On July 24, 2026, FinCEN issued an alert urging financial institutions to watch for and report fraud schemes involving federal student aid programs. Fraud rings are using stolen or complicit identities to enroll as students, receive aid refunds, and move the proceeds through accounts, money mules, shell companies, and fraudulent accounts.
The schemes may involve “ghost students” created with stolen personal information or “straw students” who provide their information for a fee. These fraudulent enrollments can drain federal aid funds and, in some cases, limit class availability for legitimate students.
Key points for financial institutions include:
- Monitor for federal student aid refunds deposited into accounts that do not appear tied to the stated student recipient. ACH references may include “refund” and the educational institution’s name or abbreviation, and the funds may later move through money mules, shell companies, or fraudulent accounts.
- When filing a SAR related to this activity, FinCEN asks institutions to include “FIN2026-FSAFRAUD” in SAR field 2 and in the narrative. Institutions should also select SAR field 34(z) Fraud – Other and enter “Federal Student Aid Fraud,” along with any other applicable suspicious activity fields.
To learn more and view FinCEN’s list of related red flags, read the alert here.
CCI suggests sharing this with your BSA/AML/CFT Officer and ACH fraud monitoring personnel. If you have any questions regarding this information, you can contact us via inquiries@completecompli.com.