FinCEN Warns Banks to Watch for Passport Card Fraud

Federal authorities are warning banks against the rising threat of passport card fraud.

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Department of State’s Diplomatic Security Service (DSS) issued a notice to financial institutions Monday (April 15), urging them to be on the lookout for suspicious activity related to the use of counterfeit passport cards.

“Since 2018, DSS has identified a concerning increase in the use of counterfeit U.S. passport cards by individuals and fraud rings to gain access to victim accounts at financial institutions nationwide,” the notice said.

“This fraud occurs in person at financial institutions and involves an individual impersonating a victim by using a counterfeit U.S. passport card that contains the victim’s actual information.”

According to the notice, the DSS estimates that between 2018 and 2023, those schemes led to $10 million in actual losses and $8 million in additional attempted losses, with more than 4,000 victims in the U.S.

“However, DSS and other law enforcement agencies assess that losses associated with U.S. passport card fraud and associated identity theft are likely significantly greater and seek increased reporting by financial institutions to identify additional illicit activity,” FinCEN said.

The notice follows FinCEN’s request from banks last month for comments on its Customer Identification Program (CIP) requirements.

The goal is to obtain insights that would help modernize various identification practices, and in its news release last month, FinCEN noted that the request for information “will inform FinCEN’s understanding in this area and evaluate the risks, benefits and safeguards if banks were permitted to collect partial SSN information from a customer and subsequently use reputable third-party sources to obtain the full [Social Security number] prior to account opening.”

As PYMNTS wrote recently, robust verification measures for banks are necessary. Research by PYMNTS Intelligence and DataVisor from the report “Fraud Takes on a New Identity” found that 4.6% of transactions recorded by banks were classified as synthetic identity fraud.

In its yearly findings on global financial institution enforcement actions, Fenergo estimated that anti-money laundering (AML) and regulatory penalties imposed on firms ballooned 57% in 2023 to $6.6 billion.

Additional PYMNTS Intelligence data showed that 95% of AML executives are focused on embracing advanced technologies to battle money laundering and other schemes, with 85% of these executives saying they are concerned about the complexity of integrating new technologies. Just 38% of businesses are using document and identity authentication tools.