QUESTION
Recently, FinCEN provided guidance on detecting sextortion. I must admit I had never heard of it until my compliance manager told me about it. I've run my mortgage company for thirty years, and I have never heard of anything like sextortion scams.
So, I read FinCEN's notice. I'm not sure how sextortion could affect the mortgage industry. From what I can tell, the predator finds ways to get the victim to turn over sexually explicit information, then blackmails and extorts them to fork over their money. This is a terrible situation, but I'm unsure if my company should be concerned about this scam.
I'm looking for your opinion. I want to find out if financial institutions, whether banks or nonbanks, should be worried if sextortion can lead to problems in mortgage banking.
Does sextortion adversely impact mortgage companies?
OUR SOLUTION
QUESTION
According to my research, the term "sextortion" has been around, at least in print, since April 5, 1950, when the Los Angeles Times published the story Sextortion Charges to Come up Next Week. It is a serious financial crime. The guidance you must be referring to is FinCEN's notice of September 8, 2025, entitled Financially Motivated Sextortion.
If you are wondering if and how sextortion impacts mortgage banking, you might be interested in learning that sextortion causes profoundly damaging effects in the financial services industry. For FinCEN to publish an extensive notice on it shows the extent to which this financial crime can crush a mortgage loan transaction and seriously harm a mortgage originator.
The mortgage industry plays a key role in detecting and disrupting these schemes by reporting financially motivated crimes to law enforcement. I will provide information on reporting such suspicious activity shortly.
WHAT IS SEXTORTION?
According to FinCEN,
"Financially motivated sextortion occurs when perpetrators, using fake personas, coerce victims to create and send sexually explicit images or videos of themselves, only to threaten to release the compromising material to the victims' friends and family unless the victims provide payment."
Sextortion is a crime that often involves adults coercing minors, especially teenagers, into sending explicit images online. Sextortion schemes that victimize minors are also a form of Online Child Sexual Exploitation. It's primarily motivated by financial gain rather than prurient interest and targets individuals of all ages.
THE SCAM
Here is an outline of the scam, which is usually perpetrated on social media or popular online video gaming platforms.
· Perpetrators either create fake accounts or hack into the accounts of real individuals to impersonate someone known to the victim or to present themselves as a potential new friend.
o
Typically,
the perpetrators of financially motivated sextortion schemes will pose as an
attractive member of the opposite sex around the same age as the intended
target.
o Perpetrators of financially motivated sextortion attempt to learn as much as they can about the intended victim's interests from their social media profiles before contacting the individual.
· The perpetrator may initially make contact on social media or popular online gaming platforms and suggest moving their conversation to private messaging or video chat apps.
· Soon after making contact with the victim, perpetrators ask for nude photos or other sexually explicit material, or offer to exchange nude pictures with the victim.
· In addition, the perpetrator may use AI-enabled sextortion by inserting the victim's likeness into realistic, sexually explicit images and videos (often called "deepfake media”).
