FinCEN Combats Stolen Identity Tax Refund Fraud through Geographic Targeting Order for South Florida

July 14, 2015

The Financial Crimes Enforcement Network (FinCEN) issued a Geographic Targeting Order (GTO) yesterday requiring South Florida check cashers to temporarily enhance the identification requirements for customers cashing Federal tax refund checks. The GTO is intended to combat the increase in “stolen identity tax refund fraud.” Typical schemes of concern to FinCEN involve criminals filing fraudulent tax returns after stealing a victim’s identity and then cashing the refund checks at local check cashers using fake identification to evade law enforcement. The GTO will require check cashers in Miami-Dade and Broward counties to obtain and record, at the time of the transaction, additional identifying information about customers cashing tax refund checks over $1,000. The additional identifying information required by the GTO will include a copy of the customer’s government-issued identification, a digital photograph of the customer taken at the time of the transaction, the customer’s phone number, and the customer’s thumbprint.

For purposes of the GTO, a “check casher” is defined by FinCEN’s existing regulations.  See 31 CFR 1010.100(ff)(2).  The term generally includes a person that accepts checks or monetary instruments in return for currency or other monetary instruments (or a combination of the two), in an amount greater than $1,000 for any person on any day in one or more transactions. Check cashers subject to the GTO must comply with its requirements from August 3, 2015 through January 30, 2016 and retain the additional information for five years from the last date on which the GTO is in effect.   

FinCEN, the Internal Revenue Service, and the U.S. Attorney’s Office for the Southern District of Florida are particularly concerned that identity thieves are attempting these schemes outside of tax filing season to catch financial institutions off guard and slip through their anti-money laundering controls. The GTO will therefore cover a time period in which the proportion of fraudulent tax refund transactions is high compared to the relatively low total volume of transactions.  FinCEN clarified that the GTO does not represent any determination concerning any check casher’s knowledge or lack thereof of any fraudulent schemes. The GTO also imposes no obligation on financial institutions that are not expressly covered under the GTO. 

A copy of the GTO is available here and FinCEN’s press release is available here

This GTO follows FinCEN’s GTO issued on April 21, 2015 requiring approximately 700 electronics exporters located near Miami, Florida to record and report to FinCEN additional information on certain transactions involving cash and certain types of negotiable instruments. The April 21 GTO was intended to shed light on transactions tied to trade-based money laundering schemes used by drug cartels to launder their proceeds. Our memo on the April 21 GTO is available here