Advisory, notice detail coronavirus crisis-related medical scams, filing instructions under BSA obligations

Calling attention to medical scams related to the coronavirus crisis and detailing filing instructions for financial institutions reporting pandemic-related criminal and suspicious activities (including Bank Secrecy Act [BSA] obligations) are the aims of advisories issued Monday from federal financial law enforcement authorities.

The advisory issued by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) calls attention to what the agency calls “rising medical scams related to the COVID-19 pandemic.”

“This advisory contains red flags, descriptions of COVID-19 related medical scams, and information on reporting suspicious activity,” the FinCEN notice states. “This is the first of several advisories FinCEN intends to issue concerning financial crimes related to the COVID-19 pandemic.”

The notice asserts that several federal agencies have detected fraudulent COVID-19-related cures, tests, vaccines, and associated services being offered to the public. Examples of fraudulent medical services, the agency said, include: claims related to purported vaccines or cures for COVID-19; claims related to products that purportedly disinfect homes or buildings; and the distribution of fraudulent or unauthorized at-home COVID-19 tests. “Some of these scams may be perpetrated by illicit actors who recently formed unregistered or unlicensed medical supply companies,” the agency said.

FinCEN said financial “red flag” indicators of the scams may include, among other things:

  • U.S. agencies, including the Federal Trade Commission (FTC), the Food and Drug Administration (FDA), or the Department of Justice (DOJ), have identified the company, merchant, or business owners as selling fraudulent products.
  • A web-based search or review of advertisements indicates that a merchant is selling at-home COVID-19 tests, vaccines, treatments, or cures.
  • The financial institution’s customer has a website with one or more indicia of suspicion, including a name/web address similar to real and well-known companies, a limited internet presence, a location outside of the United States, and/or the ability to purchase pharmaceuticals without a prescription when one is usually required.
  • Financial institutions might detect patterns of high chargebacks and return rates in their customer’s accounts. These patterns can be indicative of merchant fraud in general.

Regarding filing instructions to meet BSA obligations, the notice urges financial institutions to monitor Treasury and FinCEN’s websites for updates concerning BSA obligations related to the pandemic. It also recommends that financial institutions “should not include in the suspicious activity report (SAR) narrative their challenges during the pandemic; the SAR narrative should include COVID-19 when it is tied to suspicions activity only.”

However, FinCEN said, filers who have already included references to COVID-19 in matters not related to the pandemic do not need to file corrected reports.

The notice also advises on provision of SAR supporting documentation to law enforcement and FinCEN; information sharing; reporting COVID-19-related criminal activity; and response and recovery of funds.

FinCEN Issues Advisory on Medical Scams Related to COVID-19 and Companion Notice Providing Filing Instructions for Financial Institutions