The Financial Crimes Enforcement Network has issued an alert for financial institutions and the broader public on a virtual currency investment scam known as “pig butchering.” In the scams, bad actors use fake identities to build personal relationships with victims they call “pigs” so they can steal their assets. In many cases, the “butchering” phase of the scam involves convincing victims to invest in virtual currency—or in some cases, over-the-counter foreign exchange schemes—with the intent of defrauding them of their investments, according to the agency.
“Pig butchering scams are largely perpetrated by criminal organizations based in Southeast Asia who use victims of labor trafficking to conduct outreach to millions of unsuspecting individuals around the world,” FinCEN said in the alert. “Multiple U.S. law enforcement sources estimate victims in the United States have lost billions of dollars to these scams and other virtual currency investment frauds.”
The alert explains the pig butchering scam methodology, provides red flag indicators to assist with identifying and reporting related suspicious activity, and reminds financial institutions of their reporting requirements under the Bank Secrecy Act, FinCEN said.