On February 27, 2023, the Financial Crimes Enforcement Network (FinCEN) issued an alert to financial institutions on the nationwide surge in check fraud schemes targeting the U.S. Mail. Fraud, including check fraud, is the largest source of illicit proceeds in the United States and represents one of the most significant money laundering threats to the United States. FinCEN issued this alert in close collaboration with the United States Postal Inspection Service (USPIS) to ensure that Suspicious Activity Reports (SARs) filed by financial institutions appropriately identify and report suspected check fraud schemes that may be linked to mail theft in the United States.  

This alert provides an overview of a recent surge in mail theft-related check fraud, highlights select red flags to assist financial institutions in identifying and reporting suspicious activity, and reminds financial institutions of their reporting requirements under the Bank Secrecy Act. The alert lists the following financial red flags to mail theft-related check fraud: 

  • Non-characteristic large withdrawals on a customer’s account via check to a new payee.
  • Customer complains of a check or checks stolen from the mail and then deposited into an unknown account. 
  • Customer complains that a check they mailed was never received by the intended recipient. 
  • Checks used to withdraw funds from a customer’s account appear to be of a noticeably different check stock than check stock used by the issuing bank and check stock used for known, legitimate transactions. 
  • Existing customer with no history of check deposits has new sudden check deposits and withdrawal or transfer of funds. 
  • Non-characteristic, sudden, abnormal deposit of checks, often electronically, followed by rapid withdrawal or transfer of funds. 
  • Examination of suspect checks reveals faded handwriting underneath darker handwriting, giving the appearance that the original handwriting has been overwritten. 
  • Suspect accounts may have indicators of other suspicious activity, such as pandemic-related fraud. 
  • New customer opens an account that is seemingly used only for the deposit of checks followed by frequent withdrawals and transfer of funds. 
  • A non-customer that is attempting to cash a large check or multiple large checks in-person and, when questioned by the financial institution, provides an explanation that is suspicious or potentially indicative of money mule activity. 

Financial institutions may want to educate their customers on the risk of mailing checks. In addition to filing a SAR, financial institutions should refer their customers who may be victims of mail theft-related check fraud to the USPIS at 1-877-876-2455 or visit the USPIS website to report the incident. View the full FinCEN alert here.