FinCEN on the Front Line of Financial Crime Battle

Report spotlights elder abuse in battle against financial crime: Internet Scambusters #560

Ultimately, most scams boil down to a financial crime, but some focus directly on the movement of money between criminals, legitimate organizations and victims.

It’s the job of one US Treasury agency — the Financial Crimes Enforcement Network, or FinCEN — to coordinate the battle by sniffing out and snuffing out suspicious financial transactions.

In this week’s report, we report on FinCEN’s most recent activities and findings and show how it can help you beat the scammers. Be sure to check out the final section of this issue called: “What Can FinCEN Do For You?”

And now for the main feature…


FinCEN on the Front Line of Financial Crime Battle


The importance of cooperation between financial institutions and law enforcement agencies in tracking down and blocking financial crime is highlighted by the activities of an important but little-known (at least in the public eye) agency — FinCEN.

The Financial Crimes Enforcement Network, to give it its full name, is the focus of our latest spotlight report on scambusting organizations.

It’s part of the US Department of the Treasury and acts as a coordinator, bringing together various groups to share information in their effort to combat financial crime.

Each year, FinCEN publishes an annual summary of the suspicious activity reports (SARs) it gathers from the nation’s financial institutions, law enforcement and regulatory agencies.

Highlights of this year’s review of suspicious activity include:

Elder Financial Exploitation: The number of reports filed soared by almost 400% compared with the previous year, it says.

The most common incidents were financial abuse by relatives or caregivers, identity theft, embezzlement and check fraud — and, of course, our old “friend” money wire transfers.

And the most common tactic involved a story about a relative supposedly in urgent need of money for medical or legal problems — an approach we know well as the grandparent scam.

For more on this see Scammers Pose as Grandchildren to Swindle Grandparents.

One good bit of news is that because financial organizations are becoming increasingly aware of elder financial abuse, they’re more likely to challenge and question a potential victim if their transactions fall outside their normal pattern.

Insider Abuse: This involves individuals using their position inside an organization for unlawful financial gain.

We tend to think of this applying mainly to stock market dealings but that’s not the case.

Common examples of crime in this category involve opening new accounts for fraudulent or non-existent customers, bank tellers taking cash from drawers, corporate credit card fraud and theft of information or equipment by contractors.

The crime seems to have declined somewhat in recent years but there were still more than 200,000 SARs from 2003 to 2012.

More than half of these resulted in individuals losing their jobs, which included accountants, real estate agents and appraisers, attorneys and, most of all, company employees.

Money Laundering: This crime, which involves passing the proceeds of crime through an organization to make it appear legitimate, is mainly outside the scope of Scambusters reporting.

One exception is where members of the public are, often unknowingly, tricked into wiring money or handling transactions that form part of the laundering process and then passing the proceeds back to the criminals.

In another set of incidents, FinCEN reports that some professionals and investors have coerced terminally ill patients to agree to take part in transactions for which they believed they would receive cash, when, in fact their personal information was being used to set up fraudulent investment operations.

Insurance Fraud: FinCEN says there’s been a marked increase in recent years in suspicious activity reports from the insurance industry.

Examples include individuals taking out life insurance on people they’re not related to, what the industry calls Stranger-Owner Life Insurance.

These policies are usually taken out on older people and sometimes form part of a money laundering process — where the crook pays a very high premium with the proceeds of crime and then collects “legitimate” money when the person dies.

What Can FinCEN Do For You?

As we’ve indicated, FinCEN is not really a public-facing organization but it is an invaluable source of information about the changing shape of financial crime and it does accept calls from the public about its programs — (703) 905-3591.

Its monitoring and coordination role also creates an early-warning system about potential new areas of concern.

For instance, most recently, it issued guidance on an area where the public has already been roped into scams relating to the trading of virtual currencies.

This is rather a technical subject, mainly centering on a digital currency called “Bitcoin.”

The currency itself and the way it is intended to be used is perfectly legitimate but crooks have already spotted opportunities to use it as a mechanism for scams.

Crucially, FinCEN provides links to other scam-fighting organizations, so its website is a good starting point if you’re looking for help on certain types of scams.

One section provides links to other scam-fighting organizations. This covers ID theft, spam, tax and mortgage fraud, and other types of financial crime.

In particular, the bureau provides valuable background information and more links on mortgage and real estate fraud, foreclosure rescue and loan modification scams.

It also issues occasional public alerts on financial crime issues.

You can also sign up for email updates.

However, the key role in supporting the public against scams will be continuing to coordinate and collect reports of suspicious activity.

Spotting the pathways of financial crime in the organizations that are drawn into it through the transactions process is one valuable way of stopping it dead in its tracks.

Time to close today, but we’ll be back next week with another issue. See you then!