SAR Guidelines for Reporting Advance Fee Schemes

FinCEN has received inquiries regarding whether a financial institution required to report suspicious activities pursuant to Bank Secrecy Act regulations, 31 C.F.R. Part 103, should file a Suspicious Activity Report on ?4-1-9? or ?advance fee fraud? schemes.

An advance fee fraud scheme typically begins when a person receives an unsolicited communication from someone in a foreign country, often Nigeria or other African nations, who purports to be a current or former official of the foreign government. The solicitation will assert an urgent need for the recipient?s help to transfer a large amount of money. Explanations regarding the money?s source will vary and may include proceeds from over-invoiced contracts or other contract fraud, disbursement of money from wills, sale of crude oil at below market prices, purchases of real estate, currency conversions, or winnings from an international lottery. The recipient is promised either most or all of the money to be transferred, or a substantial commission. These schemes have a common denominator?eventually the target of the scheme will be required to pay up-front (advance) fees (licensing fees, taxes, attorney fees, transaction fees, bribes, etc.) to receive the money or commission. Detailed information about these schemes is available from the United States Secret Service website, http://www.secretservice.gov/alert419.shtml.

Financial Institution Guidance on Filing Suspicious Activity Reports

If a monetary loss has not been incurred from an advance fee fraud scheme and there are no other indicators of illegal activity warranting the filing of a Suspicious Activity Report, a financial institution should not file a Suspicious Activity Report and no further action is necessary.

If a monetary loss has been incurred from an advance fee scheme or the scheme involves other indicators of illegal activity, such as investment fraud, counterfeiting, forgery, or the misuse of an official United States Government seal, a financial institution should consider filing a Suspicious Activity Report based on the requirements of 31 C.F.R. Part 103 and the Suspicious Activity Report filing instructions. In addition, the financial institution should contact the local United States Secret Service field office, local police department, or other appropriate law enforcement agency.

For general questions regarding Suspicious Activity Report filing, financial institutions should contact their primary federal regulator, self-regulatory organization, or FinCEN?s Regulatory Helpline at (800) 949-2732.

Consumer Guidance

Financial institutions may direct consumers with questions regarding these schemes to the United States Secret Service website, http://www.secretservice.gov/ alert419.shtml. If a consumer has incurred a monetary loss from an advance fee fraud scheme, the consumer may be directed to the local United States Secret Service field office. Contact information for field offices is available on the United States Secret Service website.

Excerpted from SAR Activity Review Issue , page 47