FinCEN Advisory Warns Financial Institutions of Schemes Involving Unlawful Employment
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a new advisory urging financial institutions to remain vigilant against the unlawful employment of illegal aliens.
"This advisory highlights identity theft and payroll fraud as key features in schemes by employers in agriculture, construction, domestic service, hospitality, and other industries."
Key Details of the Advisory
- The advisory was issued jointly with the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration, in coordination with the Internal Revenue Service.
- It directly supports Executive Order 14406, "Restoring Integrity to America’s Financial System."
- The advisory specifically highlights identity theft and payroll fraud as central features of schemes used by employers in agriculture, construction, domestic service, hospitality, and other industries.
Risks Highlighted
The advisory outlines several significant risks associated with these practices:
- Unfair Advantage: Employers gain an unfair competitive advantage over legitimate businesses, depress wages, facilitate identity theft, and steal tax revenue.
- Financing Criminal Enterprises: Unlawfully obtained wages may finance transnational criminal organizations, including those involved in drug trafficking, human trafficking, and other illicit activities.
- Financial Impact: One case study describes a payroll scheme that employed undocumented aliens and cost the United States over $38 million.
Red Flag Indicators and Reporting
- Detection Tools: The advisory includes 18 red flag indicators to help financial institutions detect suspicious activity.
- Reporting Protocol: FinCEN requests that financial institutions use the key term "FINANCIALINTEGRITY-2026-A002" in Suspicious Activity Reports (SARs).
- Public Reporting: Tips and complaints can be reported directly to Immigration and Customs Enforcement (ICE) via an online tip form or phone number.
Background Context
- Record Suspicious Activity: In 2025, financial institutions reported over $2.5 billion in suspicious activity specifically associated with payroll tax fraud schemes.
- Broker Tactics: The advisory notes that complicit labor brokers may use foreign identity documents or Individual Taxpayer Identification Numbers (ITINs) to open accounts for shell companies, further obscuring the flow of funds.