proposal to explicitly require that banks and other regulated institutions build “effective and reasonably designed” anti-money laundering programs that significantly help law enforcement.
But he did not comment on the FinCEN Files, a trove of 2,100 SARs obtained by BuzzFeed News on more than $2 trillion in suspicious transactions over a nearly 20-year period ending in 2017.
Sources told ACAMS moneylaundering.com that the leak may prompt lenders to file more SARs of a defensive nature to avoid appearing ineffective. Others said that rather than underscore a broad failure by banks to identify money laundering, the reports confirm that U.S. investigations into the activity have been stifled by a lack of resources.
The bureau has mostly responded to the FinCEN Files by warning that disclosing a SAR is a federal crime.
Financial institutions have long complained that the thousands of SARs they submit each year seemingly disappear into a “black hole” and elicit only scattered feedback from law enforcement, Sen. Mark Warner (D-VA), said during a separate session of the conference Tuesday.
A raft of proposed reforms to the U.S. anti-money laundering regime, currently pending in Congress under an umbrella bill, the Corporate Transparency Act, would go some length towards fixing those issues by disbursing more funds to FinCEN, expanding current data-sharing provisions and bolstering the bureau’s cyber defenses, the lawmaker said.
The CTA, like its companion Senate bill, the ILLICIT CASH Act, which Warner has sponsored, would also task FinCEN with building and administering a database of corporate beneficial-ownership information.
Consideration of the CTA is slated for November.
Contact Daniel Bethencourt at email@example.com and Valentina Pasquali at firstname.lastname@example.org
|Topics :||Anti-money laundering , Counterterrorist Financing , Know Your Customer|
|Document Date:||September 29, 2020|