FinCEN warns of fake U.S. passport cards used to commit fraud

FinCEN, in coordination with the State Department’s Diplomatic Security Service, issued a notice Monday highlighting red flags to identify and report suspicious activity and remind financial institutions of their reporting obligations under the Bank Secrecy Act (BSA).

Andrea Gacki, the director of FinCEN, noted in a press release a “concerning increase” in the use of U.S. passport cards by illicit actors to impersonate and defraud individuals at financial institutions.

“We are issuing this notice to help financial institutions and their customers from becoming victims to this crime and to remind them to remain vigilant in identifying and reporting related suspicious activity,” she said.

The notice cited three categories of red flags:

Technical red flags: Cards lacking laser-engraved photos, discrepancies in photos on file versus those pictured on cards, date of birth or other text not being raised, or the State Department seal being replaced with an unrelated agency.

Behavioral red flags: Customers presenting a U.S. passport card not being able to reference personal identifiers, such as date of birth or Social Security number or opening an account with a third party with no prior history.

Financial red flags: Customers presenting a U.S. passport card withdrawing cash, purchasing a cashier’s check or money order, or initiating wire transfers; a customer negotiating uncharacteristic, sudden, or a large volume of checks made payable to cash; asking for daily withdrawal and transfer limits; or engaging in structuring by conducting multiple cash withdrawals below $10,000.

FinCEN noted when filing suspicious activity reports and related supported documentation, financial institutions should verify the requestor is, in fact, a representative of FinCEN or a supervisory agency.

“A financial institution should incorporate procedures for such verification into its BSA compliance or [anti-money laundering] program,” the notice stated. “These procedures may include, for example, independent employment verification with the requestor’s field office or face-to-face review of the requestor’s credentials.”

FinCEN said fraud linked to counterfeit U.S. passport cards resulted in $10 million in actual losses and $8 million in additional attempted losses affecting more than 4,000 victims in the United States from 2018-23.