FATF: Money launders may misuse COVID-19 situation

The WHO –World Health Organization pronounced COVID-19 as a pandemic as it is getting transmitted across the globe. This covid -19 has impacted our society drastically and on may 2020, FATF published a report on the challenges, operational risks faced by financial institutions in the covid situation in terms of supervision of ongoing AML/CFT directives. FATF s President has recently reported that along with its members and observers it is trying to understand the patterns and typologies of financial crimes in various geographies.

In the vague of the pandemic, there is a widespread unemployment, law and order and social issues, the GDP, growth rate of the countries are falling. Pandemic has opened the avenues for money launderers to divert or convert their illegal funds in the forms of donations to charities/trusts. FATF further identifies that criminals make use of the pandemic to conduct investment frauds, counterfeiting of medicines and cyber crime.

 A recent survey conducted across its global network reveals that the nature of risks and red flags, vulnerabilities and threats to which every country is exposed vary significantly and at this juncture, the concerned governments and law enforcement agencies are finding really difficult to detect, prevent and report illicit fund movement. FATF emphasizes that the authorities need to be provided with adequate resources to identify and prevent money laundering and terror financing activities. Thus, it is mandatory and top most priority for such institutions to adopt a customized risk based approach to investigate and report how criminals exploit or misuse the pandemic.

Financial institutions are one of the essential services that is being operated with minimum personnel. Digital technology has enabled the financial institutions for a non face-face interaction with the customer. FATF is eagerly looking forward for digitization of AML/CFT procedures and an integrated system for sharing, monitoring, and analyzing suspicious activities. This new normal throw light on effective sharing of information and other resources between the public and private sectors as the key factor for ensuring compliance upon AML/CFT regulations.


Author: Rajashree, MBA, CAMI (PonSun AML Academy)


Source: http://www.fatf-gafi.org/publications/fatfgeneral/documents/covid-19-impact-oct-2020.html