On July 16, 2024, FinCEN, OFAC, and the FBI issued a joint Notice to financial institutions urging them to be vigilant in detecting, identifying, and reporting timeshare fraud perpetrated by Mexico-based transnational criminal organizations. The Notice provides methodologies, typologies, and red flag indicators to help financial institutions identify potential timeshare fraud in their transactions.
According to the FBI, the Jalisco New Generation Cartel (CJNG) and other Mexico-based TCOs have increasingly targeted U.S. owners of timeshare properties in Mexico, especially older adults and retirees. The TCOs use proceeds from timeshare fraud to diversify their revenue streams and finance other criminal activities, such as manufacturing and trafficking of illicit fentanyl and other deadly synthetic drugs into the United States.
Methodologies of these timeshare fraud schemes in Mexico include:
Targeting and obtaining information about U.S. owners of timeshares in Mexico from complicit insiders at timeshare resorts;
After establishing trust and credibility with timeshare owners, scammers will claim to represent ready buyers, renters, or investors and then exploit victims’ trust through timeshare exit, re-rent, and investment scams; and
Re-victimization through additional impersonation and advance-fee schemes.
FinCEN has identified the following red flag indicators to help detect, prevent, and report potential suspicious activity related to timeshare fraud in Mexico:
Behavioral and Financial Red Flags of Victims of Timeshare Fraud in Mexico
A customer is uncharacteristically wiring funds to Mexico and indicates the need to send the funds immediately to pay “taxes” or “fees” to apparent timeshare brokers or else risk losing an urgent financial opportunity regarding their timeshare.
A customer is uncharacteristically sending international wire transfers from retirement accounts or trust accounts to Mexican financial institutions directly or by first sending the funds to their personal checking or savings accounts either through an internal transfer within their financial institution or by a wire transfer to their accounts held at another financial institution and then immediately wiring the funds to Mexico.
A customer is sending multiple, structured, or repetitive wire transfers to Mexican financial institutions with the same memo line denoting “taxes” or “fees” regarding a timeshare.
A customer suddenly begins sending an unusual volume of wire transfers to Mexican banks or brokerage houses despite no previous related transaction activity.
Red Flags of Counterparties Involved in Timeshare Fraud in Mexico
A counterparty in a transaction is a new or recently formed or registered Mexican company in the timeshare, travel, real estate, or financial services industries with minimal to no online presence.
A counterparty in a transaction is a new or recently formed or registered Mexican company that has indicators of being a shell company used for illicit activity.
A counterparty in a transaction is a new or recently formed or registered Mexican company with an account opened within the previous six months at a Mexican bank or brokerage house.
A counterparty in a transaction is a new or recently formed or registered Mexican company that is receiving repeated, or an unusual volume of, wire transfers from U.S. personal bank accounts, retirement accounts, or trust accounts with memo lines describing “taxes” or “fees” regarding timeshares in Mexico.
A counterparty in a transaction is a new or recently formed or registered Mexican company that appears to do business in the timeshare industry but has previously done business as a company whose name is associated with complaints by consumer protection and law enforcement agencies.
A counterparty in a transaction is a Mexican company with beneficial owners associated with timeshare fraud or drug-related U.S. Department of Justice (DOJ) indictments or OFAC designations.
Read FinCEN’s press release here.
The full Notice can be found here.