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Covid-19: An Opportunity for Money Launderers

Oct 06, 2020 Red Flag Alert Updated On: September 27, 2023
Covid-19: An Opportunity for Money Launderers

As the global pandemic continues, most people are busy trying to figure out how to keep doing their jobs in this strange new world of lockdowns and social distancing. Unfortunately, money launderers are no different and financial crime shows no signs of slowing during the crisis.

Companies need to keep their focus and stay on top of their processes to protect themselves and remain compliant. When it comes to financial crime, lockdown will be no excuse. Authorities have reiterated this fact, with the European Banking Authority reminding firms and the relevant authorities that “it remains important to continue to put in place and maintain effective systems and controls” at this time.

There have already been reports of numerous new scams that fraudsters have invented to take advantage of the situation. The chaos created by the pandemic will keep money launderers busy, so firms need to remain on the lookout for suspicious behaviour and continue to implement the right processes to prevent financial crime.

Exploiting a Bad Situation – Financial Criminals Are Taking Advantage of Covid-19

There are numerous ways in which criminals could exploit the pandemic for their own ends. The most obvious way is through cybercrime. Thanks to the lockdown, the vast majority of office work is being carried out at home. This raises several security issues that can be split into two types: poor security infrastructure and poor security processes.

On the infrastructure side, employees will now be working from their home internet networks; these may not be sufficiently secure for the transfer of confidential information. Some employees may be working from countries outside of the EU, leading to issues with document transfer and GDPR. Others may prefer to work on their personal devices when at home, again undermining secure internal networks.

All of this can lead to holes in your network that can be exploited by cybercriminals looking for a way in. It is essential to ensure that remote working is as secure as office working to be able to maintain confidence in your anti-money laundering and data protection processes.

On the processes side, this comes down to the more human issues that come with remote working. Employees may be more vulnerable to phishing attacks, for example. Before, if a suspicious email came through pretending to be from a colleague it was possible to query it immediately with them in the office. Now everything is being done by email, which can lower suspicion levels.

Similarly, if a client (or potential client) becomes pushy to get something done, employees may feel more pressured to carry out activities without undertaking full due diligence due to lack of support and the extra time required.

The Regulatory Response

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. Its response to the crisis so far has emphasised the importance of maintaining standards against money laundering and remaining alert to new and emerging illicit finance risks.

While encouraging the delivery of digital financial services at this time, it also encourages the use of responsible digital customer onboarding that can provide the flexibility customers need as well as transparency and compliance with regulations. The use of financial technology can provide significant opportunities to manage the risks of digital onboarding and simplified due diligence.

How Red Flag Alert Can Help

Red Flag Alert’s anti-money laundering service gives you all the tools you need to evaluate, manage and monitor AML risk remotely. Red Flag Alert is the UK’s most detailed business intelligence platform, updating information on 6.5 million UK businesses every day.

Red Flag Alert provides a sophisticated AML service that makes sure your firm has the information it needs to meet AML obligations.

By using our AML service you can:

  • Assess the AML risk posed by any business
  • Update your records to remain compliant
  • Investigate a business where necessary
  • Monitor current clients to know when new AML risk emerges
  • Quickly and easily determine beneficial owners
  • Understand complex organisational structures
  • Update your CRM in real time using our API
  • Develop a risk-based approach using real-time data
  • Onboard new clients quickly while remaining compliant

Learn more about how Red Flag Alert helps you protect your business from financial risk and comply with regulations, why not try Red Flag Alert today?

Published by Red Flag Alert October 6, 2020

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