The Impact from Covid 19 on AML

Overview

As the world is in lockdown, Money launderers continue to work and are taking advantage of COVID-19. As there are now a few reports that criminals are taking advantage of the difficult situation it is worth sharing our thoughts with you.

Risks that may arise due to COVID-19

– Working with an unusual client or on unusual types of matter •

– Habits changing cash becomes contactless that brings an online payments increase

With less cash and more electronic payments.

– Resistance from a client regarding compliance with due diligence checks, for example being pressured to forego necessary due diligence checks or to “speed up” the process

– Working from Home for Compliance Departments can reduce security and performance but there is also a big chance for improvement.

– Patterns of money laundering are changing money muling and virtual currencies and assets are in high demand. Before Covid 19 nearly 2 trillion dollars were laundered globally, it will be no surprise for this number to increase rapidly. The impact on financial service compliance teams may differ from organisation to organisation and is also depending on how far the digitalisation is in their departments.

What Authorities Think

What authorities think:

Regulators and authorities responded to Coronavirus:

The European Banking Authority (EBA)

“illicit finance will continue to flow” and highly adaptive criminals are likely to emerge with “new techniques and channels of laundering money”.

The US Financial Crimes Enforcement Network (FinCEN)

it was monitoring the system and found certain emerging crime trends such as imposter scams, investment scams, product scams, and insider trading Financial institutions should continue following a risk-based approach and diligently adhere to the Banking Secrecy Act (BSA) obligations.

The Australian Transaction Reports and Analysis Centre (AUSTRAC)

“preparing for a shift in the risks that criminals may pose to the financial system and the community”. AUSTRAC found the following areas of criminal exploitation where the financial system may be more vulnerable during the COVID-19.

The Financial Task Action Force (FATF)

“The FATF to use the flexibility built into the FATF’s risk-based approach to address the challenges posed by COVID-19 whilst remaining alert to new and emerging illicit finance risks,”

Key Take Away's

– AML Compliance is needed more than ever.

– While methods and behaviour are changing it seems that criminals don’t get covid 19.

– Digital Innovation and a (new) digital strategy with remote work is now important also for the back office.

Good Reads

Regulators issue warnings as criminals adapt their behaviour during the pandemic

Illicit flows will be easier during the Coronavirus Pandemic

Interpol: International fraud during Coronavirus exposed

Preventing crime & protecting police during the Pandemic