The Treasury Department is moving to crack down on illegal immigrant labor, urging banks to blow the whistle on accounts tied to payroll fraud schemes.
A Treasury advisory obtained by The Post lays out red flags showing illegal employment schemes — and exhorts banks to report employers who hire or exploit unauthorized workers to Immigration and Customs Enforcement.
Banks already smell the rot. They reported more than $2.5 billion in suspicious activity from payroll tax-fraud schemes in 2025, according to the advisory, which was set to be published Friday.
The 12-page document zeroes in on payroll tax fraud schemes that complicit employers and labor brokers run through shell companies.
“Through these schemes, employers can gain an unfair advantage over legitimate US businesses; depress wages; facilitate identity theft of people who are authorized to work in the United States, including American citizens; and steal millions of dollars in Federal and state payroll tax revenue meant for government benefit programs,” Treasury stated.
The advisory, from Treasury’s Financial Crimes Enforcement Network, carries out President Trump’s May 19 executive order that pulls banks into his fight against employers and illegal immigrants who game the financial system.
The document exposes how bosses in agriculture, construction, hospitality and domestic service hide their hiring of unauthorized workers — and how the cash flows through banks.
Citing the IRS, Treasury said the grift starts with an employer hiring a labor broker who sets up a shell company with a fake name like ABC Construction or XYZ Logistics. The broker then opens a bank account with a foreign passport or Individual Taxpayer Identification Number, deposits checks for phantom services, then cashes out or cuts small checks to pay workers off the books — and dodges every payroll tax.
Brokers pocket 4% to 10% of the illicit proceeds and identity theft powers the scheme, according to Treasury.
Unauthorized workers buy or steal Social Security numbers from citizens and legal residents to beat hiring checks, the advisory states.
Earlier this year, two Honduran nationals were sentenced for one such scheme, Treasury noted. Iris Villafranca and Osman Donaldo Zapata ran a years-long cash-payroll racket that cost taxpayers more than $38 million, drawing sentences of 17 years and four years, respectively.
Their shells deposited roughly $89 million in checks from construction subcontractors and let contractors pay workers off the books, the Justice Department said.
The advisory lists 18 red flags for banks to monitor. --->READ MORE HERE
“President Trump has done more than anyone in history to secure our nation’s borders. Part of that effort includes securing our financial system."
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an advisory requesting that banks “detect and report” payroll fraud schemes tied to illegal immigrant employment.
The Treasury Department’s measure comes after President Donald Trump signed an executive order directing bank regulators and government departments to inspect potential instances of individuals without legal status opening bank accounts or obtaining loans or credit cards.
According to the Treasury Department, these payroll schemes involving the “hiring, concealing, and exploiting non-work-authorized” individuals give employers an advantage over “legitimate U.S. businesses.”
This advantage additionally depresses wages, encourages American identity theft, and steals tax revenue meant to fund government benefit programs, the department argues.
What Does The Advisory Disclose?
In the advisory, FinCEN provides a list of “red flags” of individuals and both small and large businesses in the agriculture, construction, domestic service, hospitality, or staffing industries for banks to look out for.
Some red flags include: --->READ MORE HERE
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