FinCEN Guidance for COVID-19 SARs
In this Compliance Clip (free video), Adam explains the recent FinCEN guidance regarding COVID-19 and BSA/AML requirements. Specifically, there are four main parts to this guidance and Adam breaks each down in easy-to-understand language. Plus, your BSA Officer won’t want to miss the final part of the guidance which has a direct requirement for filing SARs relating to COVID-19.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about FinCEN guidance for COVID-19 Suspicious Activity Reports. Specifically, on March 16, 2020, FinCEN released some guidance relating to COVID-19 in this coronavirus pandemic. They set a number of things in this release.
First of all, FinCEN encourages financial institutions to contact them if BSA reporting, reports like CTRs and SARS, would be delayed for any reason relating to COVID-19 or the coronavirus. If you're going to have problems where maybe you're pulling some of your SAR detection people over to your fraud detection department because of some of the fraud scams that are happening, you need to contact FinCEN and just let them know and talk through the process with them. That’s the first thing that they're asking. And just as an FYI, that may be a good idea to do because fraud needs to happen in real time where SAR detection needs to happen or typically can happen at a later time. So that's something to think about.
Also, FinCEN encourages financial institutions to remain alert for scams, especially scams related to COVID-19. They said that they've identified a number of different scams currently during this time of pandemic. The first thing that they noticed was imposter scams where they see imposters impersonating government organizations like WHO or the CDC or other organizations to solicit donations or even steal personal information. That's the first type of scam they’re seeing. Also, they're seeing investment scams. These investment scams are basically promotions that are falsely claiming that products or services of certain public companies can prevent, detect, or cure the coronavirus. This is really coming from the SEC, Security and Exchange Commission, where there are certain scams saying that you need to invest in this company because they're going to have a solution to COVID-19. They're going to heal the world, so invest in them. And basically that's the scam that we should be watching out for. Also, there's product scams where there's fraudulent marketing and claims of products saying that these products will prevent, protect, or cure COVID-19.
Take this miracle water and you'll be healed. That's one of the scams that they're seeing. Also, they're seeing insider training where there've been reports of insider training related to COVID-19 and if you are to experience that, that could be a problem and it's something to watch out for.
In this guidance, FinCEN does something else. They encourage financial institutions to look at their advisory from a few years ago. This advisory was FIN-2017-A007 and it was titled “Advisory to Financial Institutions Regarding Disaster-Related Fraud”. What they say is take a look at this to look for descriptions of other relevant typologies, such as benefits fraud, charities fraud, and cyber-related fraud. This is a good advisory to revisit in this current pandemic situation we're experiencing in 2020 for types of fraud that could be uncovered beyond the types that FinCEN mentioned on our last slide.
Finally, it's important to know, and pay attention here, this is probably the most important thing that FinCEN has said in this guidance. They said specifically that when you are filing a SAR relating to COVID-19 or the coronavirus, they want us to enter “COVID-19: in Field 2 of the SAR template, which of course Field 2 is that note to FinCEN on the first page of the SAR. So they want us to include COVID-19 in the note to FinCEN, which is Field 2 on our SAR, if a SAR relates to the coronavirus and any type of fraud related to that.
That's all I have for you in this Compliance Clip.