Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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9/8/2004 USA PATRIOT Act Monitor News Release: Refund Anticipation Loan Fraud Often Overlooked by Financial Institutions in Filing SARs

The 7th issue of FinCEN's SAR Activity Review notes that financial institutions are often failing to file SARs where tax refund anticipation loan fraud may be occurring. Noting that its investigators had only found two SARs describing fraudulent loans based on sham tax returns, the Review includes a section designed to increase institutional awareness of this type of fraud. (There were nine other SARs that referred to suspicious deposits of rapid refunds or multiple deposits of refund loan checks by the same customer.) The level of SAR filing in this area does not square with calculations of the IRS that, by the end of 2003, one in every 966 electronically filed federal tax returns was fraudulent. SAR Review 7 lists 11 red flags that may indicate tax refund anticipation loan fraud. These red flags, and the types of schemes that the IRS and enforcement agencies are detecting, will be discussed in the September issue of the Monitor.

© 2004. The USA PATRIOT Act Monitor and accompanying news releases are published by the Civic Research Institute, 4478 U.S. Route 27, P.O. Box 585, Kingston, NJ 08528, 609-683-4450. The Monitor and the news releases are an update service for Money Laundering, Terrorism and Financial Institutions: Law Regulation Compliance, by Raymond Banoun and John Ensminger. All rights reserved. The information in this publication is not intended to replace the services of a trained legal professional.

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