Investing.com -- The U.S. Department of the Treasury’s Financial Crimes Enforcement Network issued an advisory on Friday asking financial institutions to monitor and report suspicious activity related to the illegal employment of unauthorized workers.
The advisory was released jointly with the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and National Credit Union Administration, in coordination with the Internal Revenue Service.
The document highlights how employers hiring unauthorized workers can gain advantages over legitimate businesses, lower wages, enable identity theft, and divert tax revenue from government benefit programs. The advisory notes that illegally obtained wages may help finance transnational criminal organizations involved in drug trafficking, human trafficking, and other criminal activities.
One case study in the advisory describes two foreign nationals who operated a multi-year payroll scheme employing undocumented workers that cost the United States more than $38 million.
The advisory identifies identity theft and payroll fraud as central elements in schemes by employers in agriculture, construction, domestic service, hospitality, and other industries to hide immigration law violations.
Unauthorized workers may obtain Social Security numbers and other personal information of U.S. citizens to secure employment, wages, healthcare benefits, and access to financial services. Employers may use payroll tax fraud to conceal hiring of unauthorized workers and avoid taxes and workers’ compensation benefits.
In 2025, financial institutions reported over $2.5 billion in suspicious activity linked to payroll tax fraud schemes.
The advisory describes how labor brokers may establish shell companies, often unregistered money services businesses, to provide off-the-books payroll services. These brokers may use foreign identity documents or Individual Taxpayer Identification Numbers to open bank accounts, then launder funds and distribute payments to unauthorized workers through cash couriers, checks, or peer-to-peer platforms without withholding federal and state payroll taxes.
The document encourages banks to apply enhanced due diligence when an ITIN is presented instead of a Social Security number or valid employment authorization document.
The advisory includes 18 red flag indicators to help financial institutions identify and report suspicious activity. FinCEN requests that institutions use the key term "FINANCIALINTEGRITY-2026-A002" in Suspicious Activity Reports related to these activities.
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