RED FLAGS for COVID-19 Related Fraud – What You Need to Know By Terri Luttrell, CAMS-Audit, Abrigo
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s the COVID-19 pandemic continues to wreak havoc around the globe, related fraud continues to escalate at a staggering rate. Bad actors are poised and ready to use disasters, such as a pandemic, to steal money and/or personal information. Fraudsters strive to be one step ahead of detection and are eager to take advantage of the new vulnerabilities facing people already filled with anxiety and fear.
FinCEN Advisories Warn Against COVID-19-Related Scams The coronavirus pandemic has created many vulnerable targets, including the elderly and unemployed. In answer to these growing concerns, the Financial Crimes Enforcement Network (FinCEN) recently issued three COVID-19 related advisories that call upon financial institutions to remain alert to COVID-19-related fraud by understanding the current scams and red flag indicators that may indicate this illicit activity. The advisories were issued May 18, July 7, and July 30, 2020, showing the fluidity of the scams in this unprecedented time.
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• November-December 2020
The latest advisories concerning COVID-19 related fraud highlight the increase that government agencies are seeing in fraud typologies. Similar tactics as previously, but with greater volume and targeting COVID-19 related themes. An enhanced fraud risk assessment may be warranted to understand the true risk to your financial institution and your customers. Once you know more about your detection capabilities and any potential gaps, you can develop risk-focused procedures around this heightened illicit activity. Fraud often can lead to hard dollar losses, and suspicious activity monitoring may need to be enhanced if your risk assessment indicates.
The list of red flags in these advisories can be overwhelming due to the sheer volume of typologies that are addressed. However, they should be thoroughly understood to detect COVID-19 related fraud. The increase is reported fraud is alarming and financial institutions should be prepared to take a proactive approach to protecting their customers and reporting COVID-19 related fraud.
