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BSA/AML Hot Topics: FinCEN’s COVID-19 communication to financial institutions

By Naomi Glass, AVP, BSA/AML Compliance Officer

Corporate One's BSA/AML webinar series

Now it’s easier than ever for all levels of BSA professionals to remain compliant. Both webinars will be presented by Mark W. Dever, CAMS, AAP, and vice president at ProBank Austin.

 
BSA Essentials
May 7, 1:00 – 4:00 p.m.

Now streamlined into a one-day, three-hour training, our traditional, annual compliance will discuss all the essentials, such as:

  • Member Due Diligence
  • Suspicious Activity Reporting
  • Currency Transaction Reporting


BSA Latest Information, Regulatory Update and Examiner Focus
October 27, 2:00 – 3:00 p.m.

Geared toward the more seasoned BSA/AML professional, we’ll get you up to speed on the most current industry news and information in just one hour. Topics will include:

  • Member Due Diligence
  • Audit Completion Survival Tips
  • High-Risk Members

On March 16, the Financial Crimes Enforcement Network (FinCEN) issued an important communication to financial institutions related to the impact of the coronavirus (COVID-19). FinCEN discussed two important topics, which I will cover in today’s article.

1. Notify FinCEN if the filing of Bank Secrecy Act (BSA) reports will be delayed.

First, the communication requested that if a financial institution is affected by COVID-19 and has concerns it might not be able to file required BSA reports on time, the financial institution should contact FinCEN and its functional regulator (i.e. NCUA) as soon as is practicable. BSA reports consist mainly of Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs).

FinCEN stated that it is continuing to support financial institutions for the duration of the pandemic and that financial institutions seeking to contact FinCEN should call its Regulatory Support Section at 1-800-949-2732 (option 6) or email FRC@fincen.gov. Financial institutions are also encouraged to keep FinCEN and their functional regulators informed if circumstances change.

2. Be vigilant of COVID-19 scams.

Second, FinCEN’s communication advised financial institutions to remain alert about malicious or fraudulent transactions similar to those that occur in the wake of natural disasters. Unfortunately, there are already reports of scammers engaging in illicit behavior connected to COVID-19. FinCEN is monitoring such reports and wanted to notify financial institutions of the following emerging trends:

Imposter scams – Bad actors attempt to solicit donations, steal personal information, or distribute malware by impersonating government agencies, international organizations, or healthcare organizations, such as the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO).

Investment scams – The U.S. Securities and Exchange Commission (SEC) urged investors to be wary of COVID-19-related investment scams, such as promotions that falsely claim that the products or services of publicly traded companies can prevent, detect, or cure coronavirus.

Product scams – The U.S. Federal Trade Commission (FTC) and U.S. Food and Drug Administration (FDA) have issued public statements and warning letters to companies selling unapproved or misbranded products that make false health claims pertaining to COVID-19. Additionally, FinCEN has received reports regarding fraudulent marketing of COVID-19-related supplies, such as certain facemasks.

Insider trading – FinCEN has received reports regarding suspected COVID-19-related insider trading.

For descriptions of other relevant fraud typologies, financial institutions should refer to FinCEN’s October 2017 advisory, FIN-2017-A007 “Advisory to Financial Institutions Regarding Disaster-Related Fraud.” This advisory warns financial institutions to be aware of suspicious transactions indicative of benefits fraud, charities fraud, and cyber-related fraud.

Filing SARs related to COVID-19

Finally, FinCEN provided a technical note about filing SARs related to COVID-19; specifically, financial institutions are asked to enter “COVID19” in Field 2 of the SAR-template when reporting suspicious transactions linked to the pandemic. See example SAR below:

FinCEN stated that they would provide further guidance to financial institutions as necessary.

In the meantime, to all my fellow BSA/AML compliance professionals: Stay healthy and vigilant!