Regulators issue dragnet in Miami-Dade, Broward to root out tax refund fraud

Jul 13, 2015   

By Nina Lincoff
July 13, 2015

Cashing a tax refund check greater than $1,000 in Miami-Dade or Broward counties? Starting Aug. 3, additional ID will be required.

Federal regulators issued a geographic targeting order to South Florida check cashers in those two counties to combat tax refund fraud in the area. The order was made public Monday.

Geographic targeting orders are rare, and are not always made public.

“We’ve only done two this year, and only a few last year,” Financial Crimes Enforcement Network spokesman Stephen Hudak told the Business Journal.

Those two public GTOs were issued in South Florida. To read more about the previous dragnet affecting 700 Miami-Dade County electronics distributors, click here.

South Florida is a hotbed for tax refund fraud schemes, where a criminal steals a victim’s identity and then files a fraudulent tax refund. The criminal then cashes the refund check, often with a fake ID.

But the order intends to make it more difficult for criminals to cash fraudulent checks by requiring all check cashers to record additional information between Aug. 3, 2015 and Jan. 30, 2015 on tax refund checks over $1,000. Check cashing businesses are not currently required to keep records unless the refund check is over $10,000, according to the IRS.

“Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return and claims a fraudulent refund,” said Kelly R. Jackson, the Internal Revenue Service’s Criminal Investigation Miami Field Office’s special agent in charge.

The GTOs requires businesses to:

  • record a copy of the person’s government-issued identification, which must match the name on the check.
  • keep a clear digital photo taken of the customer at the check casher.
  • get the customer’s phone number.
  • take an original thumbprint of the customer on the check.
  • hold on to the records for five years.

“We greatly appreciate the continued efforts of FinCEN and the IRS in this area,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “[We] look forward to working with financial institutions in the private sector through this GTO in order to further combat these fraudulent schemes that impact our South Florida communities.”

This order is particularly interesting because it shows how FinCEN is focusing on financial crime in South Florida, said Andrew Ittleman, a founding attorney with Miami-based Fuerst Ittleman David & Joseph.

Check cashers in the area are certainly well-equipped for this type of record keeping, but it will impose a heightened burden on the Miami-Dade and Broward county businesses, Ittleman said.

“There was a report on 60 Minutes on this exact variety of fraud and a report that described South Florida as the ‘Silicon Valley of Fraud,’” he said. “When you have that and you have this, don’t be surprised that the fed will crack down on it.”

To view original article, click here.