FinCEN Advises Financials How to Guard Against Hurricane-Related Benefit Fraud
WASHINGTON-The Financial Crimes Enforcement Network recently warned financial institutions about the potential of hurricane-related benefit fraud after the triple threat that struck late last year. "In the wake of the devastating Hurricanes Katrina, Rita, and Wilma that struck during the past year, an unusually large amount of emergency financial assistance has been distributed to storm victims in many parts of the country," the FinCEN advisory stated. It explained how the Hurricane Katrina Fraud Task Force, under the Department of Justice, has prosecuted a variety of fraud activities related to the hurricanes. The advisory warned of schemes to apply for emergency assistance benefits that people are not entitled to and listed characteristics to help credit unions and other financial institutions spot them. For example: * Deposits of multiple FEMA, Red Cross, or other emergency assistance checks or electronic funds transfers into the same account, particularly when the amounts of the checks are the same or approximately the same. * Cashing of multiple emergency assistance checks by the same individual. * Deposits of one or more emergency assistance checks, when the accountholder is a retail business and the payee/endorser is an individual other than the accountholder. * Opening a new account with an emergency assistance check, where the name of the potential accountholder is different from that of the depositor of the check. FinCEN reminded that the Bank Secrecy Act requires financials to report any suspicious transactions. "To ensure that fraudulent transactions are identified by law enforcement as early as possible, we request that financial institutions use key terms in the narrative portion of all Suspicious Activity Reports filed in connection with hurricane-related benefit fraud," the advisory said, such as `Katrina,' `Rita,' `Wilma,' `FEMA,' `Red Cross,' or `hurricane.' In these instances, FinCEN also said to contact the local FBI or Secret Service office.