Today, US authorities released a notice cautioning financial institutions about the rise in fraudulent activities involving counterfeit Passport Cards being used for identity theft and fraud schemes within banking sectors.
The notice outlines the patterns associated with passport card fraud, highlights specific indicators to aid financial institutions in identifying and reporting suspicious behavior, and underscores the obligation of financial institutions to report such activities under the Bank Secrecy Act (BSA).
This warning signifies a shift where financial institutions can no longer rely solely on passport cards as a secure form of identity verification.
The Notice was jointly issued by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Department of State’s Diplomatic Security Service (DSS).
Between 2018 and 2023, fraudulent activities related to U.S. passport cards led to $10 million in actual losses and $8 million in attempted losses, impacting over 4,000 victims in the United States. However, law enforcement agencies believe the actual losses from such fraud could be significantly higher and encourage increased reporting by financial institutions to uncover additional illicit activities.
Andrea Gacki, Director of FinCEN, stated, “FinCEN appreciates our partnership with DSS to address the concerning rise in the use of U.S. passport cards by illicit actors to impersonate and defraud individuals at financial institutions across the country. We are issuing this Notice to help financial institutions and their customers avoid falling victim to this crime and to remind them to remain vigilant in identifying and reporting related suspicious activities.”
Passport cards are valid for travel to Canada, Mexico, the Caribbean, and Bermuda. However, full passports are required for other international travel.
The Notice applies to various financial institutions, including casinos, banks, insurance companies, money services businesses, mortgage companies, precious metals and jewelry businesses, and securities and futures.
Greg Batman, Deputy Assistant Director for the Office of Investigations at DSS, commented, “The Diplomatic Security Service remains committed to protecting the American people and financial institutions from those seeking to commit financial crimes by exploiting Department of State-issued identification documents. We hope this Notice will assist financial institutions in identifying fraudulent passport cards and their misuse.”
Fraud, especially financial crimes involving counterfeit U.S. passport cards, constitutes the largest source of illicit proceeds in the United States and poses a significant money laundering threat, according to FinCEN.
The notice includes 17 technical, behavioral, and financial indicators of passport card fraud, urging financial institutions to consider various factors before determining suspicious activity, such as historical financial activity, adherence to common business practices, and the presence of multiple red flags.
For further details, the full Notice can be accessed through FIN-2024-NTC1 issued by FinCEN.
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