Financial Crimes Archives - Wisconsin Bankers Association

Fake Check Scams Posing as IRA Proceeds

By Dave Oldenburg

Financial institutions have reported incidents where a new or seasoned customer is instructed to open an IRA account, with a fake check, disguised as a rollover. Criminals who orchestrate these crimes hope that front lines staff will be fooled into believing that IRA accounts are not typically associated with fraud. Unfortunately, this type of fake check scam has gained traction and has the potential to inflict substantial losses when not detected early. Although some account holders are aware that they are negotiating a fake check, others do not realize that they are being manipulated as part of a relationship or similar fraud scheme.

How Does the Scam Work?

Similar to other fake check schemes, the purpose is to falsely inflate the balance of an account and withdraw funds as quickly as possible. Funds are often transferred internally, followed by outgoing wires, BillPay, or other electronic payment methods, before the check is returned unpaid.

How Do I Spot a Fake IRA Check Scheme?

It is important to note that criminals generally use accurate information from compromised accounts such as a bank’s ABA, account number, and approximate check range to create and distribute the checks. Some may go further and use convincing check stock, bearing a quality signature of an authorized signer to increase the likelihood that the check will be negotiated.

With that in mind, it’s important to recognize common red flag indicators associated with this type of fraud:

The check is made payable to an individual. As a rule of thumb, legitimate Traditional and Roth IRA rollover checks are generally made payable to the financial institution, for benefit of (FBO) the account holder
The check doesn’t appear to be drawn on a qualified retirement plan. Many fake checks are drawn on a law firm, cashier’s check or what appears to be a general business operating account.
The check is sent directly to the branch by an unknown third party with instructions to deposit the check into a new or existing IRA
A memo line with vague instructions to deposit the check into an IRA account
The customer seems concerned when funds will be made available
The account holder wants to disburse funds shortly after the account was opened

When in doubt, it’s best not to accept the check and follow your bank’s procedures on suspicious account activity.

Oldenburg is a fraud officer, Bank First, Manitowoc and member of the WBA Financial Crimes Committee.

February 27, 2023/by Hannah Flanders

Advocacy, News

Financial Abuse of the Elderly

According to the Federal Bureau of Investigation (FBI), millions of elderly citizens are targeted annually with some form of financial fraud, and many of these attempts are successful. It has been estimated that seniors lose approximately $3 billion per year as a result of these scams, which are becoming more widespread and sophisticated. Surprisingly, much of the criminal activity is initiated by a friend or family member. A recent study by the University of Southern California revealed that 55% of respondents reporting any type of elder abuse categorized those acts as financial, and that family members were the most alleged perpetrators of elder financial abuse.

With these facts in mind, banks should maintain heightened sensitivity around transactions that involve elderly clients, particularly if these clients have historically managed their own finances and may be exhibiting signs of cognitive decline. Increased vigilance, in general, can assist in uncovering fraud.

Knowing the customer, coupled with a comprehensive employee training program, can act as a strong front-line tactic to help banks prevent and expose elder financial abuse.

Here are some best practices for recognizing “at-risk” clients:

Be on the lookout for non-family members being added to banking or investment accounts.
Monitor large money transfers and changes in spending patterns, as these could be signs that some form of abuse is occurring. A senior’s spending habits are often predictable in frequency, volume and payees.
Be alert for large amounts of funds exiting accounts to payees who had not been previously paid in any manner.
Keep detailed notes in the form of dated, journal-type entries, recording any spending or personal behavior that seems unusual. These notes would be in addition to those kept on risk tolerance, goals, objectives, etc.
Follow up with clients via phone or email to discuss any sudden financial decisions that seem out of character.
In addition to making personal contact, encourage the client to engage an independent attorney to assist in their financial matters.
Understand the laws that apply to the financial abuse of an elder client. Follow prescribed protocols if any illegal activity is suspected.
Implement internal procedures to elevate circumstances which may present the need for further inquiry and analysis to the appropriate decision-makers.

“It’s important not just to have a system in place to detect elder financial abuse, but to also act on situations where potential fraud or malicious intent has been identified,” said Kristin Roger, vice president and head of financial institutions at Travelers. “We know banks want to serve as trusted advisors to their customers, and by taking simple steps, they can better protect their customers from potential financial harm.”

Elder financial fraud is on the rise and counts as one of the more heinous abuses of trust that senior citizens might endure. Along with the financial damage inflicted on customers, incidents of elder financial fraud can cause serious reputational harm. Therefore, implementing a sound method of prevention, detection, identification and reporting of this criminal behavior is paramount.

Travelers is committed to managing and mitigating risks and exposures, and does so backed by financial stability and a dedicated team — from underwriters to claim professionals – whose mission is to insure and protect a company’s assets. For more information, visit travelers.com.

Travelers is a WBA Associate Member

November 16, 2022/by Hannah Flanders

Compliance

Legal Q&A: Procedures for Information Sharing

How your bank can prevent financial crimes

By Scott Birrenkott

Q: What Tools are Available to Banks to Help Deter Financial Crimes?

A: Part of Bank Secrecy Act (BSA) regulations establish procedures for information sharing to deter money laundering and terrorist activity.

As financial institutions continue to monitor Office of Foreign Assets Control (OFAC) lists regarding sanctions and other restrictions, don’t forget to monitor for information sharing requests through Section 314 of the USA PATRIOT Act. Pursuant to section 314(a) law enforcement agencies may request that the Financial Crimes Enforcement Network (FinCEN) solicit, on its behalf, certain information from financial institutions.

Upon receiving an information request, a financial institution must conduct a one-time search of its records to identify accounts or transactions of a named suspect. Generally, financial institutions must search records for current accounts, accounts maintained during the preceding 12 months, and transactions conducted outside of an account by or on behalf
of a named suspect during the preceding six months. If a financial institution identifies any account or transaction, it must report to FinCEN that it has a match. No details should be provided to FinCEN other than the fact that the financial institution has a match. A negative response is not required. Unless otherwise provided, the search and response must be conducted within 14 days.

Financial institutions should also consider that FinCEN issued an alert on March 7 to be vigilant against efforts to evade the expansive sanctions and other U.S.-imposed restrictions implemented in connection with the Russian Federation’s further invasion of Ukraine. The advisory warns of evasion attempts and that “sanctioned Russian and Belarusian actors may seek to evade sanctions through various means, including through non-sanctioned Russian and Belarusian financial institutions and financial institutions in third countries.”

FinCEN also provides several red flag indicators to watch for attempted evasions. Select red flag indicators include for transactions initiated from IP addresses located in Russia, Belarus, or other sanctioned jurisdictions, transactions connected to convertible virtual currency (CVC) addresses listed on OFAC lists of specially designated nationals and blocked persons, and customer use of a CVC exchanger or foreign-located money service businesses in a high-risk jurisdiction.

April 8, 2022/by Hannah Flanders

News, Resources

Signs of Business Check Cashing Fraud to Watch Out For

Dave Oldenburg

By Dave Oldenburg, fraud officer, Bank First, Watertown and member of the WBA Financial Crimes Committee

Business check cashing fraud, dubbed “operation homeless” by law enforcement, continues to impact our industry. Furthermore, it can negatively affect customer perception when fraudulent “on-us” checks are cashed at your bank.

Although there are many kinds of check fraud schemes, business check cashing fraud begins when a customer’s legitimate business checks are taken from commercial mailboxes. Often times, the compromise occurs when a customer’s outgoing mail or the recipient’s mailbox is breached. These mailboxes are often unsecured — making them an ideal target to steal checks. Once the checks are stolen, the ringleader produces quality counterfeit checks that closely resemble the features of legitimate checks. In this type of fraud, the intent is to cash as many checks as possible at numerous bank branches — sometimes pocketing tens of thousands in just one day.

The ringleader creates the checks, but recruits individuals (mules) to cash the checks if they have current and valid identification. In turn, the mules receive a small portion each time a check is paid out. In an organized fashion, these criminals travel around the state with counterfeit items, drawn on many accounts from different banks.

Fortunately, there are ways to stop fraud in its tracks. Here are some suggested “best practices” for front-line staff:

Compare the check to recently cleared checks as well as the signature card on file.
Looks for signs of traced, forged, or scanned signatures that appear irregular.
The current check range on recently cleared items may be considered — however a counterfeit check is often in the current range.
Look for recently issued identification (sometimes mules will obtain identification for the sole purpose of committing check fraud).
Refuse to cash the check when presented with worn or damaged identification that omits information.
Refuse identification that doesn’t appear to match the individual presenting the check.

Be aware of some common “red flags” that may be indicators of business check cashing fraud such as:

The branch location is “out of the way” from the non-customer’s address listed on the check or listed on the identification presented.
The person presenting the check came to the branch on foot or was dropped off.
The person presenting the check appears anxious, rushed, or overly chatty or name drops.
The person is in contact with someone on their mobile phone while the transaction is being performed.

To help mitigate your institution’s risk of loss, it is recommended that checks presented by non-customers be handled with additional scrutiny. Most importantly, if the maker of the check does not have positive pay services, consider adopting procedures where an authorized signer is contacted to validate checks over a certain dollar amount.

January 11, 2022/by Cassandra Krause

BSA/AML, Compliance, Frontline Retail, IRAs, Lending, Webinar

Beneficial Ownership Final Rule: Details & Deadlines

Do you know where FinCEN, CTA, and BOI intersect? Do you know the ins and outs of FinCEN’s beneficial ownership rules changes? This webinar will explain how the reporting provisions will further combat illicit use of the U.S. financial system. Learn the specific beneficial ownership reporting deadlines and details with this in-depth program.

Webinar Highlights

Who is a reporting company?
What are the exemptions from reporting?
Detailed analysis of what a substantial owner is and who is a 25% owner
Two types of company applicants
Four pieces of information that must be provided
How the FinCEN identifier will be issued
Timing and the next steps for implementation

Webinar Details
On September 29, 2022, the Financial Crimes Enforcement Network (FinCEN) issued a final rule implementing the bipartisan Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting provisions. The rule enhances the ability of FinCEN and other agencies to protect U.S. national security and the U.S. financial system from illicit use. It provides essential information to national security, intelligence, and law enforcement agencies; state, local, and tribal officials; and financial institutions to help prevent drug traffickers, fraudsters, corrupt actors (such as oligarchs), and proliferators from laundering or hiding money and other assets in the United States.

The rule describes who must file a BOI report, what information must be reported, and when a report is due. Specifically, the rule requires reporting companies to file reports with FinCEN that identify two categories of individuals: (1) the beneficial owners of the entity; and (2) the company applicants of the entity. This comprehensive webinar will cover all the particulars.

Who Should Attend?
This detailed session will benefit BSA officers, BSA staff, trainers, compliance staff, and operations personnel.

Take-Away Toolkit

Beneficial Ownership Final Rule Manual, volume 1
Employee training log
Interactive quiz
PDF of slides and speaker’s contact info for follow-up questions
Attendance certificate provided to self-report CE credits

NOTE: All materials are subject to copyright. Transmission, retransmission, or republishing of any webinar to other institutions or those not employed by your agency is prohibited. Print materials may be copied for eligible participants only.

Presenter
Deborah Crawford – Gettechnical Inc
Deborah Crawford is the president of Gettechnical Inc., a Florida-based firm, specializing in the education of financial institutions across the nation. Her 30+ years of experience began at Hibernia National Bank in New Orleans. She graduated from Louisiana State University with both her bachelor’s and master’s degrees.

Crawford specializes in the education of financial institution employees and officers in the areas of deposit account laws, new account documentation, insurance, complex compliance regulations, and IRAs.

Registration Options

$245 – Live Webinar Access
$245 – OnDemand Access + Digital Download
$350 – Both Live & On-Demand Access + Digital Download

November 18, 2022/by Katie Reiser

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