FinCEN and bank regulators urge US banks to flag illicit activity linked to unlawful employment

The Financial Crimes Enforcement Network (FinCEN), together with the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and the National Credit Union Administration (NCUA), issued a joint advisory on Friday 5 June urging banks and other financial institutions to identify and report suspicious activity linked to the unlawful employment of people not authorised to work in the US. The advisory was issued in coordination with the Internal Revenue Service.

The advisory, FIN-2026-A002, focuses on identity theft and payroll fraud schemes used by employers in sectors such as agriculture, construction, domestic service and hospitality to conceal violations of the Immigration Reform and Control Act. According to FinCEN, financial institutions reported more than $2.5 billion in suspicious activity associated with payroll tax fraud schemes in 2025 alone.

18 RED FLAGS

The advisory lists 18 red flags grouped by customer type. For individuals, they include a Social Security number that does not match Social Security Administration records, accounts opened with a non-US passport or Individual Taxpayer Identification Number by people claiming to run small businesses in those sectors who receive large recurring cheque deposits, recurring peer-to-peer payments from small or newly established companies in agriculture, construction, domestic service, hospitality or staffing, and large volumes of cheques from such firms cashed on a recurring basis at money services businesses, including cheque cashers. For business customers, indicators include a history of Immigration and Customs Enforcement worksite compliance violations, significant business operations with little to no payroll activity, and large volumes of cheques under $1,000 paid to many people.

Institutions filing suspicious activity reports in response are asked to use the key term FINANCIALINTEGRITY-2026-A002.

CFPB STATEMENT ON LENDING

Separately, the Consumer Financial Protection Bureau issued a statement, published in the Federal Register on 8 June, saying creditors may, and in some cases must, consider an applicant's immigration status when assessing ability to repay under the Truth in Lending Act and Regulation Z, where documentation indicates that repayment ability will change because of that status. The statement followed Executive Order 14406, which directed the CFPB to consider clarifying the issue.