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Why law enforcement relationships matter in fraud investigations

Terri Luttrell, CAMS-Audit, CFCS
August 26, 2026
0 min read

What are fraud investigations?

Fraud investigations are the process financial institutions use to identify, analyze, document, and respond to suspected fraudulent activity. They are about much more than investigating a disputed transaction or gathering information to file a claim with a credit card carrier. Today, fraud investigations are an important part of a bank or credit union’s broader financial crime prevention program.

This article covers these key topics: 

Fraud and AML

That distinction matters because fraud and money laundering increasingly overlap. Fraud proceeds may move through money-mule accounts, shell companies, wire transfers, checks, instant payments, or other channels before being withdrawn or transferred elsewhere. Activity that begins as a fraud investigation may uncover suspicious transactions that require further AML/CFT review and potentially a Suspicious Activity Report (SAR). Likewise, transaction monitoring may identify activity that ultimately points to an underlying fraud scheme.

Historically, many financial institutions managed fraud and AML as separate functions with different responsibilities. That model is changing as the lines between fraud and money laundering become increasingly connected. Fraud teams may identify the predicate criminal activity, while AML teams follow the movement of illicit proceeds and fulfill applicable BSA reporting responsibilities. Sharing information across those functions can give investigators a more complete view of the customer, transactions, and potential financial crime.

This crossover also reinforces why relationships with law enforcement matter. A financial institution may initially see a customer loss or suspicious account, while law enforcement may be investigating the same activity as part of a larger fraud network. Treating fraud investigations as part of the broader financial crime program helps institutions connect the pieces, appropriately escalate suspicious activity, and provide useful information when law enforcement becomes involved.

 

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Fraud investigations are growing

Fraud is moving quickly, criminals are becoming more sophisticated, and customers are increasingly being manipulated into sending money to bad actors. Once funds leave the institution, getting them back can be extremely difficult.

If your institution experienced a significant fraud event tomorrow, would your fraud team know who to call in law enforcement? More importantly, would law enforcement know your institution and understand how you can work together?

Financial institutions invest significant resources in detecting and preventing fraud, but a strong relationship with law enforcement should also be part of the fraud program. Building those relationships before an incident can strengthen fraud investigations by helping both sides understand what the other can contribute when a serious case develops.

 

Seeing the bigger picture

Financial institutions know their customers and their normal transaction activity, but their visibility has limits. Once funds move elsewhere, that visibility changes.

A fraudster may move funds through accounts at several financial institutions, while money mules may receive payments from victims across the country. The same criminal organization could target customers at multiple banks and credit unions, leaving each institution with only a piece of the activity. What looks like a single victim or isolated event to one institution may be part of a much larger scheme that law enforcement is working to connect.

That broader perspective can be valuable during fraud investigations. Financial records and Bank Secrecy Act (BSA) reporting can help investigators trace funds, identify patterns, connect accounts or individuals, and develop a more complete picture of suspected criminal activity. Remember that financial institutions must always follow applicable legal and regulatory requirements when sharing information. Policies, procedures, privacy requirements, and established reporting channels should guide those communications.

 

Build relationships early

It’s best practice to anticipate a significant fraud event and introduce your institution to law enforcement. Get to know the agencies serving your area. Depending on your institution and risk profile, that might include local police departments, sheriff’s offices, state agencies, or federal law enforcement. Educational events where law enforcement discusses current schemes, such as SAR committees, can be a good place to start.

The relationship should be reciprocal. Financial crime professionals can help law enforcement understand banking processes, transaction channels, and the types of information an institution may maintain. Law enforcement can help financial crime teams understand what information is useful to an investigation and provide insight into scams affecting the community.

That insight has practical value. If law enforcement is seeing an increase in a particular scam, financial institutions can alert frontline employees, educate customers, reinforce relevant red flags, and look for similar activity in their own accounts.

Developing those relationships now means you can focus on the case when time matters rather than figuring out whom to call.

 

Make reporting fraud count

Financial crime professionals spend significant time investigating activity and meeting reporting requirements. Do not underestimate the value that work can have outside the institution.

Currency Transaction Reports (CTRs) and SARs can provide law enforcement with important information about potentially illicit financial activity. A well-written SAR narrative can explain what the institution observed, why the activity was suspicious, and how transactions, accounts, or individuals may be connected.

The value of that reporting is reflected in how frequently BSA data is connected to federal investigations. According to FinCEN, 38.8% of active FBI Complex Financial Crime Program investigations in fiscal year 2025 were linked to SARs or CTRs. The FBI also reported 5,957 arrests of investigative subjects tied to BSA reports during the fiscal year.

It’s important to remember that details matter. What may feel like one more regulatory filing to a busy AML/CFT team could provide information that helps law enforcement identify accounts, follow funds, recognize patterns, or connect activity across a larger criminal investigation.

That is an important message for AML/CFT and fraud teams. Quality reporting is not simply about completing a regulatory obligation. Accurate reporting and useful narratives can provide information that supports criminal fraud investigations.

 

How can I support a fraud investigation?

A law enforcement relationship is most valuable when the financial institution is prepared to respond appropriately to an authorized request. Account records, transaction histories, and other supporting documentation can help investigators trace funds, identify connections, and confirm activity uncovered during an investigation. Complete information matters because missing records or context can slow the investigative process.

Financial institutions should know who receives law enforcement requests, who is authorized to respond, and where relevant records are maintained. These responsibilities should be clearly addressed in procedures so employees are not trying to determine the process during an urgent case.

Frontline employees also play an important role. They may notice an unusual withdrawal, hear a concerning explanation for a wire transfer, or realize someone is coaching a customer. Branch employees do not need to become fraud investigators, but they should know how to document their observations and promptly escalate concerns.

 

Protect older customers

Elder financial exploitation is one area where established law enforcement relationships can have an especially meaningful impact.

An older customer may believe they are helping a grandchild in trouble, protecting money from the government, or sending funds to someone they trust. In many cases, the customer may not believe they are a victim at all. Frontline employees may be among the first to recognize changes in transaction behavior or to hear an explanation that raises concerns.

Financial institutions should have clear procedures for escalating suspected elder financial exploitation and making appropriate reports. Employees need to understand those procedures before they encounter a customer who may be in danger of losing money.

Law enforcement relationships can be particularly valuable in fraud investigations involving older adults because time matters. The victim may still be communicating with the criminal, another payment may be imminent, or funds may already be moving.

Law enforcement can also provide a different voice. A customer who dismisses warnings from family members or financial institution employees may respond differently when law enforcement explains that the activity resembles a known scam. Having an established contact can help the institution reach the appropriate resources without losing valuable time figuring out where to start.

 

Strengthen your fraud strategy

Financial institutions bring knowledge of their customers, accounts, transactions, and payment activity. Law enforcement may bring a broader view that connects activity across multiple victims, institutions, and communities. Neither side has the entire picture, which is why collaboration matters.

Financial institutions should build relationships with law enforcement before a major fraud event occurs. Know whom to contact and establish clear procedures for responding to law enforcement requests. Employees should also understand escalation procedures and the importance of quality reporting.

A little preparation today can make communication much easier when a serious case arrives. Build the relationship before you need it so both sides are prepared to get to work.

Find out how to streamline and strengthen fraud detection with Abrigo.

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About the Author

Terri Luttrell, CAMS-Audit, CFCS

Compliance and Engagement Director
Abrigo
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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