Federal regulators have issued new guidance directing financial institutions, including credit unions, to increase scrutiny of suspicious activity tied to unauthorized employment, payroll fraud and identity theft, marking one of the first major actions stemming from President Donald Trump's executive order on restoring integrity to the U.S. financial system.
The Financial Crimes Enforcement Network (FinCEN), in coordination with the NCUA, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and Internal Revenue Service, released a joint advisory Friday warning that unlawful employment schemes can facilitate tax evasion, identity theft, human trafficking and other criminal activity.
The advisory was mandated by Trump's May executive order, Restoring Integrity to America's Financial System, which directed federal financial regulators to identify risks associated with unauthorized workers and their employers and provide guidance to financial institutions.
Among the key directives, FinCEN encouraged institutions to apply enhanced due diligence when Individual Taxpayer Identification Numbers, or ITINs, are used in lieu of Social Security numbers and outlined dozens of red flags involving payroll fraud, shell companies, structured cash withdrawals and suspicious remittance activity. The agency also requested that institutions reference a new identifier when filing Suspicious Activity Reports related to these schemes.
The advisory noted that financial institutions reported more than $2.5 billion in suspicious activity linked to payroll tax evasion and workers' compensation fraud schemes in 2025 alone.
The Defense Credit Union Council (DCUC) welcomed the guidance but emphasized the need for a balanced regulatory approach.
"Credit unions have long served as trusted stewards of the financial system, balancing member service with a strong commitment to compliance and financial integrity," said DCUC President and CEO Anthony Hernandez.
Jason Stverak, DCUC's chief advocacy officer, said the organization supports efforts to provide institutions with practical tools to identify suspicious activity while continuing to advocate for a risk-based approach that recognizes the operational realities facing smaller credit unions.
The guidance does not impose new account-opening requirements but signals heightened regulatory attention to anti-money laundering controls, customer due diligence and suspicious activity monitoring at credit unions and other financial institutions.
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