FinCEN, Banking Agencies, Targeting Unauthorized Employment

Federal financial regulators have taken coordinated action to address unauthorized employment risks to the integrity of the US financial system, as Mayer Brown writes in a recent article on its website.

On June 5, 2026, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), the Internal Revenue Service (IRS), and other Treasury and Congressional entities issued a joint advisory identifying typologies, red flags, and reporting expectations for financial institutions. The advisory represents the first concrete deliverable under a May 2026 executive order directing Treasury to address these risks.

The advisory fulfills a mandate issued by President Trump requiring Treasury to identify suspicious activity patterns associated with non-work-authorized individuals and their employers.

It aligns with existing anti-money-laundering priorities, including fraud, drug trafficking, transnational criminal organizations, and human trafficking. Financial institutions filed more than $2.5 billion dollars in suspicious activity reports related to payroll tax fraud in 2025 alone.

The article analyzes the advisory’s key components and their implications for banks, non-bank financial institutions, and fintechs. It examines two principal fraud typologies: identity theft involving misappropriated Social Security numbers, and off-the-books payroll schemes using shell companies and labor brokers.

The advisory’s treatment of Individual Taxpayer Identification Numbers (ITINs) as potential risk factors that warrant enhanced due diligence is a central compliance concern. The article also covers 18 red-flag indicators, suspicious activity reporting instructions, and recommended institutional next steps ahead of anticipated rules.

Enforcement trends signal a multi-agency posture that connects bank compliance obligations with worksite immigration enforcement in ways that create overlapping legal exposure.

Risk management programs should be evaluated against the advisory, particularly regarding ITIN-linked accounts and payroll activity inconsistencies. Transactional due diligence in acquisitions involving labor-intensive industries should now incorporate review of target payroll practices and shell company structures.

Coordination among FinCEN, IRS, and immigration authorities is intensifying, and companies operating across those regulatory frameworks are at higher jurisdictional risk.