Credit union regulator clangs warning bell on fraud linked to coronavirus crisis

Risk of fraud associated with the financial impact of the coronavirus crisis is the emphasis of a new risk alert issued Thursday by the federal regulator of credit unions.

The alert (20-RISK-02) from the National Credit Union Administration (NCUA) notes that persons out to commit fraud try to “take advantage of opportunities made possible through new or expanded large government programs arising from emergency situations, such as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).”

NCUA said the alert describes the increased risks associated with routine operations, outlines red flags of the fraud schemes, offers references and ways to report fraud or misconduct, and lists member education resources.

Among the specific fraud issues the alert pinpoints are those associated with: the Small Business Administration’s (SBA) Paycheck Protection Program (PPP); business tax credits; and unemployment insurance.

The agency’s message also urges credit unions to contact it and federal law enforcement if it suspects fraud and to file suspicious activity reports (SARs) through the Treasury’s law enforcement arm, the Financial Crimes Enforcement Network (FinCEN), as appropriate.

The agency urged credit unions to include the type of fraud and name of the scam or scheme (for example, imposter scam or money mule scheme) in the appropriate field of the SAR. “Including other detailed information, such as the potentially affected programs, common methodologies, identities, and IP addresses can significantly enhance law enforcement’s ability to detect and respond to CARES Act related frauds,” the agency advised.

NCUA Risk Alert (20-RISK-02) COVID-19 Fraud Schemes

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