John Zasada, Compliance Consulting Director, Financial Institutions Group

On Oct. 13, 2020, the Financial Crimes Enforcement Network (FinCEN) issued Advisory FIN-2020-A007 to assist financial institutions in filing Suspicious Activity Reports (SARs) due to unemployment insurance fraud. FinCEN has noted a dramatic increase in COVID-19-related unemployment insurance fraud. The fraud takes various forms, including fictitious employer-employee fraud, employer-employee collusion fraud, misrepresentation of income fraud, insider fraud and identity-related fraud. FinCEN developed ten financial red flag indicators of unemployment insurance fraud.

If any of the red flags indicators are detected and it is determined a SAR should be filed, FinCEN requests financial institutions to reference this advisory by including the key term “COVID19 UNEMPLOYMENT INSURANCE FRAUD FIN-2020-A007” in SAR field 2. In addition, the SAR narrative should indicate a connection between the suspicious activity being reported and the activities highlighted in the advisory. Financial institutions should also select SAR field 34(z) (Fraud – other) as the suspicious activity type to indicate a connection between the suspicious activity being reported and COVID-19. If financial institutions detect unemployment fraud and are filing a SAR as a result, they should include the keywords “unemployment fraud” in SAR field 34(z).

If you have questions about this new advisory and its impact on your institution, contact Doeren Mayhew’s regulatory specialists.