Takeaway:
The Financial Crimes Enforcement Network (FinCEN), in coordination with the U.S. Department of State’s Diplomatic Security Service (DSS), has issued a Notice to financial institutions alerting them to a rise in identity theft and fraud schemes involving counterfeit U.S. passport cards. Financial institutions are urged to enhance vigilance in detecting and reporting suspicious activities associated with this fraudulent activity.
Treliant supports financial institutions by improving their ability to identify and defend against these threats through advanced fraud detection strategies and comprehensive compliance training tailored to the evolving landscape of financial crime.
Highlights
The Notice, which was released on April 15, 2024, to financial institutions emphasizes the need for increased vigilance in identifying and reporting activities related to the use of counterfeit U.S. passport cards for identity theft and fraud. FinCEN noted that this has been a rising trend since 2018, where fraudsters generate these cards to access and defraud victims’ bank accounts, resulting in significant financial losses.
FinCEN and DSS also highlighted a series of technical, behavioral, and financial red flags that can aid financial institutions in identifying fake passport cards. The indicators below are meant to be assessed in the context of a customer’s overall activity to determine the likelihood of fraud. They include but are not limited to:
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U.S. Passport Card Fraud and Identity Theft Red Flags
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| Technical[1] |
- The photo on the presented U.S passport card has a white, blurry border; a dark gray square surrounding the photo; or is in color. Legitimate U.S. passport cards are laser engraved, which produces a clear and crisp grayscale portrait image.
- The photo of the account holder on file does not match the individual present who is pictured in the counterfeit U.S. passport card.
- The card bearer’s date of birth and other areas of text are flat and do not feel raised when touched. Legitimate U.S. passport cards have tactile text on certain areas of the card and should feel textured.
- The holographic U.S. Department of State seal is missing or has been substituted with a seal from an unrelated agency.
- The smaller portrait is blurry and does not contain micro-printed text with information specific to the bearer of the card, or the portraits are of different people. On legitimate U.S. passport cards, the secondary photo is a complex image that contains personalized details that are microprinted to create the image.
- The signature of a customer presenting a U.S. passport card for identification does not match the customer’s signature card on file.
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| Behavioral |
- A customer presenting a U.S. passport card as identification may not know or be able to reference personal identifiers, including date of birth or social security number.
- If a customer presenting a U.S. passport card as identification does know or is able to reference personal identifiers, including date of birth or social security number, they nevertheless lack basic account knowledge and are excessively interested in specific details about their account balances and withdrawal limits.
- A customer appears to be following directions by phone from a third-party.
- A customer presents a U.S. passport card for identification and opens a new joint account with a third-party with whom the customer has no prior relationship.
- A customer conducts transactions characteristic of U.S. passport card fraud at branch locations outside of their geographical footprint.
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| Financial |
- A customer presents a U.S. passport card as a form of identification and subsequently withdraws cash, purchases a cashier’s check, purchases money orders, or initiates wire transfers for a large amount for no business or apparent lawful purpose.
- A customer presents a U.S. passport card as a form of identification and attempts to negotiate an uncharacteristic, sudden, or abnormally large volume of checks made payable to cash.
- A customer presents a U.S. passport card as a form of identification, asks for daily withdrawal and transfer limits, and subsequently withdraws cash, initiates a wire transfer, or purchases a cashier’s check made payable to a third party.
- A customer presents a U.S. passport card before transferring funds out of an existing account to a recently established joint account, and the funds are then rapidly withdrawn or wired from the joint account to a separate, unrelated account.
- A customer makes withdrawals from an account at multiple branch locations for no business or apparent lawful purpose using a U.S. passport card as identification.
- A customer engages in behavior that suggests efforts to evade the CTR filing requirements (e.g., the customer alters or cancels a transaction when informed of the CTR filing requirement or engages in structuring by conducting multiple cash withdrawals below $10,000 during one business day).
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The Notice highlights a concerning rise in the misuse of counterfeit U.S. passport cards to execute identity theft and fraud schemes across financial institutions, as identified by DSS. The urgency of these efforts is underscored by recent Federal Trade Commission (FTC) data* showing a significant rise in overall fraud losses, surpassing $10 billion in 2023, with a notable increase in investment scams and imposter schemes. This increase in fraud losses comes despite a similar number of overall fraud reports over the past two years (2.6 million). This indicates that the average fraud loss per report has increased tremendously. By keeping current with fraud trends and incorporating red flags such as the above into regularly scheduled training and investigative protocols, financial institutions can mitigate fraud, thereby safeguarding their clients’ assets and protecting their institutional reputation.
*Source: Federal Trade Commission
[1] See Appendix: Security Features of Legitimate U.S. Passport Cards on pp. 7-9 of the Notice for visual images and tips from DSS of how to identify fraudulent passport cards.
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