US Treasury flags $8 billion in suspicious overseas transfers

US warns of risks in overseas money transfers

Washington, Oct 31

The Financial Crimes Enforcement Network, or FinCEN, issued an alert on payments directed by overseas agents through US-based money services businesses. It also released a notice on the misuse of charities and non-profit organisations.

The documents formed part of anti-fraud initiatives announced by Treasury Secretary Scott Bessent in St. Cloud, Minnesota. Treasury said the measures supported the White House Task Force to Eliminate Fraud.

FinCEN cautioned that suspicious activity reports provide investigative leads and do not establish criminal wrongdoing.

The alert focuses on arrangements in which an overseas commercial agent tells a US money-transfer company to pay another foreign business. That recipient may be described as the agent's supplier or partner. Banks handling these payments may have little information about the overseas agent, the final recipient or the underlying business transaction, the alert said.

Treasury said criminals could exploit poorly monitored cross-border relationships to conceal who ultimately receives money and why it is being transferred. Such arrangements could also facilitate terrorist financing, it said.

FinCEN said institutions should consider the full circumstances and customers' transaction histories before deciding whether activity is suspicious.

Both documents describe warning signs and remind institutions of existing Bank Secrecy Act reporting duties. They ask institutions to identify relevant suspicious activity clearly when filing reports with FinCEN.

The companion notice identifies three broad forms of charity abuse: sham organisations used for illicit purposes, fraudulent fundraising for personal benefit, and embezzlement by insiders.

In embezzlement cases, the charity itself can be a victim, with employees and donors unaware that money is being stolen. FinCEN said insiders may divert donations or use organisations' accounts to meet personal expenses.

Information about donors, funding sources, fundraising methods and organisational affiliations may help institutions assess risk, the notice said. FinCEN said the Bank Secrecy Act does not require collection of these specific details about non-profit customers.

FinCEN and federal banking regulators issued a joint fact sheet on charities in November 2020, recognising their need for access to financial services. It said customer due diligence rules did not require banks to impose unique, additional checks solely because a customer was a charity or non-profit organisation.

— IANS