Pub. 17 2020 Issue 3

20 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S D uring normal times, it can be challenging for bankers to get their arms around the regulatory require- ments surrounding the Bank Secrecy Act (BSA) and anti-mon- ey laundering (AML) regulations. So, when you add a global pandemic, such as COVID-19, things can get a little dic- ey, especially when navigating compet- ing priorities. Fortunately for us, the Federal regula- tors have been proactive in providing the banking industry with up-to-date com- pliance guidance (although it is essential to note the guidance did not extend the BSA regulatory reporting deadlines) relating to the pandemic. Furthermore, the Financial Crimes Enforcement Net- work (FinCEN) went as far as creating a webpage devoted to coronavirus updates. A brief scan of their webpage includes the following advisories: • Advisory on Cybercrime and Cyber-Enabled Crime Exploiting the Coronavirus Disease 2019 (COVID-19) Pandemic • FinCEN Advisory on Imposter Scams and Money Mule Schemes Related to Coronavirus Disease 2019 (COVID-19) • FinCEN Advisory on Medical Scams Related to COVID-19 • Companion Notice to FinCEN COVID-19 Advisories • Paycheck Protection Program Fre- quently Asked Questions • Updated FinCEN Notice to Financial Institutions Regarding COVID-19 • FinCEN Notice to Financial Institu- tions Regarding COVID-19 In these statements, FinCEN encourag- es financial institutions to communicate concerns related to the COVID-19 pan- demic and to remain diligent in detecting related suspicious activity. Hopefully, by now, banks have passed the stage where concerns exist over the potential delays in filing required BSA reports — suspicious activity reports (SARs) and currency transaction reports (CTRs) — but know that risk was really for many. That brings us to suspicious activi- ty monitoring and reporting, a staple of a safe and sound BSA program. By now, suspicious activity, including illicit fraudulent transactions, is not particu- larly new to us. We have dealt with many types of fraud — ACH, loan and identity theft fraud — to name a few. But, since FinCEN has suggested that the banking community “remain alert about mali- cious or fraudulent transactions similar to those that occur in the wake of natural disasters,” we should take a look at the emerging trends connected to COVID-19: • Imposter Scams — Bad actors attempt to solicit donations, steal personal information or distribute malware by impersonating gov- ernment agencies (e.g., Centers for Disease Control and Prevention), international organizations (e.g., World Health Organization (WHO), or healthcare organizations. • Investment Scams — The U.S. Se- curities and Exchange Commission (SEC) urged investors to be wary of COVID-19-related investment scams, such as promotions that falsely claim that the products or services of pub- licly traded companies can prevent, detect or cure coronavirus. • Product Scams — The U.S. Federal Trade Commission (FTC) and U.S. Food and Drug Administration (FDA) have issued public statements and warning letters to companies selling unapproved or misbranded products that make false health claims about COVID-19. Addition- ally, FinCEN has received reports regarding fraudulent marketing of COVID-19-related supplies, such as certain facemasks. • Insider Trading — FinCEN has re- ceived reports regarding suspected COVID-19-related insider trading. When you throw in the reminder regarding the importance of detecting trends related to COVID-19 medical fraud, imposter scams, and cyber- enabled crime, the banking industry has the daunting task of being the watchdog for fraudulent transactions. Where do we start? Begin with the bank’s system for identifying potentially suspicious activity. Most banks have multiple channels that funnel unusual activity to the appropriate party for research and reporting. First, and likely most important, bank employee detection is key. During day-to-day operations, employees may observe unusual or potentially suspi- cious transaction activity or requests. During this pandemic, it is important that employees be aware of the FinCEN emerging trends and the potential red THE RACE IS ON — KEEPING UP WITH THE BSA By Compliance Alliance