WASHINGTON, D.C. — The U.S. Department of the Treasury’s Financial Crimes Enforcement Network has issued new guidance urging banks and other financial institutions to increase scrutiny of financial activity linked to the unlawful employment of unauthorized workers, citing concerns about payroll fraud, identity theft, tax evasion, and money laundering.
The advisory, issued jointly with the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration in coordination with the Internal Revenue Service, outlines risks that federal officials say can arise when employers conceal unauthorized workers through fraudulent payroll arrangements.
According to FinCEN, financial institutions reported more than $2.5 billion in suspicious activity connected to payroll tax fraud schemes during 2025.
Treasury officials said some schemes involve labor brokers who establish shell companies to process off-the-books payrolls for employers. Under these arrangements, employers route payments through intermediary entities that allegedly distribute wages without withholding required federal or state payroll taxes.
The advisory states that such operations may rely on identity theft, including the unauthorized use of Social Security numbers and other personal information, to obtain employment, benefits, and financial services.
Federal officials also warned that illicit proceeds generated through some employment and payroll fraud schemes can be used to support broader criminal activity, including drug trafficking, human trafficking, and other offenses connected to transnational criminal organizations.
In one case highlighted by FinCEN, two foreign nationals allegedly operated a payroll scheme that employed undocumented workers and caused more than $38 million in losses to the United States.
The guidance identifies agriculture, construction, domestic service, hospitality, and other labor-intensive industries as sectors where financial institutions may encounter indicators of payroll and employment-related fraud.
FinCEN also encouraged banks to consider the use of Individual Taxpayer Identification Numbers, or ITINs, as a potential risk factor when conducting customer due diligence. The agency noted that banks should evaluate ITIN usage alongside other available information when opening accounts or extending credit.
The advisory includes 18 red-flag indicators intended to help financial institutions identify and report suspicious activity associated with unauthorized employment and related financial crimes.
FinCEN is directing institutions filing Suspicious Activity Reports related to the advisory to reference the term “FINANCIALINTEGRITY-2026-A002” in their submissions. The agency also encouraged financial institutions and members of the public to report employers suspected of knowingly employing unauthorized workers to U.S. Immigration and Customs Enforcement.
The guidance supports the administration’s broader efforts to strengthen oversight of the financial system and detect fraud schemes tied to unlawful employment practices.
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