Post By: Pieter van den Akker, Senior Partner at International KYC
We are all acutely aware that COVID-19 is creating disruption and distress in many societies and economies across the globe. In recent months much information has surfaced on how organised crime is evolving to benefit from the pandemic and how this impacts the way that dirty money is generated and laundered.
The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. This inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. In May the FATF released an analysis[1] of emerging financial crime trends to its 200+ member states suggesting policy responses and advising the implementation of measures to respond to COVID-19 related new risks and vulnerabilities. These suggestions include:
- Domestic coordination to assess the impact of COVID-19 on AML/CFT risks and systems;
- Strengthened communication with the private sector;
- Encouraging the full use of a risk-based approach to customer due diligence;
- Supporting electronic and digital payment options.
Similarly, a recent statement issued by the European Banking Association (EBA)[2] towards European Banking Supervisory bodies recommends certain actions to mitigate financial crime risks in the COVID-19 environment:
- To continue to share information on emerging ML/TF risks and setting clear expectations of the steps credit and financial institutions should take to mitigate those risks;
- To considering how to adapt the use of their supervisory tools temporarily to ensure ongoing compliance by credit and financial institutions with their AML/CFT obligations.
- To work closely with credit and other financial institutions, Financial Intelligence Units (FIU) and law enforcement authorities to identify, and raise awareness of, new ML/TF typologies.
The United Nations Organisation on Drugs & Crime (UNODC) has also published several papers[3] analysing how specific criminal activities such as bribery & corruption, cyber crime, human trafficking thrive in a COVID-19 world.
Particularly disturbing is an emerging trend[4] witnessed in several countries whereby criminal organisations, acting as modern-day Robin Hoods, provide food and other much needed relief to affected communities, thereby subverting the legitimate authorities and undermining social cohesion and societal stability.
Looking forward, the widely anticipated severe economic downturn is likely to create numerous opportunities for cash-rich criminals to buy themselves influence in businesses desperately fighting for their survival.
About the Author: Pieter van den Akker, formerly Global Head of AML Operations at ABN AMRO Bank and RBS is Senior Partner at i-KYC, a financial crime advisory and training firm.
[1] https://www.fatf-gafi.org/publications/fatfgeneral/documents/covid-19-ml-tf.html
[2] https://eba.europa.eu/coronavirus
[3] https://www.unodc.org/unodc/en/covid-19-policy-documents.html
[4] https://www.economist.com/international/2020/05/16/the-pandemic-is-creating-fresh-opportunities-for-organised-crime