Identifying Tax Refund Fraud

It looks like somebody is doing something to try to help alleviate some of the red tape involved in identifying tax return fraud.

 

 

 

 

 

 

On my most recent search for tax return fraud news and updates, I found out;

“The Financial Crimes Enforcement Network (FinCEN) is issuing this Advisory to assist financial institutions with identifying tax refund fraud and reporting the activity through the filing of Suspicious Activity Reports (SARs). “

Apparently this measure will assist financial institutions  with the reporting of tax return fraud by requiring that they submit a report any time there is any suspicious activity or “red flags” such as:

• Multiple direct deposit tax refund payments
• Suspicious or authorized account opening at a depository institution, on behalf of individuals who are not present, with the fraudulent actor being named as having signatory authority.
• Opening multiple prepaid card accounts by one individual in different names using valid TINs for each of the supplied names, and subsequent mailing of the prepaid cards to the same address.
• Business account holders processing third-party tax refund checks in a manner inconsistent with their stated business model or at a volume inconsistent with expected activity
• Business account holders processing third-party tax refund checks and conducting transactions inconsistent with normal business practices, which may include: (etc., etc.)
• Multiple prepaid cards that are associated with….
• The opening of a business account for a check cashing business at a financial institution,…….
• A sudden increase in volume moving through the account of an existing check cashing service, involving tax refund checks issued to individuals from across the United States.

You may read the rest here:  FIN-2012-A005

I definitely didn’t want to plagiarize the entire article.

The document goes on to say that if a financial institution knows, suspects or basically has reason to believe that a transaction is fraudulent in nature then they had better report it (just not in those words) by filing a SAR (suspicious activity report).

I’m not sure what type of dent this will make in preventing tax return fraud if any.  But I’m sure glad to see that something is at least being worked on.