FinCEN Issues Warning to Financial Institutions on Rising Romance Scam Fraud

The Financial Crimes Enforcement Network (FinCEN), the anti-money laundering (AML) unit of the U.S. Treasury, has issued a formal warning urging financial institutions to remain alert to the increasing threat of romance scam fraud. The warning aligns with the U.S. government’s multiagency #DatingOrDefrauding campaign, which aims to raise awareness of fraud schemes that target victims through dating apps, social media platforms, and text messages.

The Commodity Futures Trading Commission launched the #DatingOrDefrauding initiative to highlight the growing danger of relationship-based investment scams. FinCEN emphasized the severity of the issue, stating, “Losses from romance and confidence scams reported to the Federal Bureau of Investigation exceeded $650 million in 2023.”

To assist financial institutions in identifying and reporting romance scams, FinCEN pointed to four previously issued alerts. The September 2023 alert on "Pig Butchering" scams details how criminal groups fabricate identities and craft elaborate backstories to establish trust with victims, only to defraud them through virtual currency or foreign exchange schemes. Many of these operations are run by organized crime networks that exploit individuals subjected to labor trafficking. The June 2022 advisory on elder financial exploitation underscores that romance scams frequently prey on older adults. Scammers often gain their trust before stealing assets, leaving many victims in financial ruin.

Additionally, FinCEN's April 2024 Financial Trend Analysis highlights that romance scams frequently "evolve into investment scams," with a significant portion of elder financial exploitation cases tracing back to these fraudulent schemes. The September 2024 Financial Trend Analysis on mail theft-related check fraud reveals that scammers sometimes manipulate romance scam victims into cashing stolen checks and transferring funds, effectively using them as money mules to launder stolen money.

FinCEN urged financial institutions to carefully follow the specific Suspicious Activity Report (SAR) filing instructions and key terms outlined in its alerts and advisories. The agency stressed the importance of these filings in helping law enforcement dismantle romance scam operations, noting that accurate reporting plays a critical role in holding fraudsters accountable.

By fLEXI tEAM