FinCEN Analysis Finds Mail Theft-Related Check Fraud a Widespread Problem For Banks

Posted: Sep 11 2024

The Financial Crimes Enforcement Network received more than 15,000 Bank Secrecy Act reports about possible mail theft-related check fraud during a six-month period in 2023, which were associated with $688 million in actual or attempted transactions, the agency said in a financial trend analysis on the problem. Banks filed 88% of check fraud reports, the majority coming from small- to medium-sized banks.

Criminals most frequently alter and then negotiate stolen checks, according to FinCEN’s analysis. The second most frequent use of stolen checks was creating counterfeit checks—where a stolen check is used as a template to produce counterfeits. The third most common outcome was perpetrators fraudulently signing and depositing checks. The updated typologies criminals use range from unsophisticated to highly organized and complex, often involving advanced counterfeit check technology and chemicals that can remove ink from stolen checks, it added.

Many perpetrators utilized methods that avoid human contact, including check deposits via remote deposit capture or at ATMs and opening accounts online rather than in person, FinCEN said. Check fraud was reported in every state as well as Washington, D.C., and Puerto Rico. Alabama had the highest reporting rate relative to its population, followed by Georgia, D.C., New York and New Jersey.

To combat check fraud, including by mail, and other fraud and scams, the American Bankers Association offers the ABA Fraud Contact Directory, an online resource that helps banks connect with other institutions to resolve warranty breach claims for checks as well as claims for unauthorized and/or fraudulent transfers for wires, ACH, RTP or FedNow.
To learn more, visit: https://www.fincen.gov/sites/default/files/shared/FTA-Check-Fraud-FINAL508.pdf