The Financial Crimes Enforcement Network and IRS last week issued an alert for financial institutions on fraud schemes related to the employee retention credit, or ERC, available to businesses and tax-exempt organizations affected by the COVID-19 pandemic. The alert provides an overview of typologies associated with ERC fraud and scams, 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.
Red flags include a business account that receives more than one ERC check deposit over multiple days, small business accounts that receive an ERC check deposit that is not commensurate with the size of the business or the number of employees, and an account receiving an ERC check deposit has no deposits other than Treasury-issued checks.
