Financial Considerations and Life Changes

Tax season is a great time to discuss financial considerations, and life changes that federal contractors and federal contractor personnel must report.
 
Every individual that works in and around the U.S. Government is a potential target for exploitation by malicious actors intending to do harm to the United States and its people. If you have been granted eligibility for access to classified or sensitive government information, you are a prime target for exploitation and attempts to elicit US Government information. In tandem, anyone in close proximity to any individual that has been granted eligibility could also be a target.
 
Certain situations make us more susceptible to compromise and we be aware of those that must be reported to our company’s Facility Security Officer (FSO).
 
Financial Difficulties and Distress
One of the easiest pathways for our adversaries to elicit information is through offers of gifts and money or threats of exposing our difficulties.
 
Financial distress can happen to anyone and may be caused by a variety of circumstances. While some situations may be created or exacerbated by poor self-control, lack of judgement, excessive gambling, mental health issues, or alcohol/drug/substance abuse/misuse or dependence, many people experience financial difficulty due to circumstances beyond their control such as job loss, medical debt, family crisis, or simply not having enough money coming in to meet their financial obligations.
 
Regardless of the reason, when a person is overextended, having difficulty satisfying debts, meeting financial obligations, living within their means, or is simply overextended, there is a greater risk that they might engage in illegal or questionable activity to generate additional funds. Financial pressure makes us a prime target for exploitation, as it can be incredibly tempting to take an easy path toward easing the burden.
 
Unexplained Affluence
Unexplained affluence refers to a lifestyle, standard of living, or accumulation of wealth that cannot be reasonably attributed to a person's known income or legal sources. It can be a red flag, suggesting that a person may have access to illegal or undisclosed sources of income, and raises concerns about the person’s trustworthiness or vulnerability to bribery or coercion. 
 
It can look like a sudden increase in net worth, lavish purchases, or the repayment of large debts that are inconsistent with a person's known income sources.
 
Financial Awareness and Reporting Financial Considerations
Keeping a close eye on your financial data and credit information can help you identify if you are running into financial difficulty and if there is any questionable activity happening in your name. Your social security number and other personally identifiable information (PII) can be used to steal your identity and even open lines of credit in your name. This is one of the reasons that protecting PII is so critical!
 
Maintain awareness of your financial situation, especially if you are not the person handling your finances. Credit monitoring can help you catch concerns before they get out of hand and before they come to the attention of the government. There are several credit monitoring services available that offer services to monitor your credit record regularly. In addition, all 3 credit bureaus will allow you to run your own credit report for free each year. We recommend you run all 3 annually.
 
Always keep data safety in mind with credit monitoring services. Be cautious of fake website that are just trying to steal your information. If you find an error on your credit report or if you see an account that you do not recognize, contact the credit bureau directly and file a dispute immediately.
 
If you suspect your Social Security number is being used fraudulently for income declaration purposes, we highly recommend that you contact the Social Security Administration at www.ssa.gov or call toll-free at 1-800-772-1213. They will review your earnings with you to ensure their records are correct.
 
Reporting Financial Considerations
The following circumstances must be reported to your company’s FSO, whether they are about yourself or another covered individual:

• Excessive indebtedness
• Inability to satisfy debts
• Unwillingness to satisfy debts, regardless of ability to do so
• History of not meeting financial obligations
• Unpaid obligations over 120 days
• Liens and judgements
• Collections
• Bankruptcies
• Foreclosures
• Wage garnishments
• Deceptive or illegal financial practices (i.e. embezzlement, employee theft, check fraud, credit card fraud, timecard fraud, expense account fraud, mortgage fraud, filing deceptive loan statements, and other intentional financial breaches of trust.)
• Consistent spending beyond one’s means or frivolous or irresponsible spending that could indicate excessive indebtedness, significant cash flow issues, a history of late payments or of non-payment, or other negative financial indicators.
• Failure to file, failure to pay, or fraudulently filing of Federal, state, or local income tax returns.
• Any indicator of unexplained affluence, as shown by a lifestyle, standard of living, increase in net worth, lavish purchases, repayment of large debts inconsistent with a person's known income sources, money transfers that are inconsistent with known legal sources of income, etc.
• Borrowing money or engaging in significant financial transactions to fund gambling or pay gambling debts.
• Concealing gambling losses, family conflict, or other problems caused by gambling.
• Any other financial considerations that could potentially raise concern about financial difficulty or affluence.
• Receipt of a large sum of money, property, or wealth that is not readily identifiable by your typical income. Examples may be an inheritance, significant lottery or gambling winnings, proceeds from sale of a home, etc.
• Concern that your identity or credentials have been compromised.

 
Changes in Personal Status / Life Changes
If you have been granted security clearance or suitability for access to sensitive information (public trust, suitability vetting, contractor fitness, etc.) there are several basic life events and changes that must be reported to your company’s FSO.
 
The following circumstances must be reported to your company’s FSO, whether they are about yourself or another covered individual:
 

• A name change, for any reason.
• Marriage (All civil marriages, legally recognized civil unions, and legally recognized domestic partnerships.)
• Separation
• Divorce
• Changes in cohabitation status (A cohabitant is defined as any person with whom the covered individual resides and shares bonds of affection, obligation, or other commitment.)
• Cohabitation with any Non-U.S. citizen, regardless of reason
• New relatives and additions to your family (new children by birth or adoption, mother/father in-law, etc.)
• Adoption of Non-U.S. citizen children
• Any change in U.S. citizenship status (including requests to obtain dual citizenship and citizenship by naturalization in another country)
• Change in employment status
• Change in need for access to classified information or level of access to classified information
• Any change wherein access to classified information is no longer required
• Any change wherein a person no longer wishes to be processed for eligibility determination or no longer wishes to perform classified or sensitive work.

 
Why Reporting is Critical & How to Report Concerns
Despite the cause, both financial difficulties and unexplained affluence can raise concerns about an individual’s reliability, trustworthiness and ability to protect classified or sensitive information, and can impact an individual’s clearance or eligibility for access to sensitive information.
 
Financial considerations must be reported immediately upon occurrence.
 
Changes in personal status (life changes) must be reported to your company’s FSO as soon as you become aware that the change will occur.
 
Don’t be afraid to lean on your FSO for support! We are here to help you. Your FSO can provide reporting guidance and/or point you toward company resources that may be able to assist you if you are in your time of need.
 
Resources and Additional Learning

• CDSE Financial Considerations
• DCSA Reporting Changes, Concerns, or Threats
• CDSE Financial Considerations
• CDSE Receive and Maintain Security Clearance
• CDSE Annual Security Refresher
• Experian Credit Bureau
• Equifax Credit Bureau
• Transunion Credit Bureau
• Reporting Job Aid
• Case Study Library
• 32 CFR Part 117 (NISPOM Rule)
• 32 CFR Part 147 (Adjudicative Guidelines)

 
As always, if you have any questions about whether or not a situation requires reporting, ask your FSO! Your company’s FSO is the best person to help you navigate any questions you have about security compliance, briefing, and reporting requirements. As security professionals, we are here to help you navigate things to ensure you fulfill all requirements