FinCEN Raises Alarm On Healthcare Fraud

On March 30, 2026, the U.S. Department of the Treasury (the Treasury) Financial Crimes Enforcement Network (FinCEN) issued an Advisory urging financial institutions to step up their detection and reporting of suspicious transactions tied to Medicare, Medicaid, and other healthcare benefit program fraud schemes. As part of the administration’s “whole-of-government effort to combat fraud, waste, and abuse involving Federal payments,” the Advisory highlights key traits of common healthcare fraud schemes and outlines more than 20 “red flags” to help financial institutions identify such activity.

Healthcare Fraud on the Rise

FinCEN’s Advisory comes amid what the Treasury considers a sharp increase in healthcare fraud. According to the Advisory, Bank Secrecy Act reporting reflects a 330% rise in healthcare fraud-related filings between 2020 and 2025, with a record number of suspicious activity reports (SARs) in 2025. Based on this rise in reporting, the Treasury states that healthcare fraud has “increased significantly since the COVID-19 pandemic” and estimates that it costs taxpayers between $147 billion and $490 billion annually.

Key Healthcare Fraud Characteristics

FinCEN’s Advisory outlines three key characteristics of these increasingly common healthcare fraud schemes.

First, per the Advisory, healthcare fraud often begins with straw owners and shell companies. Fraudsters frequently establish or acquire provider entities using nominee owners, stolen identities, or falsified documentation to enroll in federal programs and open accounts while concealing beneficial ownership. FinCEN notes that this is particularly common in durable medical equipment, home and hospice care, and telemedicine.

Second, the Advisory notes that most schemes involve some form of fraudulent claim submission, often facilitated by kickbacks and bribes to complicit medical professionals. According to FinCEN, common types of fraudulent claims include:

• Seeking reimbursement for medically unnecessary goods or services
• Filing multiple claims for the same item or service (“double billing”)
• Filing claims for items or services that were never provided (“phantom billing”)
• Filing multiple claims for items or services that should be billed together (“unbundling”)
• Filing a claim for a more expensive item or service than the patient actually received (“upcoding”)

Third, the Advisory explains that healthcare fraud schemes typically involve money laundering. According to FinCEN, after receiving reimbursements, fraudsters rapidly funnel funds through domestic and international financial systems — often via shell entities, money mules, digital assets, or high-value purchases such as real estate and luxury goods.

FinCEN’s Red Flags

To detect and prevent fraud — and timely report fraud when it occurs — the Advisory includes 24 “red flag indicators of fraud schemes targeting healthcare benefit programs.” Those 24 flags fall into four themes.

1. The first theme concerns ownership and control. Financial institutions should be vigilant when inexperienced individuals open accounts as owners of recently established, or newly purchased, healthcare providers or suppliers— a pattern suggesting shell companies that conceal true beneficial ownership.
2. The second theme covers anomalous billing and reimbursement patterns: large payment volumes shortly after enrollment, sudden billing spikes following ownership changes, or reimbursement levels inconsistent with a provider’s size or specialty — all signs of a sham provider submitting false claims.
3. The third theme addresses money laundering. Key indicators include rapid fund movement and layering — reimbursements quickly transferred to shell entities, routed to foreign jurisdictions, or converted into digital assets.
4. The fourth theme flags mismatches between revenue and operations. A provider collecting significant reimbursements while showing minimal payroll, inventory purchases, or other indicia of genuine healthcare services lacks the hallmarks of a functioning business and may be a sham.

FinCEN cautions, however, that “no single red flag is determinative of illicit or suspicious activity,” and accordingly advises financial institutions to “consider the surrounding facts and circumstances, such as a customer’s historical financial activity, whether the transactions are in line with prevailing business practices, and whether the customer exhibits multiple red flags, before determining if a behavior or transaction is suspicious or otherwise indicative of a connection to healthcare fraud.”

Implications for Financial Institutions and Healthcare Providers

FinCEN’s Advisory puts both financial institutions and healthcare providers on notice. For banks and fintech companies, it drafts them to be the first line of defense in identifying and disrupting healthcare fraud — expected to deploy transaction monitoring, onboarding diligence, and timely reporting of suspected fraud. For healthcare providers and suppliers, it signals heightened scrutiny of ownership structures, billing patterns, and financial activity, particularly where reimbursement flows or expense profiles deviate from industry norms. Legitimate providers may face frequent inquiries, account reviews, or reporting where their operations resemble FinCEN’s “red flags.”

We will continue to monitor healthcare fraud developments and enforcement.

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