Recent FinCEN Advisory Highlights Rising Health Care Fraud Risk for Financial Institutions

As the federal government intensifies its “whole of government” approach to combat fraud, waste, and abuse, particularly in Federal Health Care Benefit Programs, financial institutions face growing exposure to health care fraud proceeds moving through domestic and cross‑border financial systems. Last week, FinCEN, in coordination with the FBI and HHS‑OIG, issued a new advisory urging heightened vigilance and robust reporting of suspicious activity tied to schemes targeting Medicare, Medicaid, and health care benefit programs. FinCEN warned that health care fraud has surged since the pandemic and poses a significant threat to program integrity. This advisory serves as yet another reminder of the Trump Administration’s continued focus on health care fraud enforcement. 

The Numbers

FinCEN reported a 330% increase in Bank Secrecy Act (BSA) filings related to health care fraud between 2020 and 2025, with financial institutions filing more than 3,800 Suspicious Activity Reports (SARs) in 2025 alone involving healthcare or health insurance.

Common Health Care Fraud Schemes

FinCEN highlighted recurring health care fraud schemes for financial institutions to be aware of, including:

• Straw owners and shell companies: The use of nominee owners (including non-resident aliens or stolen identities of physicians) to form or purchase health care providers, obscure beneficial ownership, and enroll in benefit programs, most commonly in durable medical equipment (DME), home health, hospice, pharmacies, telemedicine, laboratories, and adult day care.
• False billing: The submission of claims for nonexistent, medically unnecessary, substandard, or worthless services, often facilitated through the payment of illegal kickbacks and bribes for patient referrals or prescriptions.
• Claims manipulation: The submission of false claims through upcoding, unbundling, or duplicate billing.

Money Laundering

The advisory cautioned that proceeds from healthcare fraud schemes are often laundered quickly after reimbursement to bypass Anti-Money Laundering (AML) controls through domestic and foreign channels. Common money laundering schemes include wiring funds to shell companies, transferring funds to money mules, brokers, or cryptocurrency wallets, cash withdrawals, check transfers, or purchasing real estate or other luxury items.

Key Red Flags for Financial Institutions

FinCEN highlighted twenty-four common indicators to assist financial institutions “detect, prevent, and report” suspicious activity targeting health care benefit programs. Some of the most frequent are:

• Newly formed health care providers owned or managed by individuals with little experience in the health care industry.
• A customer serving as a nominee owner opening financial accounts for others with prior convictions for health care fraud convictions, or exclusions from Medicare or Medicaid.
• Rapid or unusually large reimbursements shortly after enrollment or ownership changes to the health care provider.
• Upon receipt of reimbursements from a health care benefit program, immediate transfers to an account associated with a company that has little to no online presence, or was recently incorporated, or has some other indicators of a shell company.
• Large reimbursements from health care benefit programs immediately upon establishment of the health care provider.
• Minimal legitimate health care related operational expenses despite receiving significant reimbursements from health care benefit programs.
• Heavy reliance on reimbursements from a single health care benefit program.
• Disproportionate spending on “marketing” or “consulting” compared to other apparent business-related expenses.
• Large cash withdrawals or high-value check transfers tied to spikes in reimbursement.
• A sudden substantial increase in reimbursements from health care benefit programs inconsistent with historical reimbursement patterns;
• A considerable proportion of the reimbursements from health care benefit programs are wired to foreign jurisdictions.

Key Takeaways

• The exposure is real and rising. Health care fraud is a top driver of U.S. illicit finance, with BSA reporting up exponentially since 2020.
• The schemes are familiar: straw owners, rapid enrollment, false billing (services not rendered/unbundling/upcoding), and fast money laundering to shells, digital assets, and abroad.
• The indicators are known: FinCEN’s red flags center on ownership anomalies, atypical reimbursement patterns, non‑industry expenditures, suspicious cash/check behavior, and high‑risk outbound flows.

For more information about this and other enforcement trends, please contact Jay McCormack at (617) 357-3776 and jmccormack@verrill-law.com. Jay is a Partner in the White Collar Defense & Government Enforcement and Health Care & Life Sciences practices at Verrill. He is a former federal prosecutor who specialized in health care fraud. He also previously served as the Acting U.S. Attorney for the District of New Hampshire.