FinCEN Flags More Than $8 Billion in Suspicious Cross-Border Payments and Warns of Charity Fraud Risks

The US Financial Crimes Enforcement Network (FinCEN) has issued two new warnings to financial institutions concerning suspicious cross-border payments involving money services businesses (MSBs) and the exploitation of charitable and non-profit organisations for illicit purposes. The measures, announced on 30 October 2026, highlight vulnerabilities involving third-party payment arrangements, opaque fund flows and the diversion of donations and public funds.

In its first publication, FinCEN reported that US financial institutions had identified more than US$8 billion in potentially suspicious payments directed by foreign agents of US-based MSBs between 2021 and 2025. The transactions involved arrangements in which overseas agents instructed US money transmitters to transfer funds to third-party beneficiaries, sometimes without sufficient information about the recipients or the underlying commercial purpose.

Foreign agents are commonly used by money transmitters to facilitate international remittances and settlement arrangements. While these structures can serve legitimate commercial purposes, FinCEN warned that they may also be exploited to move funds through the US financial system while concealing the ultimate beneficiaries and the nature of the transactions. In some cases, the information available to the MSB and its banking partners may be limited or contradictory, making it difficult to establish the economic rationale for a payment.

The US$8 billion figure represents potentially suspicious activity identified through Bank Secrecy Act reporting. It should not be interpreted as confirmed criminal proceeds, proven financial losses or evidence that the entire amount was connected to money laundering or terrorist financing. FinCEN nevertheless considers the scale of the reported activity significant enough to warrant enhanced attention from banks, payment providers and other financial institutions.

The agency identified several recurring transaction patterns that may indicate misuse of foreign-agent arrangements. These include payments to foreign exchange houses, commercial banks and trading companies that have no apparent relationship with the MSB's normal business activities. Recipients in China, the United Arab Emirates, Egypt and parts of East Africa, including Kenya, Uganda and Djibouti, were among the examples identified. The geographical references are intended to provide transaction context and do not mean that businesses or customers in these jurisdictions should automatically be considered suspicious.

Other warning signs include large or repeated transfers to newly established companies, general trading businesses or entities with little identifiable commercial presence. Payments may also be inconsistent with the customer population normally served by the MSB or with the settlement arrangements documented between the parties. Repeated transfers in round or near-round amounts, unusually rapid movement of funds after receipt and reluctance by an agent to provide supporting documentation were also highlighted.

FinCEN emphasised the importance of understanding the complete transaction chain, including the originating customer, foreign agent, US-based MSB and ultimate beneficiary. Where a payment is described simply as a settlement obligation or business expense, financial institutions should seek appropriate supporting information, such as invoices, contracts, orders and evidence of the recipient's business activities.

The second publication addresses the exploitation of domestic and international charities and non-profit organisations. FinCEN identified three principal forms of abuse: sham charities, fraudulent non-profit organisations and embezzlement within legitimate organisations.

Sham charities are established or presented as legitimate charitable organisations but are used to support illicit activities, potentially including terrorist financing. Fraudulent non-profits may similarly advertise charitable or humanitarian objectives while diverting donations or government funding for the personal benefit of their controllers. Embezzlement involves a different pattern, in which individuals holding positions of trust within genuine organisations misuse their authority to steal funds intended for charitable activities.

The notice highlights how charitable structures may be exploited to conceal the movement of funds. Warning signs include organisations soliciting donations despite having little evidence of actual operations, entities using names similar to established charities without any formal affiliation, unexplained transfers between organisations with common controllers and significant government reimbursements received shortly after an organisation's establishment.

FinCEN also identified potential indicators of internal diversion, including payments to officers or connected parties without a clear business justification, vague consulting invoices, expenditure inconsistent with an organisation's stated mission and funds intended for a charity being deposited into an employee's personal account. A significant discrepancy between the amount of funding received and the expenditure allocated to actual charitable programmes may also warrant further examination.

The notice draws attention to the potential misuse of government-funded programmes, including schemes in which organisations submit fabricated claims or report services that were never provided. The issue has particular relevance in Minnesota, where federal authorities have pursued extensive investigations into fraud involving public benefit programmes. One prominent example is the Feeding Our Future case, involving the alleged diversion of funds intended for a federally funded child nutrition programme. Several defendants have been convicted, while other enforcement proceedings remain subject to their respective legal processes.

Both publications contain practical instructions for financial institutions when submitting relevant suspicious activity reports. For transactions involving foreign-agent-directed MSB payments, FinCEN requests that institutions include the identifier FIN2026FOREIGNAGENT in field 2 and in the narrative of the relevant Suspicious Activity Report (SAR). For activity involving the exploitation of charities and non-profit organisations, the requested identifier is FIN2026NPO, also to be included in field 2 and the SAR narrative. The agency additionally requests the relevant identifiers in the comments section of applicable suspicious Form 8300 filings.

These reporting identifiers do not mean that every transaction displaying one of the indicators automatically requires a SAR. Financial institutions must continue to apply the relevant Bank Secrecy Act reporting requirements and assess the circumstances of each case.

The warnings also reinforce the importance of risk-based customer due diligence rather than blanket restrictions on entire sectors. FinCEN recognises that MSBs provide essential services, particularly to underserved communities and individuals relying on international remittances. Similarly, charitable organisations play an important role in humanitarian assistance and public services, and the agency does not consider the non-profit sector as a whole to present a uniformly high financial-crime risk.

Banks and payment providers should therefore assess the actual activities, ownership, counterparties, transaction patterns and control arrangements of individual customers. For MSBs, this includes reviewing foreign-agent relationships, contractual authority, expected payment volumes and the identity and business purpose of third-party beneficiaries. For charities, relevant considerations include fundraising methods, sources of funding, overseas operations, beneficiaries, governance arrangements and the relationship between stated charitable objectives and actual financial activity.

The two publications place particular emphasis on transparency across complex payment chains. Financial institutions may have information about their direct customers but limited visibility over foreign agents, intermediaries and ultimate recipients. Effective monitoring consequently requires institutions to identify inconsistencies between declared business activities and actual transactions, obtain supporting information where necessary and document the rationale for escalation or closure.

The new warnings do not introduce an across-the-board prohibition on MSB or charity banking, nor do they announce penalties against specific financial institutions. Instead, they provide additional indicators and reporting guidance intended to help financial institutions identify potential money laundering, terrorist financing, fraud and misappropriation of funds while maintaining access to legitimate remittance and charitable services.

By fLEXI tEAM