FinCEN Alert FIN-2023-Alert007 — COVID-19 Employee Retention Credit Fraud (Nov. 22, 2023)

Record facts

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1.	
Internal Revenue Service’s (IRS) CI is the criminal investigation division of the IRS.  For more information on CI,
see IRS, About Criminal Investigation (Sept. 28, 2022).
2.	
31 U.S.C. § 5312(a)(2); 31 CFR § 1010.100(t).
3.	
The ERC was established in Public Law 116–136 § 2301, and is occasionally referred to as the Employee Retention 
Tax Credit.  It was further amended by the COVID-Related Tax Relief Act of 2020, the American Rescue Plan Act of 
2021, and the Infrastructure Investment and Jobs Act of 2021.  For more information about the Employee Retention 
Credit, see generally IRS, COVID-19-Related Employee Retention Credits: Overview (Jan. 31, 2023), and IRS, Employee 
Retention Credit (last updated Nov. 9, 2023) (“IRS Employee Retention Credit”).
4.	
Public Law 116–136.
5.	
IRS, “Employee Retention Credit available for many businesses financially impacted by COVID-19” (last updated Oct. 
23, 2023) and “Employee Retention Credit - 2020 vs 2021 Comparison Chart” (Feb. 28, 2023).  Employers may receive 
up to $26,000 per employee if they meet certain conditions.  See IRS, National Taxpayer Advocate, “Objectives Report 
to Congress Fiscal Year 2024” (June 23, 2023), p. v.  Further, over 860,000 business have claimed over $152 billion 
in credits as of March 3, 2023, and the IRS continues to review claims ahead of the application deadline.  See also 
“Appendix A: COVID-19 Employer Credits Claimed, by Type of Credit” in IRS, Data Book, 2022, (Apr. 14, 2023), p. 75.
6.	
The general deadline for applying for the ERC for the 2020 tax year is April 15, 2024, and, for the 2021 tax year, it 
is April 15, 2025. “Is there a deadline to claim the ERC?” in IRS, Frequently Asked Questions about the Employee 
Retention Credit (last updated Nov. 7, 2023).
7.	 To be eligible for the ERC, employers must have: (1) sustained a full or partial suspension of operations due to 
orders from an appropriate governmental authority limiting commerce, travel, or group meetings due to COVID-19 
during 2020 or the first three quarters of 2021; (2) experienced a significant decline in gross receipts during 2020 or 
a decline in gross receipts during the first three quarters of 2021; or (3) qualified as a recovery startup business for 
the third or fourth quarters of 2021 (“ERC Eligibility Requirements”).  For more information on ERC eligibility, see 
IRS Employee Retention Credit, supra Note 3, at p. 1.  For further analysis related to IRS’ backlog and processing 
delays as a result of the fraudulent claims, see IRS, National Taxpayer Advocate, “Objectives Report to Congress 
Fiscal Year 2024” (June 23, 2023), p. v.
FIN-2023-Alert007	
	
November 22, 2023
FinCEN Alert on COVID-19 Employee Retention Credit Fraud 
The U.S. Department of the Treasury’s (Treasury) Financial 
Crimes Enforcement Network (FinCEN), in close coordination 
with Internal Revenue Service Criminal Investigation 
(CI),1 is issuing this alert to financial institutions2 on fraud 
schemes related to the COVID-19 Employee Retention Credit 
(ERC)3 and is urging vigilance in identifying and reporting 
related suspicious activity.  The ERC was authorized by the 
Coronavirus Aid, Relief, and Economic Security (CARES) Act4 
as a tax credit to encourage businesses to keep employees on 
payroll during the COVID-19 pandemic and was subsequently 
extended and amended three times.5
CI has identified ongoing fraud and scams related to the ERC that, to date, have resulted in 323 
investigations involving more than $2.8 billion of potentially fraudulent ERC claims throughout 
tax years 2020, 2021, 2022, and 2023.6  Further, these fraudulent claims added to, and disrupted, 
the IRS’s ERC claim review process, which created a significant backlog and caused delays in the 
processing of legitimate ERC claims filed by eligible businesses.7  While portions of that backlog 
Suspicious Activity Report (SAR) 
Filing Request:
FinCEN requests that financial 
institutions reference this alert in 
SAR field 2 (Filing Institution Note 
to FinCEN) and the narrative by 
including the key term 
“FIN-2023-ERC” and select SAR 
field 34(z) (Fraud – other).

F I N C E N  A L E R T
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have cleared, the IRS has shifted its attention to investigating questionable ERC claims and has 
placed a moratorium on the filing of any new claims.8
Fraud, including financial crimes related to the COVID-19 pandemic,9 is the largest source of illicit 
proceeds in the United States, and represents one of the most significant money laundering threats to 
the United States, as highlighted in the U.S. Department of the Treasury’s most recent National Money 
Laundering Risk Assessment,10 National Strategy for Combatting Terrorist and other Illicit Financing,11 
and Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) National Priorities.12
This alert provides an overview of typologies associated with ERC fraud and scams, highlights select red 
flags to assist financial institutions in identifying and reporting suspicious activity and reminds financial 
institutions of their reporting requirements under the Bank Secrecy Act (BSA). 
The information contained in this alert is derived from FinCEN’s analysis of BSA data, open-source 
reporting, and information provided by law enforcement partners.
Trends and Typologies of ERC-Related Financial Crimes
Individuals and businesses have fraudulently abused several COVID-19-related assistance programs 
intended to support eligible businesses.13  The ERC has become a popular target for such fraud as 
identified by CI and other law enforcement agencies.  Individuals have been known to file fraudulent 
ERC claims using shell companies or existing but ineligible businesses and, in some cases, have 
abused the taxpayer-funded program to pay for lavish purchases and personal expenses upon receipt 
of the credit.
8.	
IRS Press Release, “IRS Commissioner signals new phase of Employee Retention Credit work; with backlog 
eliminated, additional procedures will be put in place to deal with growing fraud risk” (July 26, 2023).  Further, on 
Sept. 14, 2023, the IRS Commissioner announced an immediate moratorium through at least Dec. 31 on processing 
new claims in an effort to protect honest small business owners from scams.  See IRS News Release, “To protect 
taxpayers from scams, IRS orders immediate stop to new Employee Retention Credit processing amid surge of 
questionable claims; concerns from tax pros” (Sept. 14, 2023).
9.	
For previous FinCEN advisories related to COVID-19 fraud, see FinCEN, “Advisory on Financial Crimes Targeting 
COVID-19 Economic Impact Payments” (Feb. 24, 2021); FinCEN, “Advisory on COVID-19 Health Insurance and 
Health Care-Related Fraud” (Feb. 4, 2021); FinCEN, “Advisory on Unemployment Insurance Fraud During the 
Coronavirus Disease 2019 (COVID-19) Pandemic” (Oct. 13, 2020); FinCEN, “Advisory on Imposter Scams and Money 
Mule Schemes Related to Coronavirus Disease 2019 (COVID-19)” (July 7, 2020).  For a complete listing of FinCEN’s 
COVID-19-related publications, please visit FinCEN’s Coronavirus webpage.
10.	 Treasury, “National Money Laundering Risk Assessment” (Feb. 2022), pp. 6-7.
11.	 Treasury, “National Strategy for Combatting Terrorist and Other Illicit Financing” (May 2022), p. 27.
12.	 FinCEN, “Anti-Money Laundering and Countering the Financing of Terrorism National Priorities” (June 30, 2021).
13.	 Treasury, “National Money Laundering Risk Assessment” (Feb. 2022), pp. 8-11; see also Government Accountability 
Office (GAO), “COVID Relief: Fraud Schemes and Indicators in SBA Pandemic Programs” (May 18, 2023); GAO, 
Report to Congressional Committees, “Fraud Schemes and Indicators in SBA Pandemic Programs” (May 18, 2023); 
Department of Justice (DOJ), U.S. Attorney’s Office, Northern District of Georgia, Press Release, “Stonecrest man 
sentenced to jail for defrauding the USDA COVID-19 relief program” (Aug. 3, 2021); DOJ, U.S. Attorney’s Office, 
Northern District of Georgia, Press Release, “Hampton man pleads guilty to seeking fraudulent IRS COVID relief” 
(Dec. 16, 2021); DOJ, U.S. Attorney’s Office, Middle District of Georgia, Press Release, “Business Owner Sentenced to 
Prison, Ordered to Pay Restitution, for CARES Act PPP Fraud” (Mar. 17, 2022).

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Identifying the ERC
The ERC is credited through a Treasury-
issued check that is mailed to the business 
address used to apply for the credit and 
deposited by the recipient.  The ERC is not 
issued via direct deposit. 
Financial institutions can identify the ERC on 
Treasury checks as the lower left of the check 
will reflect the tax quarter and IRS Form 
associated with the credit (e.g., “F-941”, “F-
943”, “F-944”, or “F-7200”).14 
14.	 The tax quarter and date are reflected in the lower left of the check and appear consecutively.  An example would 
include “12/2021 F-941” for ERC checks that reflect claims filed for the last tax quarter of 2021, using a Form 941 
(“Identifying the ERC”). For more information on forms used to claim an ERC, see “How do I claim the ERC?” in IRS, 
Frequently Asked Questions about the Employee Retention Credit (last updated Nov. 7, 2023).
15.	 See generally IRS News Release, “IRS opens 2023 Dirty Dozen with warning about Employee Retention Credit claims; 
increased scrutiny follows aggressive promoters making offers too good to be true” (May 20, 2023) (“2023 IRS Dirty 
Dozen”).
16.	 As highlighted by the IRS, filing a claim for the ERC is a complex process that requires careful review of eligibility 
requirements before applying.  Eligible employers can claim the ERC on an original or amended employment tax 
return for qualified wages paid between March 13, 2020, and December 31, 2021.  Businesses filing a retroactive 
ERC claim must file an amended employment tax return to claim the credit.  The ERC is not a program for which 
any business can apply to see if it is eligible, and businesses that wrongfully apply may be subject to penalties.  IRS, 
“Employee Retention Credit Eligibility Checklist:  Help understanding this complex credit” (last updated Sept. 19, 
2023).  See also IRS, Frequently Asked Questions about the Employee Retention Credit (last updated Nov. 7, 2023).
17.	 IRS News Release, “IRS alerts businesses, tax-exempt groups of warning signs for misleading Employee Retention 
scams; simple steps can avoid improperly filing claims” (May 25, 2023) (“IRS Alert May 2023”).
18.	 IRS, “IRS announces withdrawal process for Employee Retention Credit claims; special initiative aimed at helping 
businesses concerned about an ineligible claim amid aggressive marketing, scams” (Oct. 19, 2023).  See also IRS, 
“Withdraw an Employee Retention Credit (ERC) claim” (Oct. 19, 2023).
As described further below, the IRS has also 
been made aware of scams related to the ERC in 
which many businesses have been duped into 
filing ERC claims by third parties.15  During the 
2023 tax season, the IRS noted various scammers 
appeared throughout the United States using 
the false pretense of being tax credit experts to 
convince businesses to file for the ERC.  These 
third-party ERC promoters provided taxpayers 
with misinformation about the program and 
their business’ ability to meet the qualification 
criteria.  However, these promoters did not have 
the basis to make such claims, as they did not 
evaluate the business’ eligibility and merely saw
an opportunity to file additional ERC claims and turn a profit by charging fees related to those 
claims.16  Promoters have used witting and unwitting businesses as part of these schemes, and ERC 
fraud victims are at risk of having their claims denied or facing scenarios where they must repay 
the credit while scammers profit from the claim regardless of its outcome.17  The IRS has provided 
businesses that have not yet received the credit or those who have received the credit but have not 
cashed nor deposited their refund check with the opportunity to withdraw their filed ERC claims if 
they assess that they were pressured or misled into filing a claim.18

F I N C E N  A L E R T
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Filing of Fraudulent Claims
Use of Fabricated and Dormant Entities
Some individuals have fraudulently filed ERC claims with the IRS using fabricated and dormant 
entities.19  For ERC schemes, CI has observed that dormant entities typically had an EIN20 but did 
not have any activity and then filed taxes for at least one tax period during the claim period.
Case Study
Hollywood Man Arrested on Indictment Alleging He Fraudulently Sought over $65 Million 
in COVID-19 Employment Tax Credits
A Hollywood, California man was arrested and arraigned on federal charges alleging he sought 
more than $65 million from the IRS by falsely claiming on tax returns that his nonexistent 
farming business was entitled to COVID-19-related tax credits.  Kevin J. Gregory, 55, who is 
charged in a federal grand jury indictment with 17 counts of making false claims to the IRS, 
was arrested on May 25, 2023, by special agents with CI.  According to the indictment that was 
returned on May 11 and unsealed on May 26, from November 2020 to April 2022, Gregory made 
false claims to the IRS for the payment of nearly $65.4 million in tax refunds for a purported 
Beverly Hills-based farming-and-transportation company named Elijah USA Farm Holdings.  
The IRS issued a portion of the refunds Gregory claimed, and Gregory allegedly used that 
portion – more than $2.7 million – for personal expenses.21
Ineligible Businesses
As noted previously, there are specific requirements22 that a business must meet to qualify to 
receive the ERC.  Still, business owners may knowingly apply for the ERC hoping that they will 
obtain an ERC they are not eligible to receive.23  For example, businesses that received a Paycheck 
19.	 Fabricated entities, i.e., those without a physical location, and certain “shell” companies, are businesses that have 
been assigned an Employer Identification Number (EIN) by the IRS, but do not appear to exist; these businesses are 
fictitious entities established for the sole purpose of filing fraudulent returns and receiving fraudulent funds.  See 
FinCEN, Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. 59498 (Sept. 30, 2022).  Dormant 
entities, occasionally referred to as “shelf” entities, are businesses with minimal to no operational activity or whose 
financial activity or tax filings show large periods of inactivity followed by brief periods of activity, such as the filing 
or receipt of a claim.  Illicit actors may create these entities and shelve them until an opportune time, such as to 
capitalize on a tax program. 
20.	 An EIN is also known as a Federal Tax Identification Number and is used by the IRS to identify a business entity.  
Generally, businesses require an EIN.  While there are various ways businesses can apply for an EIN, those that apply 
online can receive an EIN immediately and at no cost.  See IRS, Employer ID Numbers (Updated July 6, 2023).
21.	 DOJ, U.S. Attorney’s Office, Central District of California, Press Release, “Hollywood Man Arrested on Indictment 
Alleging He Fraudulently Sought over $65 Million in COVID-19 Employment Tax Credits” (May 26, 2023).
22.	 See ERC Eligibility Requirements, supra Note 7, at p. 1.
23.	 According to the IRS, some tax professionals have reported receiving undue pressure from clients to participate and 
claim the ERC, even when the tax professional believes the client is not entitled to the credit.  The IRS has encouraged 
the tax professional community to continue to advise clients not to file ERC claims when the tax professional believes 
they do not qualify.  See 2023 IRS Dirty Dozen, supra Note 15, at p. 3.

F I N C E N  A L E R T
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Protection Program (PPP) loan through the IRS during the pandemic cannot use the same wages 
they counted in the PPP loan to apply for the ERC.24  Despite this, some businesses may file 
amended tax returns that misrepresent the businesses’ eligibility for the ERC, including falsifying 
staff wages during the pandemic or their status as a business that had operations fully or partially 
suspended by government orders during the pandemic.25  
Third-Party Promoters 
Third-party promoters, known as “ERC mills,” have been deploying aggressive marketing tactics 
such as mail notices designed to look like official IRS communications and advertisements on radio, 
social media, and television to convince businesses to use the promoters’ services to apply for the 
ERC.26  Promoters may also directly contact businesses through mail, phone, or walk-ins, indicating 
that they are “ERC experts” or tax professionals who have determined the business is missing 
out on COVID relief funds they are entitled to receive.27  Promotion scams are likely to target 
established businesses in an attempt to avoid IRS scrutiny in the claim.  
After convincing the business to apply for the ERC through dishonest tactics, ERC mills will 
file an ERC claim on behalf of the business, neglecting to inform the business of the eligibility 
requirements.28  These third-party scammers may refuse to provide detailed information to 
business owners on how the businesses’ eligibility determination was made and the computations 
used to determine the ERC amount.29  As a tactic to mitigate liability, the promoters may also avoid 
signing the ERC return they prepared for the business.  Promoters typically charge a business 
a large upfront fee, sometimes upwards of 30-40 percent of the expected ERC, or a fee that is 
contingent on the amount of the credit.30  Since these promoters are profit-driven, businesses for 
whom they file may receive an extremely large ERC that is not commensurate with the size of the 
business.  
Promoters may also submit claims on behalf of businesses without their knowledge or using stolen 
information.31  ERC mills may also steal the taxpayer’s personal information from an ERC claim to 
use in other identity theft schemes.32  
24.	 Wages reported as payroll costs for PPP loan forgiveness or certain other tax credits cannot be claimed for the ERC in 
any tax period.  See Sec. III(I.), “Interaction with Paycheck Protection Program (PPP) Loans” in IRS, “Notice 2021-20” 
(Mar. 1, 2021), pp. 73-80.
25.	 Since a business must have been in operation during the pandemic, businesses that were established after the 
beginning of 2022 do not qualify for the ERC.  Additionally, businesses that closed prior to the COVID-19 pandemic 
are not eligible to receive ERC benefits.  For more information on proper government orders, see “Qualifying Orders” 
in IRS, Frequently Asked Questions about the Employee Retention Credit (last updated Nov. 7, 2023).
26.	 IRS News Release, “IRS issues renewed warning on Employee Retention Credit claims; false claims generate 
compliance risk for people and businesses claiming credit improperly” (Mar. 7, 2023).  See also 2023 IRS Dirty Dozen, 
supra Note 15, at p. 3.
27.	 See IRS Alert May 2023, supra Note 17, at p. 3.
28.	 See ERC Eligibility Requirements, supra Note 7, at p. 1. 
29.	 “ERC Scams” in IRS, Frequently Asked Questions about the Employee Retention Credit (last updated Nov. 7, 2023).
30.	 According to the IRS, businesses should always avoid a tax preparer basing their fee on the amount of the return.
See IRS Employee Retention Credit, supra Note 3, at p. 1.
31.	 DOJ, U.S. Attorney’s Office, District of Utah, Press Release, “Utah County Residents and an Accounting Business 
Charged in $11 Million COVID-Related Tax Fraud Scheme” (Feb. 3, 2023).
32.	 See IRS Alert May 2023, supra Note 17, at p. 3.

F I N C E N  A L E R T
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Case Study:
New Jersey Tax Preparer Arrested for Fraudulently Seeking Over $124 Million
in COVID-19 Employment Tax Credits
A New Jersey tax preparer was arrested on July 31, 2023, on charges related to fraudulently 
seeking over $124,000,000 from the IRS by filing over 1,000 tax returns falsely claiming COVID-
19-related employment tax credits.  According to court documents, from November 2020 to May 
2023, Leon Haynes of Teaneck, New Jersey, allegedly repeatedly exploited a program created to 
help small businesses impacted by the COVID-19 pandemic.  Acting as a tax preparer, Haynes 
allegedly prepared and submitted approximately 1,387 false forms to the IRS claiming COVID-
related tax credits on behalf of himself and clients.  The complaint further alleges that Haynes 
falsely told his clients that the government was giving out COVID-relief money for businesses 
and that they were eligible for the money simply because they had a business.  Allegedly, 
without consulting with his clients, Haynes then submitted forms to the IRS on behalf of their 
businesses that grossly overstated the number of employees and the dollar amount of wages 
paid.  Haynes allegedly submitted similarly false forms for three of his own companies.  Based 
on these and other misrepresentations, Haynes’ conduct allegedly sought approximately 
$124,751,995 in tax refunds on behalf of his companies and numerous other businesses in his 
clients’ names.  The IRS allegedly mailed Haynes multiple tax refund checks totaling $1,007,966 
for his own companies and allegedly disbursed a total of $31.6 million in refunds to Haynes’ 
clients and himself based on the false tax forms that Haynes submitted.  The complaint further 
alleges that Haynes charged many clients a fee of as much as 15 percent of the refund they 
received.  If convicted, Haynes faces a maximum penalty of three years in prison for each 
count of aiding and assisting in the preparation of a false return and 20 years in prison for mail 
fraud.  CI, Social Security Administration-Office of the Inspector General, and the U.S. Postal 
Inspection Service are investigating the case.33
Fraudulent Receipt and Use of ERC Funds
Individuals who fraudulently file an ERC claim may deposit the credit into a business account that 
is funded solely by the ERC, or into an account with limited prior transactions.  Some fraudsters 
may also deposit the ERC into a personal account as opposed to a business account.  Once the 
ERC is deposited, individuals may use the ill-gotten funds to support lavish vacations or purchase 
luxury goods.  Alternatively, fraudsters may attempt to conceal receipt of these funds upon deposit 
by transferring the funds elsewhere using peer-to-peer (P2P) services, moving the funds into an 
online banking institution, or withdrawing the funds as cash through an ATM.  Other recipients 
may attempt to deposit an altered check34 which closely resembles an ERC Treasury-issued check.35  
33.	 DOJ, Office of Public Affairs Press Release, “New Jersey Tax Preparer Arrested for Fraudulently Seeking Over $124 
Million in COVID-19 Employment Tax Credits” (July 31, 2023).
34.	 Altered check are checks that have been modified from their original format.  In most instances the fraudsters steal 
checks and alter the name and address (“Altered Checks”).
35.	 See Identifying the ERC, supra Note 14, at p. 3.  See also FinCEN, “Alert on Nationwide Surge in Mail Theft-Related 
Check Fraud Schemes Targeting the U.S. Mail” (Feb. 27, 2023).

F I N C E N  A L E R T
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Financial Red Flag Indicators of ERC Fraud
FinCEN, in coordination with CI, has identified the following financial red flag indicators to assist 
financial institutions in detecting, preventing, and reporting suspicious transactions associated with 
ERC fraud, many of which overlap with red flags of financial crimes related to Economic Impact 
Payments authorized under the CARES Act.36  Because no single financial red flag indicator is 
determinative of illicit or suspicious activity, financial institutions should consider the surrounding 
facts and circumstances, such as a customer’s historical financial activity, whether the transactions 
are in line with prevailing business practices, and whether the customer exhibits multiple red flags, 
before determining if a transaction is indicative of ERC fraud or is otherwise suspicious.
	A business account receives more than one ERC check deposit over multiple days. 
	Small business accounts receive an ERC check deposit that is not commensurate with the size 
of the business, the number of employees, and the volume of transactions.37 
	A large ERC is deposited into a business account and is subsequently transferred using P2P 
services or to an online banking institution, or withdrawn as cash at an ATM.  Funds may be 
subsequently transferred from the account into separate accounts or payments may be made 
to new businesses that a customer has not had transactions with prior to receiving an ERC 
check deposit.
	The account receiving an ERC check deposit has no deposits other than Treasury-issued 
checks, or the account has no regular business transactions.38 
	A customer attempts to deposit an altered Treasury ERC check, or financial institutions are 
unable to verify the validity of the checks that customers attempt to deposit.39    
	The ERC check is deposited into a new business account that did not exist in 2020 or 2021. 
	A new business account is created for an established business, but no other business activity 
occurs in the account except the deposit of the ERC.  This may be indicative of identity theft, 
where the established business was used as a fraudulent front to file for the ERC.
	A dormant business account suddenly receives an ERC check deposit.
	An ERC is deposited into a business account with no payroll history.  
36.	 See “Advisory on Financial Crimes Targeting COVID-19 Economic Impact Payments,” supra Note 9, at p. 2.
37.	 The amount of the credit depends on several factors including the number of employees; the employer’s payroll and 
gross receipts; and whether the employer paid any sick or family leave wages.  For 2020, Eligible Employers can 
receive a credit of up to $5,000 per employee for the calendar year.  For 2021, Eligible Employers can receive a credit 
of up to $7,000 per employee for each quarter.  See Employee Retention Credit – 2020 vs 2021 Comparison Chart, supra 
Note 5, at p. 1.
38.	 See Identifying the ERC, supra Note 14, at p. 3.
39.	 See Altered Checks, supra Note 34, at p. 6. See also Identifying the ERC, supra Note 14, at p. 3.

F I N C E N  A L E R T
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	A customer reports or provides documents indicating that their ERC was obtained by a third-
party firm whose credentials cannot be verified or is the subject of adverse media. 
Reminder of Relevant BSA Obligations and Tools
for U.S. Financial Institutions 
Suspicious Activity Reporting
Other Relevant BSA Reporting
USA PATRIOT ACT Section 314(b) Information Sharing Authority
Suspicious Activity Reporting
A financial institution is required to file a SAR if it knows, suspects, or has reason to suspect a 
transaction conducted or attempted by, at, or through the financial institution involves funds 
derived from illegal activity; is intended or conducted to disguise funds derived from illegal 
activity; is designed to evade regulations promulgated under the BSA; lacks a business or 
apparent lawful purpose; or involves the use of the financial institution to facilitate criminal 
activity.40  All statutorily defined financial institutions may voluntarily report suspicious 
transactions under the existing suspicious activity reporting safe harbor.41 
When a financial institution files a SAR, it is required to maintain a copy of the SAR and the 
original or business record equivalent of any supporting documentation for a period of five 
years from the date of filing the SAR.42  Financial institutions must provide any requested 
SAR and all documentation supporting the filing of a SAR upon request by FinCEN or an 
appropriate law enforcement or supervisory agency.43  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.  
40.	 See 31 CFR §§ 1020.320, 1021.320, 1022.320, 1023.320, 1024.320, 1025.320, 1026.320, 1029.320, and 1030.320.
41.	 See  31 U.S.C. § 5318(g)(3).  Financial institutions may report suspicious transactions regardless of amount involved 
and still take advantage of the safe harbor.
42.	 See 31 CFR §§ 1020.320(d), 1021.320(d), 1022.320(c), 1023.320(d), 1024.320(c), 1025.320(d), 1026.320(d), 1029.320(d), 
1030.320(d).
43.	 Id.  See also FinCEN, “Suspicious Activity Report Supporting Documentation” (June 13, 2007).

F I N C E N  A L E R T
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SAR Filing Instructions
SARs, and compliance with other BSA requirements, are crucial to identifying and stopping 
ERC fraud schemes.  FinCEN requests that financial institutions indicate a connection between 
the suspicious activity being reported and the activities highlighted in this Alert by including 
the key term “FIN-2023-ERC” in SAR field 2 (Filing Institution Note to FinCEN), as well as in 
the narrative.  Financial institutions may highlight additional advisory or alert keywords in the 
narrative, if applicable.
Financial institutions should select SAR Field 34(z) (FRAUD-Other) as the associated suspicious 
activity type and include the term “Employee Retention Credit” in the text box.  Financial 
institutions also should select all other relevant suspicious activity fields, such as those in SAR 
Fields 36 (Money Laundering) and 38 (Other Suspicious Activities), if applicable. 
Financial institutions should include all available information relating to the account and 
locations involved in the reported activity, identifying information related to other entities 
and persons involved in the depositing or cashing of suspicious checks and the status of 
their accounts with the institution.  Financial institutions also should provide all available 
information regarding other domestic and foreign financial institutions involved in the activity; 
where appropriate, financial institutions should consider filing a SAR jointly on shared 
suspicious activity.44 
Other Relevant BSA Reporting Requirements
Financial institutions and other entities or persons also may have other relevant BSA reporting 
requirements to provide information in connection with the subject of this alert.  These include 
obligations related to the Currency Transaction Report (CTR),45  Report of Cash Payments 
Over $10,000 Received in a Trade or Business (Form 8300),46  Report of Foreign Bank and 
Financial Accounts (FBAR),47  Report of International Transportation of Currency or Monetary  
Instruments (CMIR),48  Registration of Money Services Business (RMSB),49  and Designation 
44.	 See 31 CFR §§ 1020.320(e)(1)(ii)(A)(2))(i), 1021.320(e)(1)(ii)(A)(2)), 1022.320(d)(1)(ii)(A)(2), 1023.320(e)(1)(ii)(A)(2)(i), 
1024.320(d)(1)(ii)(A)(2), 1025.320(e)(1)(ii)(A)(2), 1026.320(e)(1)(ii)(A)(2)(i), 1029.320(d)(1)(ii)(A)(2), 1030.320(d)(1)(ii)(A) (2).
45.	 A report of each deposit, withdrawal, exchange of currency, or other payment or transfer, by, through, or to a 
financial institution that involves a transaction in currency of more than $10,000.  Multiple transactions may be 
aggregated when determining whether the reporting threshold has been met.  See 31 CFR §§ 1010.310-313, 1020.310-
313, 1021.310-313, 1022.310-313, 1023.310-313, 1024.310-313, and 1026.310-313.
46.	 A report filed by a trade or business that receives currency in excess of $10,000 in one transaction or two or more 
related transactions.  The transactions are required to be reported on a joint FinCEN/Internal Revenue Service form 
when not otherwise required to be reported on a CTR.  See 31 CFR § 1010.330; 31 CFR § 1010.331.  A Form 8300 also 
may be filed voluntarily for any suspicious transaction, even if the total amount does not exceed $10,000.
47.	 A report filed by a U.S. person that has a financial interest in, or signature or other authority over, foreign financial 
accounts with an aggregate value exceeding $10,000 at any time during the calendar year.  See 31 CFR § 1010.350; 
FinCEN Form 114.
48.	 A form filed to report the transportation of more than $10,000 in currency or other monetary instruments into or out 
of the United States.  See 31 CFR § 1010.340. 
49.	 A form filed to register a money services business (MSB) with FinCEN, or to renew such a registration. See 31 CFR § 
1022.380.

F I N C E N  A L E R T
10
of Exempt Person (DOEP).50  These standard reporting requirements may not have an obvious 
connection to illicit finance, but may ultimately prove highly useful to law enforcement.
Form 8300 Filing Instructions
When filing a Form 8300 involving a suspicious transaction relevant to this alert, FinCEN 
requests that the filer select Box 1b (“suspicious transaction”) and include the key term 
“FIN-2023-ERC” in the “Comments” section of the report.  
Information Sharing
Information sharing among financial institutions is critical to identifying, reporting, and 
preventing Employee Retention Credit Fraud or other illicit financial activity.  Financial 
institutions and associations of financial institutions sharing information under the safe harbor 
authorized by section 314(b) of the USA PATRIOT Act are reminded that they may share 
information with one another regarding individuals, entities, organizations, and countries 
suspected of possible terrorist financing or money laundering.51  FinCEN strongly encourages 
such voluntary information sharing.
Reporting Third Party ERC Schemes to the IRS or the Department of Justice
To report tax-related illegal activities relating to ERC claims, submit by fax or mail a completed 
Form 14242, Report Suspected Abusive Tax Promotions or Preparers and any supporting 
materials to the IRS Lead Development Center in the Office of Promoter Investigations.
Mail: Internal Revenue Service Lead Development Center
Stop MS5040
24000 Avila Road
Laguna Niguel, CA 92677-3405
Fax: 877-477-9135
Additionally, fraudulent activities can be reported to the Department of Justice’s National 
Center for Disaster Fraud using the NCDF Disaster Complaint Form.
50.	 A report filed by banks to exempt certain customers from currency transaction reporting requirements.  See 31 CFR § 
1010.311.
51.	 See FinCEN, “Section 314(b) Fact Sheet” (Dec. 2020).

F I N C E N  A L E R T
11
For Further Information
FinCEN’s website at https://www.fincen.gov/ contains information on how to register for FinCEN 
Updates.  Questions or comments regarding the contents of this Alert should be addressed to the 
FinCEN Regulatory Support Section at frc@fincen.gov.
If you have immediate information to share with law enforcement regarding this, please contact the 
CI field office nearest you.52 
The mission of the Financial Crimes Enforcement Network is to safeguard 
the financial system from illicit use, combat money laundering and its 
related crimes including terrorism, and promote national security through 
the strategic use of financial authorities and the collection, analysis, and 
dissemination of financial intelligence.
52.	 For contact information of a CI field office near you, see CI, “2022 Annual Report” (Nov. 3, 2022), pp. 23-43.

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