Threats and Trends in FinCEN’s Identity-Related Suspicious Activity Report

By Sandra Desautels

The Financial Crimes Enforcement Network (FinCEN) released a comprehensive Financial Trend Analysis (FTA) focused on information pertaining to identity-related suspicious activities within Suspicious Activity Reports (SARs) filed during the calendar year 2021.1  According to FinCEN, 1.6 million reports, constituting 42% of the filings for the year 2021, were associated with identity-related concerns. These reports amounted to a staggering $212 billion in suspicious activity. 

The instances of identity-related SARs demonstrate a consistent upward trend.2 The FTA report scrutinizes suspicious activities linked to the exploitation of identity processes, encompassing account creation, account access, and transaction processing (collectively, identity processes). The report specifically underscores details pertinent to depository institutions and money services businesses (MSBs).


Highlights of the FinCEN Financial Trend Analysis (FTA)

On January 9, 2024, FinCEN issued an FTA on information linked to identity-related suspicious activity that identified more than 14 typologies commonly specified in identity-related BSA reports. The top five typologies constituted 88% of identity-related SARs and 74% of the total suspicious activity amount in the reported calendar year 2021, as illustrated in the graph below:


General Fraud — General fraud was the most frequently reported concern in SARs, echoing known overarching trends that warranted the inclusion of fraud into the national Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) priorities.3 Notably, the FTA report accentuates the escalating threat posed by imposter scams, resulting in reported losses exceeding $2.6 billion in 2022.

False Records — This typology involves attackers providing false identification, documentation, and payments in interactions with financial institutions (e.g., fake Social Security numbers). Some financial institutions proactively identify false records, while others only identify concerns after the fact. False records are an especially pernicious problem for digital financial products and institutions, as predominantly physical forms of identification are more difficult to verify without the opportunity to review in person.

Identity Theft — Attackers exploit compromised personal identifying information (PII) to open accounts and apply for credit lines4 without the rightful owner's permission (e.g., victim is deceased, incarcerated, or otherwise unable to apply). For example, factors contributing to this typology include large-scale data breaches, such as the 2017 Equifax breach that exposed the personal information of 147 million Americans.5

Third-Party Money Laundering (TPML) — This includes individuals acting as intermediaries (straw buyers and money mules) to conduct transactions on behalf of others. The FTA report outlines it entails the recruitment of money mules online through scams, making them witting or unwitting participants in laundering fraud proceeds while also concealing the identity of the true transactor, thereby circumventing verification. 

Circumventing Standards — Directly tied to the lack of proper recordkeeping or registration by financial institutions, where circumventing standards may lead to failures in customer and counterparty verification.


Key Criminal Tactics

Identity-related exploitation involves three distinct tactics—"impersonation," "compromise," and "circumvention"—occurring in the identity processes of validation, authentication,7 and verification,8 respectively.


Source: “Identity-Related Suspicious Activity:  2021 Threats and Trends.”, January 9, 2024.


Asymmetrical Impact

Identity-related suspicious activity trends exhibit variations across financial institutions. Specifically, MSBs report circumvention of verification as the primary cause of identity exploitation. Depository institutions, along with the broader financial services entities, grapple predominantly with impersonation challenges that exploit the lag in traditional, government-issued identification methods in a rapidly digitizing world. FinCEN emphasizes the potential role of government-issued digital identification and increased public-private cooperation in closing this gap9 and addressing the multifaceted challenges posed by identity-related crimes.


What This Means For Financial Institutions

Although the FTA report does not introduce additional regulatory obligations or supervisory expectations, or modify existing regulatory requirements for financial institutions, there are considerations for financial institutions with weak identity-related controls. According to Guidehouse’s professional, Erik Provitt, “Technology has allowed bad actors to create near- perfect forgeries of traditional identification documents. Organizations must leverage technology to verify the combination of PII (name, address, date of birth, and Social Security Number) matches to the person presenting the identity document; and establish the document was issued by a government entity. In a digital environment, it is equally important to verify the email, phone, device fingerprint, and IP Address are associated with the PII entered; and not associated with known fraud or otherwise inconsistent with the applicant, e.g., IP address is in Singapore, but the applicant purports to live in Atlanta, GA.” 
Note the Fair and Accurate Credit Transactions Act (FACTA)10 mandates creditors and financial institutions to establish an identity theft red flag program. Although the Federal Trade Commission (FTC) refrains from conducting routine compliance audits, it remains poised to initiate an audit in response to a filed complaint. Companies falling under the purview of the Red Flags Rule11 must adhere to compliance requirements to avoid financial penalties.
If the fraud trends identified in the FTA continue to rise, financial institutions could face substantial financial losses.12  Growing risks may also encompass reputational damage, loss of public trust, and increased scrutiny by regulators.

"Organizations must leverage technology to verify the combination of Personal Identification Information (PII) matches to the person presenting the identity document. In a digital environment, it is important to verify the digital fingerprints that are associated with the PII entered."

⁠— Erik Provitt, Associate Director, Financial Crime, Fraud & Investigative Services

What Should Your Financial Institution Start Doing Now

Financial institutions should scrutinize their existing policies, procedures, and controls concerning the validation, authentication, and verification of customers' information. This entails a meticulous review to ensure alignment with evolving industry standards and the dynamic landscape of fraud.

In addition, financial institutions would benefit from a proactive stance that includes a comprehensive assessment of their exposure to fraud risks from products, services, customer base, and similar factors, plus identification and review of the existing mitigating measures.


How Guidehouse Can Help Financial Institutions

Guidehouse can help financial institutions assess their fraud risk exposure, enhance fraud risk management programs, and improve fraud controls aligned to the identified trends. Areas of relevant expertise include:

  • Fraud Prevention
  • Fraud Detection
  • Technical Assessment of Fraud Controls
  • Fraud Risk Assessments
  • Fraud Awareness Training

Guidehouse can assess your fraud risk management program to determine whether it is effective, identify gaps or weaknesses, or conduct training on fraud compliance. Guidehouse is well-equipped to make an individualized assessment of your unique circumstances and offer innovative advice and solutions for responding to heightened identity-related fraud risks.


This article is authored by Sandra Desautels, with contributions by Ekaterina Koroleva, Kyle Cook and Erik Provitt.

1. Review of Identity Related Suspicious Activity 2021 Threats and Trends. 2024. Washington D.C.: Financial Crimes Enforcement Network.
2.  Federal Trade Commission. “Consumer Sentinel Network Data Book 2022.” Washington D.C.: Federal Trade Commission, February 2023.
3. “Financial Crimes Enforcement Network Anti-Money Laundering and Countering the Financing of Terrorism National Priorities.” 2021.
4. “Identity Theft Trends, Patterns, and Typologies Based on Suspicious Activity Reports.” 2005.
5. Federal Trade Commission. “Equifax Data Breach Settlement,” December 2022.
6. The validation stage begins when a customer presents identity attributes and supporting evidence (e.g., birth certificate, passport, driver’s license, etc.)—in person or remotely—for review by a financial institution. The financial institution makes these determinations by comparing the presented information and evidence against authoritative government data.
7. In the authentication stage, a financial institution attempts to assess whether the customer is who they purport to be based on the customer’s possession and control of valid authenticators. Authentication provides risk-based assurance that the customer is the same customer whose identity was validated and verified during previous steps of the identity process.
8. In the verification stage, the financial institution confirms that the previously validated identity evidence belongs to the customer (e.g., matching the customer’s appearance to a photo on the customer’s photo identification documents). Verification tools and techniques can rely on humans or be entirely automated.
9. Kirby, Jimmy. “Prepared Remarks of FinCEN Acting Deputy Director Jimmy Kirby.” Presented at the Identity, Authentication, and the Road Ahead, a Cybersecurity Policy Forum, January 25, 2023. 
11.  Reference the rule
12. “Payments App Zelle Begins Refunds for Imposter Scams after Washington Pressure,”, n.d.,

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