FinCEN advisory for unemployment insurance fraud SARs

We have previously blogged on the rise in fraud amid the COVID-19 pandemic, with one of the most prevalent types of fraud being unemployment insurance fraud. On October 13, FinCEN issued an advisory on how credit unions can detect, prevent, and properly report cases of unemployment insurance fraud.

The advisory sets out the five main types of unemployment insurance fraud that has occurred during the COVID-19 pandemic that credit unions should be aware of. These include fictitious employer (a filer falsely claims to work for a company), employer-employee collusion (employee receives unemployment insurance payments and unreported wages), misrepresentation of income (filer claims higher wages than previously earned), insider (state employees approving unqualified applications or improper payment amounts), and identity-related (filers submit application using stolen identification information).

FinCEN provides ten red flags that may indicate unemployment insurance fraud, but reminds credit unions that no single red flag is necessarily indicative of suspicious activity. These red flags are similar to the ones issued in NCUA Risk Alert 20-RISK-02, but FinCEN provides more detailed and operational indicators that may be helpful to credit unions in detecting unemployment insurance fraud. Here are some red flags that credit unions should be aware of when a member receives unemployment insurance payments:


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