Massive Expansion Of Government Aid Attracts Fiscal Miscreants
August 12, 2020
The National Credit Union Administration is out with its advisory on fraud alerts related to the ongoing pandemic. A lot of the potential fraud involves government assistance programs, according to NCUA.
Here are highlights from the report.
Financial Institution Fraud
New account fraud, identity theft, cybersecurity risks, imposter and money mule schemes, and mobile banking application fraud are on the rise as a result of the opportunities related to the ongoing COVID-19 pandemic. Fraudsters are particularly motivated to attempt these schemes because of the predominately virtual environment, and the significant shift towards remote access. Fraudsters are increasingly seeking opportunities to exploit vulnerabilities in financial institutions’ remote access systems and customer-facing processes.
Small Business Administration Loan Fraud
The Small Business Administration (SBA) is currently providing relief to small businesses through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans.
The most common red flags in these SBA programs include:
Business Tax Credits Fraud
The CARES Act allows businesses to take an Employee Retention Credit though business tax credits from the IRS. This credit is designed to encourage employers to keep employees on payroll through a refundable tax credit of 50 percent for up to $10,000 in qualified wages, which is paid to an employee by an eligible employer experiencing economic hardship related to the COVID-19 pandemic. The CARES Act also authorizes an additional Credit for Sick and Family Leave for employers that pay these wage types.
The most common red flags associated with these tax credits include:
Unemployment Insurance Fraud
The CARES Act provides additional unemployment insurance funding for eligible individuals through the Pandemic Unemployment Assistance (PUA) program, the Federal Pandemic Unemployment Compensation program (FPUC), and the Pandemic Emergency Unemployment Compensation (PEUC) program.
The most common red flags associated with these programs include:
Funds Also To Support Economic Empowerment Of Blacks And Low- And Moderate-Income Communities
The Bottom Line
Most financial institutions have tremendous excess capacity in their existing branches today.