FinCEN warns banks of surge in check fraud mail schemes

The Financial Crimes Enforcement Network is warning banks of a surge in check fraud schemes targeting the U.S. Mail and U.S. Postal Service carriers since the COVID-19 pandemic. 

According to a Feb. 27 advisory, financial institutions filed more than 680,000 potential check fraud-related Suspicious Activity Reports to FinCEN in 2022, nearly doubling the 350,000 from the previous year.  

FinCEN advised banks to evaluate potential fraud in several ways, including:

  • A non-customer trying to cash a large check or multiple large checks in-person provides cashiers with an answer they deem suspicious.
  • Transactions not aligning with the customer’s historical financial activity or business practices.
  • Fielding customer complaints that a check they mailed was never received by the intended recipient or was deposited into an unknown account
  • Observing faded handwriting underneath darker handwriting  

According to FinCEN, criminals, either acting alone or as part of organized groups, are using forced entry or makeshift devices to steal personal checks, tax refund checks, business checks and checks related to government assistance programs. Criminals are reportedly increasingly violently targeting USPS mail-carriers to steal keys to unlock mailboxes. “These criminals, located throughout the country, target USPS blue collection boxes, unsecured residential mailboxes and privately owned cluster box units at apartment complexes, planned neighborhoods and high-density commercial buildings,” FinCEN said. 

After stealing the checks, criminals allegedly alter them, replacing payee information with their own identification or with a fraudulent identity or business account under their control. According to FinCEN, “washed” checks are sometimes copied, printed and sold to third-party criminals on both the dark web and encrypted social media platforms for convertible virtual currency. Checks are also sometimes deposited at banks, through ATMs or via remote deposit.  

“Following the initial theft and fraudulent negotiation of the stolen checks, criminals may continue to exploit their victims by using the personal identifiable information found in the stolen mail for future fraud schemes, such as credit card fraud or credit account fraud,” FinCEN advised.

To limit the impacts of fraud, banks should immediately notify local police, said United Bankers Bank Chief Operations Officer Mary Williams. Documenting the incident as soon as possible helps banks to recover the stolen funds or as they go through litigation. She advised banks to train employees to watch for potential fraud indicators.