As we think about the evolution of banking and the innovative ways to move money, writing checks does not come to mind as a frequent transfer method. However, for fraudsters, checks are still one of the more common sources for stealing funds from consumers and businesses. According to the Federal Bureau of Investigation (FBI), losses from check fraud total $18 billion annually. That staggering statistic represents approximately 500 million checks, more than a million daily. Sometimes traditional crimes persist, and in the case of check fraud, continue in a big way.
On February 27, 2023, the Financial Crimes Enforcement Network (FinCEN) issued an alert to financial institutions on a 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 is one of the anti-money laundering/countering the financing of terrorism (AML/CFT) National Priorities.
The FinCEN alert was issued as criminals have increasingly committed fraud by targeting the U.S. Mail since the COVID-19 pandemic. Fraudsters will steal personal checks, business checks, tax refund checks, and checks related to government assistance programs, such as social security payments and unemployment benefits. In addition to financial gains from this fraudulent activity, criminals may continue to exploit their victims by using the personal identifiable information found in the stolen mail for future fraud schemes, such as credit card fraud or synthetic identity fraud. These fraud schemes are perpetrated by both individuals and organized criminal enterprises.
Why is check fraud still so prevalent when most consumers have moved away from check writing? The increase in government assistance checks during the pandemic no doubt played a role in the rise. The ease of physical entry into mailboxes, including the USPS blue collection boxes, makes this an evergreen crime for all experience levels. A recent check fraud case involved the conviction of a former bank employee for fraudulently opening bank accounts from the proceeds of stolen checks from the mail of churches and religious institutions. The banker and his co-conspirators opened approximately 412 fraudulent bank accounts with these stolen checks, to the tune of almost $2 million. The convicted banker faces a maximum sentence of 30 years in federal prison for each of conspiracy to commit bank fraud; bank fraud; making false entries in bank records; and receipt of a bribe or reward by a bank employee.
