US financial institutions are sending more filings on potential suspicious activity around fraud involving prepaid cards, fraud coming in through email portals and illicit activities involving funnel accounts, according to a US Treasury report released Wednesday.
The Financial Crimes Enforcement Network (FinCEN) highlighted these trends in its SAR Stats 2015 Technical Bulletin after analyzing more than three million suspicious activity reports between March 2012 and December 2014. To read a copy of the report, please click here.
The 40-plus page report breaks down trends between the various institutions subject to anti-money laundering (AML) rules, including banks, money services businesses, casinos, certain insurance and real estate operations and others.
The information in the FinCEN database is of great value to both the filers and law enforcement customers, which regularly ping the database to get leads on new or ongoing cases. FinCEN, overall, has been making ovations in recent months to banks and law enforcement to laud them for delivering and using the data to create cases and thwart organized criminals.
Here are some key takeaways from the report and a related speech by FinCEN’s director, Jennifer Shasky Calvery, which can be found here.
Crowdfunding crowing: “Rewards-Based Crowdfunding Abuse” identified in SARs from January 2010 through May 2015 identified 79 SARs filed by banks and MSBs containing rewards-based crowdfunding activity references in the narrative.
The majority of these SARs indicated the category as “Money Laundering,” “Fraud” or “Other Suspicious Activities.” The most common sub-types within these categories were “Suspicion Concerning the Source of Funds,” “Structuring,” “Debit/ Credit Card,” and “Transactions With No Apparent Economic, Business or Lawful Purpose.” The total reported transaction amounts for these SARs is nearly $28 million.
Prepaid problems: Last year, prepaid-related fraud activities saw an overall increase as compared to aggregated reports filed in 2012-2013 for the same activity type. In 2014, in three of the four individual suspicious activity categories, references to Prepaid Access/Prepaid Card-related activity increased.
Email fails: While no longer trending in 2014 within the Suspicious Activity Category of Fraud on SARs as filed by Other Types of Financial Institutions, E-Mail-related activity continues to appear under various entries: Compromised, Fraudulent, Hacked or Hijacked E-Mail, E-Mail Compromise Fraud, Scheme, or Takeover and Phishing and Spoofing (as applicable).
In addition to recurring as a trend within SARs filed by Securities and Futures Firms (Fraud), and Other Types of Financial Institutions (Other Suspicious Activities), said theme also surfaced in another Securities category (Other Suspicious Activities) as opposed to few references in 2012-2013.
Funnel accounts: Among emerging activities most individually referenced by filers were Funnel Account Activity, Flipping and Excessive Activity – these latter two themes also mentioned with frequency (2,124 and 1,968 times, respectively) in aggregated 2012-2013 FinCEN SAR data for the same industry and category.
Card overpayments, refunds: Among new activity trends was also Large Overpayment with Refund Checks Issued. A review of the narratives associated with this free-text entry indicate a two-part transaction involving subjects overpaying on their credit/debit card accounts via check(s) and receiving a refund (usually in the form of a credit balance refund check).
In 2014 there were 124 references from Other Financial Institution Types relative to this activity, each specifying some form of refund provided. An additional 27 entries from the same filer type(s) and category (Money Laundering) noted Large Overpayment(s) on the Account/Balance/Card, but did not further indicate a refund. Mentions to Overpaying Account were substantially present in 2012-2013 data but only in three cases indicated a refund provided.
Data dives: In 2014 alone, over 380 unique agencies representing a broad cross section of federal, state, and local law enforcement, regulators, self-regulated organizations, and state attorney offices operating nationwide accessed Bank Secrecy Act (BSA) data via FinCEN’s portal. Thousands of agents, analysts, and investigative personnel from each of these entities have conducted in excess of 2.3 million queries against the database during that period.
Daily data: On average, FinCEN receives approximately 55,000 electronically filed BSA reports from more than 80,000 financial institutions and 500,000 individual foreign bank account holders each day through an IT system it developed known as E-filing.
The bureau then make this information available to more than 9,000 law enforcement and regulator users through a search tool it designed to meet their specialized needs, known as FinCEN Query.
They, in turn, make approximately 30,000 searches of the data each day. E-filing not only streamlines reporting for tens of thousands of financial institutions and hundreds of thousands of individual filers, it also helps the users of the BSA data by making BSA reports searchable in FinCEN Query in two days, rather than a minimum of two weeks if filed on paper.