royp@ballardspahr.com | 215.864.8336 | view full bio

Priya focuses her practice on white collar defense, internal investigations, and complex civil litigation. She counsels clients in AML and BSA matters, as well as matters involving allegations of tax fraud, violations of the False Claims Act and Anti-Kickback Statute, violations of the Food, Drug, and Cosmetics Act, securities violations, and other fraud and regulatory offenses and abusive acts and practices.

The Financial Crimes Enforcement Network (“FinCEN”) just issued another Advisory pertaining to two consumer fraud schemes exacerbated by the COVID-19 pandemic. This Advisory focuses on “imposter schemes” and “money mule schemes, ”which we discuss below.

This most recent Advisory is the latest in a string of pronouncements relating to the pandemic by FinCEN, which has stated that it regularly will issue such documents. As we have blogged, FinCEN issued an Advisory on May 18 regarding medical scams related to the pandemic, and issued a companion Notice that “provides detailed filing instructions for financial institutions, which will serve as a reference for future COVID-19 advisories.” On April 3, 2020, FinCEN also updated its March 16, 2020 COVID-19 Notice in order to assist “financial institutions in complying with their Bank Secrecy Act (“BSA”) obligations during the COVID-19 pandemic, and announc[ing] a direct contact mechanism for urgent COVID-19-related issues.”

The most recent Advisory again provides a list of potential red flags that FinCEN believes that financial institutions should be monitoring for, in order to detect, prevent, and report such suspicious activity. As we previously have commented: although such lists can be helpful to financial institutions, they ultimately may impose de facto heightened due diligence requirements. The risk is that, further in time, after memories of the stressors currently imposed by COVID-19 have faded, some regulators may focus only on perceived historical BSA/AML compliance failures and will invoke these lists not merely as efforts by FinCEN to assist financial institutions in deterring crime, but as instances in which FinCEN was putting financial institutions on notice.

Further, the most recent Advisory suffers from the fact that its list of red flags for imposter schemes is best directed at consumers themselves, rather than at financial institutions offering services to consumers: many of the red flags pertain to anomalies in the communications sent directly by fraudsters to targeted consumer victims – information that financial institutions rarely possess.
Continue Reading FinCEN Issues Advisory on COVID-19 and Imposter and Money Mule Schemes

The SEC Office of Compliance Inspections and Examinations (OCIE) has announced its 2018 examination priorities. Unsurprisingly, cybersecurity remains among the key priorities. OCIE has included cybersecurity as an examination topic since at least 2014.

OCIE released its 2018 priorities to “improve compliance, prevent fraud, monitor risk, and inform policy.” OCIE conducts the SEC’s National Exam Program (NEP), whose mission is to protect investors, ensure market integrity and support responsible capital formation through risk-focused strategies that: (1) improve compliance; (2) prevent fraud; (3) monitor risk; and (4) inform policy. The results of the NEP’s examinations are used by the SEC to inform rulemaking initiatives, identify and monitor risks, improve industry practices and pursue misconduct. OCIE is responsible for conducting examinations of broker-dealers, investment advisers, transfer agents, and other SEC-regulated entities.
Continue Reading SEC Continues to List Cybersecurity Among OCIE Examination Priorities