FinCEN Unveils Disturbing Trends: $212 Billion in Identity-Related Suspicious Activity Exposed in 1.6 Million Reports for 2021

In a significant disclosure on Tuesday, the Financial Crimes Enforcement Network (FinCEN) brought to light that it had received a staggering 1.6 million reports of suspicious activity in 2021, translating to a substantial $212 billion related to identity exploitation. This revelation unfolded as part of FinCEN's release of its comprehensive Financial Trend Analysis (FTA) report, specifically focusing on information associated with identity-related suspicious activities documented in Bank Secrecy Act (BSA) reports for the year.

Director Andrea Gacki, underlining the critical nature of robust customer identity processes, remarked, "Robust customer identity processes are foundational to the security of the U.S. financial system, and critical to the effectiveness of financial institutions’ programs to combat money laundering and counter the financing of terrorism."

The report, constituting a pivotal aspect of FinCEN's overarching Identity Project, delves into the intricate and diverse schemes employed by malicious actors to exploit identity-related processes, ranging from transaction processing to account opening and access.

Breaking down the findings, the FTA identified no less than 14 common typologies in identity-related BSA reports. The top five, including fraud, false records, identity theft, third-party money laundering, and circumvention of verification standards, collectively constituted a substantial 88% of identity-related reports and an impressive 74% of the total suspicious activity reported throughout 2021.

A closer examination of trends emerging from the BSA reporting unveiled that depository institutions shouldered the majority, accounting for approximately 54% of identity-related reports. Furthermore, the report highlighted that impersonation ranked as the predominant identity exploitation reported by most financial institutions, while money services businesses consistently cited circumvention of verification.

Intriguingly, the report brought attention to the disproportionate financial impact of compromised credentials compared to other forms of identity exploitation, emphasizing the critical importance of addressing this specific threat.

FinCEN, in no uncertain terms, underscored the intrinsic value of information provided by financial institutions in strict accordance with the BSA, underscoring its unwavering commitment to leveraging its regulatory authorities to assist these institutions in detecting, reporting, and preventing criminal activities.

Recognizing the pivotal role of digital identity innovations in strengthening anti-money laundering and counter-terrorism financing efforts, FinCEN has proactively engaged with both the private and public sectors. Initiatives such as the Tech Sprint in collaboration with the Federal Deposit Insurance Corporation, alongside partnerships with regulators and law enforcement agencies, underscore FinCEN's proactive stance toward responsible innovation and fortifying the financial sector's resilience against illicit finance.

As part of the broader strategy outlined in the 2022 National Strategy for Combating Terrorist and Other Illicit Financing, FinCEN continues to spearhead efforts to identify and combat threats while actively fostering responsible innovation within the financial industry.

By fLEXI tEAM