The U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), in coordination with the IRS and other federal government agencies, is warning banks about “exploitation of the U.S. financial system by non-work authorized populations and their employers.” Banks are instructed to look for off-the-books payroll arrangements that might suggest an employer is hiring and concealing unauthorized workers and committing payroll tax fraud. FinCEN says that such illegal activity contributes to the federal government’s “tax gap” — the difference between tax owed and tax collected. In 2025, financial institutions reported over $2.5 billion in suspicious activity associated with payroll tax fraud.
