The U.S. Financial Crimes Enforcement Network (FinCEN) issued the alert on Friday, detailing the scam's approach and providing behavioral, financial, and technological red flags to help identify and report associated suspicious activity.
The "Pig butchering" fraud, according to FinCEN, is similar to the technique of fattening a hog before slaughter. In this case, victims put their money into ostensibly respectable virtual currency investment opportunities before being duped out of it.
FinCEN explained that a scammer would frequently initiate contact with a potential victim via text messages, direct messages on social media, or other communication tools and platforms, usually under the premise of accidentally contacting the wrong number or attempting to reconnect with an old acquaintance.
The fraudster, who may pose as an investor or money manager, may also build a social media presence that displays affluence and an attractive lifestyle.
Once a victim responds, according to FinCEN, the scammer engages with them over time to cultivate trust and form a connection. When that is accomplished, the victim is introduced to a "supposedly lucrative virtual currency investment opportunity" and directed to use virtual currency investment websites or applications designed to appear legitimate but are fraudulent and ultimately controlled or manipulated by the scammer.
"The victims in this situation are referred to as 'pigs' by the scammers who leverage fictitious identities, the guise of potential relationships, and elaborate storylines to 'fatten up' the victim into believing they are in trusted partnerships," read the alert.
After the target's assets are taken, the scammers refer to "butchering" or "slaughtering" the victims, leaving them financially and emotionally harmed, according to FinCEN.
The government agency also urged financial institutions to disclose any suspicious activity, as mandated by the country's Bank Secrecy Act, aimed at detecting and preventing money laundering.
"This scam has impacted far too many Americans, which is why FinCEN is sounding the alarm and asking financial institutions to report suspicious activity indicative of this scheme," said Acting Director Himamauli Das.
He emphasized that reporting suspicious activity will allow law enforcement to both assist victims and track down the criminals.
The Financial Crimes Enforcement Network also stressed that these frauds are mostly performed by criminal organizations located in Southeast Asia that exploit victims of labor trafficking to reach out to millions of innocent people all over the world.
