The Financial Crimes Enforcement Network (FinCEN) and IRS Criminal Investigation (CI) issued a notice to raise awareness about fraud throughout the construction industry. The organizations alerted financial institutions about increased state and federal payroll tax evasion and workers’ compensation insurance fraud in the U.S. commercial and residential construction industries.

The organizations alerted financial institutions about increased state and federal payroll tax evasion and workers’ compensation insurance fraud in the U.S. commercial and residential construction industries. Photo courtesy of Clem Onojeghuo.

Officials say that federal tax authorities lose hundreds of millions of dollars yearly to these schemes, which are carried out by unlawful actors primarily through banks and check cashers.

“FinCEN is committed to combating fraud by shedding light on how illicit actors within the construction industry are using shell companies and other tactics to commit workers’ compensation fraud and avoid payroll taxes,” says Himamauli Das, FinCEN acting director. “We are proud of our collaboration with CI in issuing this notice and exposing tax and insurance fraud that has plagued the construction industry and undermines law-abiding construction firms.”

Das explains that the official notice provides financial institutions with information on how to monitor, detect and report suspicious activity that could indicate payroll tax evasion and workers’ compensation fraud in the construction industry.

The notice details how fraudulent schemes in construction could involve networks of individuals and the use of shell companies and fake documents. These schemes impact the local and national construction job markets and put legitimate construction contractors and their employees at a competitive disadvantage.

“Earlier this year, we touted how Bank Secrecy Act data plays an instrumental role in the agency’s criminal investigations, and we believe the data we receive in response to today’s notice will expose a number of payroll tax evasion and workman’s compensation schemes,” says CI chief Jim Lee. “By enlisting the help of financial institutions, we hope to crack down on fraudsters and level the playing field for legitimate business owners.”

Leave a Reply

Your email address will not be published. Required fields are marked *