Steve H. Powell & Company

  • Contact
  • About us
  • Management
  • Services
    • Loan Review
    • Compliance
    • Due Diligence
    • ALLL Methodology
    • Strategic Planning
  • Newsletter
  • Blog
  • Contact
  • About us
  • Management
  • Services
    • Loan Review
    • Compliance
    • Due Diligence
    • ALLL Methodology
    • Strategic Planning
  • Newsletter
  • Blog

​

FinCEN Alert: Pig Butchering

9/25/2023

0 Comments

 
Authors: Jeremy Clifton, CRCM, CAMS and Nick Milcarek 

On September 8, 2023, FinCEN issued an alert regarding the fraud scheme known as “pig butchering”. Pig butchering is a form of fraud that involves victims (the pigs) giving money to foreign actors who operate under the guise of a successful money manager involved in crypto currency (virtual currency) trading. Once the perpetrator is satisfied with the amount the victim has given, they drain the entire “account” of funds from that victim (the butchering). Many of these scammers are victims of labor trafficking directed by large crime syndicates in Southeast Asia who reach out to millions of people around the world. These scammers usually reach out to the victims through social media, email, or text to persuade them into buying into this supposed “high return investment”. The fraudster will leverage high pressure sales tactics such as them missing out on a potential lucrative opportunity to further convince them into action. Once the victim begins to trust the supposed “investor”, they are directed to use a fraudulent website most likely controlled by the scammer. Note that this can also include trusted third-party applications. The aggressor may also demand remote access to the victim’s devices to create accounts via virtual asset service providers (VASP). Many victims are also asked to purchase multiple pre-paid cards or make large wire transfers to unknown entities. Unfortunately, victims have been known to take out money from tax advantage accounts, take on a second mortgage, or a home equity line just to put money into the scheme. Recent incidents have shown more successful scammers even inviting whole families and friend groups to join in. After the victim starts to buy in, the perpetrator must maintain legitimacy by fabricating high returns and even allowing the victim to take small amounts out of the “fund”. This builds confidence and reassures the victim that the investment is real. If the fraudster starts to believe that the victim is losing confidence in them and the investment, they become more aggressive by developing reasons to stay in and pressuring them to not miss out on the opportunity. If that does not work, the perpetrator pulls out all the money from the account and eliminates any contact with the victim(s).

One more interesting comment that FinCEN noted in this FIN is that financial institutions should “When requested to provide supporting documentation, financial institutions should take special care to verify that a requestor of information is, in fact, a representative of FinCEN or an appropriate law enforcement or supervisory agency. A financial institution should incorporate procedures for such verification into its BSA compliance or AML program. These procedures may include, for example, independent employment verification with the requestor’s field office or face-to-face review of the requestor’s credentials.” If your bank does not already have such a procedure in your written BSA program, it’s a good idea to do so now.
​
There are many red flags that can indicate a possible pig butchering scheme. Financial institutions should analyze multiple factors associated with historical financial activity, transactions in line with business practices, and whether the customer shows signs of multiple red flags. Red flags, and the formal alert by FinCEN can be found here: FinCEN_Alert_Pig_Butchering_FINAL_508c.pdf
0 Comments



Leave a Reply.

    Archives

    March 2025
    February 2025
    January 2025
    November 2024
    October 2024
    September 2024
    August 2024
    July 2024
    May 2024
    March 2024
    February 2024
    January 2024
    December 2023
    November 2023
    September 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    July 2021
    May 2021
    February 2021
    January 2021
    October 2020
    August 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    March 2019
    January 2019
    September 2018
    August 2018
    June 2018
    May 2018
    April 2018
    February 2018
    January 2018
    October 2017
    August 2017
    July 2017
    June 2017
    March 2017
    February 2017
    October 2016
    September 2016
    August 2016
    June 2016

    RSS Feed

Proudly powered by Weebly