WASHINGTON — The U.S. Treasury Department’s Financial Crimes Enforcement Network issued an advisory urging financial institutions to be vigilant against fraud schemes involving the unlawful employment of illegal aliens, warning that such schemes have cost American taxpayers billions of dollars and helped finance transnational criminal organizations.
The advisory was issued jointly with the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, and National Credit Union Administration, and in coordination with the Internal Revenue Service. It highlighted identity theft and payroll fraud as key features of schemes by employers in agriculture, construction, domestic service, hospitality, and other industries to conceal violations of U.S. immigration law.
Financial institutions reported more than $2.5 billion in suspicious activity associated with payroll tax fraud schemes in 2025, according to FinCEN’s analysis. In one case study included in the advisory, two foreign nationals conspired to operate a years-long payroll scheme employing undocumented workers that cost the United States more than $38 million.
The advisory described a common structure in which a complicit labor broker sets up a shell company — often an unregistered money services business — to provide off-the-books payroll or payment processing services for employers and their unlawful workers. Employers send checks to the shell companies for purported services, and the labor broker then distributes payments to workers through cash couriers, checks, or peer-to-peer platforms without withholding federal or state payroll taxes.
FinCEN’s analysis also found that illegal workers can illicitly obtain Social Security numbers and other personally identifiable information belonging to U.S. citizens and lawful permanent residents to gain unlawful employment, access employer and government-provided health care benefits, and open financial accounts.
The advisory encouraged banks to apply enhanced due diligence when Individual Taxpayer Identification Numbers are presented in lieu of Social Security numbers or valid employment authorization documents to open accounts or obtain credit, flagging ITIN use as a potential risk factor warranting further review.
Treasury Secretary Scott Bessent said the administration would not allow illegal aliens to abuse financial institutions to steal from American taxpayers, framing the advisory as part of the broader effort to secure both the nation’s borders and its financial system.