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FinCEN Issues Analysis of Identity-Related Suspicious Activity

The Financial Crimes Enforcement Network (FinCEN) has issued a Financial Trend Analysis (FTA) on information linked to identity-related suspicious activity in Bank Secrecy Act (BSA) reports filed in calendar year 2021. FinCEN’s analysis found that approximately 1.6 million reports (42 percent of the reports filed that year) related to identity — indicating $212 billion in suspicious activity.

“This report reveals the existence of significant identity-related exploitations through a large variety of schemes,” said FinCEN Director Andrea Gacki. “Robust customer identity processes are foundational to the security of the U.S. financial system, and critical to the effectiveness of financial institutions’ programs to combat money laundering and counter the financing of terrorism. Financial institutions are encouraged to work across their internal departments to address these schemes.”

The report, which is part of what FinCEN has previously referred to as its Identity Project, explores how bad actors exploit identity-related processes involved in processing transactions as well as opening and accessing accounts. FinCEN identified over 14 typologies commonly indicated in identity-related BSA reports. The most frequently reported were fraud, false records, identity theft, third-party money laundering, and circumvention of verification standards. These top five typologies accounted for 88 percent of identity-related BSA reports and 74 percent of the total identity-related suspicious activity amount reported during calendar year 2021.

Trends found in the BSA reporting include:

  • Although identity-related suspicious activity impacted all types of financial institutions, depository institutions filed the most identity-related BSA reports, around 54 percent of all identity-related filings.
  • While most financial institutions in the identity-related BSA dataset reported impersonation as their top identity exploitation, money services businesses most often reported circumvention of verification.
  • The report found that compromised credentials have a disproportionate financial impact as compared to other types of identity exploitation.

FinCEN’s FTAs highlight the value of information filed by financial institutions in accordance with the BSA. Additional reports on a variety of topics are located on FinCEN’s website.

FinCEN is committed to using its authorities to assist financial institutions with detecting, reporting, and preventing criminals from circumventing these processes to victimize customers. In line with the 2022 National Strategy for Combating Terrorist and Other Illicit Financing, Treasury and FinCEN recognizes that innovations in digital identity can strengthen anti-money laundering and countering the financing of terrorism compliance and help banks and other financial institutions more effectively and efficiently identify and report illicit financial activity.

To advance responsible innovation, FinCEN has engaged with the private and public sectors to assess opportunities and to explore the risks and challenges emerging technologies present to financial institutions—including through the Bank Secrecy Act Advisory Group, FinCEN Exchanges, and Innovation Hours. The bureau has partnered with the Federal Deposit Insurance Corporation in a digital identity-focused Tech Sprint, and with other regulators and law enforcement to support the U.S.-UK Privacy Enhancing Technologies Prize Challenges. FinCEN has also served as the Department of the Treasury’s point for the Federal Identity Forum and Expo or FedID conference, the U.S. government’s annual public-private identity conference. These efforts served as a forum for stakeholders to both embrace responsible innovation and leverage innovation to mitigate risks, as well as identify threats and opportunities to protect the American people and the financial sector from illicit finance.

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Using the above phone number and email address, you can gain access to a knowledgeable team that’s ready to address all your credit union’s compliance inquiries — promptly and efficiently. With the Compliance Hotline, you can proactively respond to impromptu questions and issues by getting clarity and insight on technical topics that normally slow you down. We want to help you unlock the full potential of your League membership by leveraging the resources and support you need to navigate the complex world of compliance effortlessly. We’re ALWAYS just a phone call or email away!

Additionally, other League-member compliance resources include:

  • ViClarity
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  • ComplySight
  • InfoSight
  • CU Store
  • Record Retention Guide
  • GRC Technology Solutions

For more information, email Lisa Quaranta.

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