The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued an advisory directing financial institutions to identify and report suspicious activity associated with the unlawful employment of unauthorized workers and related fraud schemes. The advisory is particularly noteworthy because it reflects many of the concerns SWACCA and its allies have raised for years regarding labor brokers, payroll fraud, worker misclassification, tax evasion, wage suppression, and unfair competition in the construction industry.
The advisory highlights a range of practices that FinCEN says are used to conceal employment of unauthorized immigrants, including the use of labor brokers and shell companies to facilitate off-the-books payroll arrangements. FinCEN notes that these schemes are particularly prevalent in the construction industry and highlights construction as one sector where employers may utilize labor brokers, shell companies, off-the-books payroll systems, and fraudulent workers’ compensation arrangements to conceal unauthorized workers, evade payroll taxes, and reduce labor costs.
FinCEN warns that some employers and labor brokers allegedly use layered subcontracting arrangements, check-cashing operations, cash payroll systems, and shell companies to avoid employment verification requirements, underreport payroll, evade workers’ compensation obligations, and gain an unfair competitive advantage over law-abiding employers. In particular, the advisory cites FinCEN’s analysis of more than $2.5 billion in suspicious activity reported in 2025 involving labor brokers and payroll fraud schemes. FinCEN directs financial institutions to monitor for indicators associated with these activities, including payroll practices inconsistent with a company’s size and operations, unusual payments to labor brokers or recently established companies, and large volumes of cash withdrawals or check-cashing activity associated with payroll.