FinCEN Issues COVID-19 Red Flag Alert

May 19, 2020 at 9:05 am Leave a comment

Yesterday evening the Financial Crimes Enforcement Network (FinCEN) issued the first in what it says will be a series of alerts highlighting red flags financial institutions should be on the lookout for during the pandemic.  The first guidance deals with medical scams.

The report highlights three categories of scams replete with examples of how compliance efforts help identify and prevent crimes.  The categories are:

  1. Fraudulent claims involving vaccines, medical tests and services
  2. Non-Delivery Fraud of Medical-Related Goods Scams; and
  3. Price Gouging and Hoarding of Medical-Related Items

Each category is accompanied by red flags for which your credit union should be on the lookout.  Many of these red flags involve making sure your credit union does extra due diligence when opening up an account for a new business specializing in medical services and supplies as well as keeping an eye out for sudden changes in a company’s business strategy.

Remember that under NCUA regulations, your credit union has the obligation to be aware of emerging fraudulent practices and to adjust its bank secrecy act protocols accordingly.

The guidance underscores just how important a role your compliance team plays for your credit union and law enforcement writ large.  When you combine millions of nervous citizens with trillions of dollars being distributed by the government with unprecedented speed, the question is not will fraud be committed but how much fraud will be committed?  The one thing all bad guys have in common is that they want to make money off their crimes.

That puts your compliance protocols to the test on a daily basis.  The department of justice recently announced that it was bringing the first criminal charges against two individuals posing as struggling restaurant owners in need of PPP funding.  They arrested the cons following a taped conversation in which the alleged owners were caught on tape lying to and FBI agent posing as a compliance officer.

Entry filed under: Compliance, COVID-19, Legal Watch. Tags: , , , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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