FinCEN alert issued on fraud schemes targeting federal student aid

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an alert recently to urge financial institutions to be vigilant in detecting, identifying and reporting suspicious activity connected to fraud schemes targeting The U.S. Department of Education’s Office of Federal Student Aid programs.

Fraud rings use stolen and fraudulent identities, as well as other tactics, to enroll in educational institutions and unlawfully acquire funds from Federal student aid programs. The schemes not only
result in losses to Federal student aid programs, but also, in some cases, real students face difficulties enrolling in classes because of the number of fraudulently enrolled “students.”

The Department of Education has launched a nationwide effort to prevent fraud in federal student aid programs, according to the alert. The document lists types of scams targeting FSA programs, such as the creation of “ghost students” using false identities to obtain funds. It also lists red flags associated with student aid-related fraud.