COVID-19 and Transaction Monitoring: Managing AML Compliance


As a result of the ongoing global struggle with the COVID-19 pandemic, financial institutions are experiencing novel compliance challenges linked to this outbreak. The new strain of coronavirus has sent global financial markets into widespread turmoil and this unfortunately presents criminals with new opportunities to generate and launder funds gained from illicit activities. As a result, financial authorities around the globe have taken to adjusting their AML/CFT approach to cater for the new patterns of criminal behaviour being recorded.

Organizations are expected to be knowledgeable of the new ways that money launderers are using to exploit the pandemic and are also expected to ascertain how their AML/CFT compliance processes need to evolve and change in light of the elevated risks.

Changes in behaviour

The current pandemic has seen numerous countries set up stringent control measures such as restricting movement and therefore keeping people in their homes. The impact such measures have had on the global economy has brought about drastic changes in banking behaviours and in criminal behaviours too. Panicking at the current situation, people are withdrawing hard currency and are making more use of mobile apps thinking that it is safer. An increase in the use of virtual currencies has also been noticed.

Unlike in past times, digital banking services are now being used more frequently and by more people who would not normally use them, like the elderly. This increase in digital services use provides a challenge for AML/CFT, making it more difficult for compliance teams to identify between legal and illicit activities. Efforts to combat money laundering are complicated further by the creative changes criminals and fraudsters have taken a liking to. Illegal activity during this coronavirus crisis has taken the form of fake cures, fake charity, and government impersonations amongst others.

Media monitoring

The increased risk of money laundering activities brought about by the pandemic has unsurprisingly resulted in an increased presence of AML/CFT stories in the media. In times of crisis like today, financial institutions and banks would do well to adjust their media screening to capture news story types that could indicate and point out potential money laundering crimes. Story types worthy to keep an eye out for include:

Regulation – media stories focusing on regulatory punishments may shed some light on the actions taken by authorities against other firms accused of activities like price-fixing and collusion.

Financial difficulty – media stories focusing on debt, bankruptcy, closures, redundancies, and departures of top-level staff.

Violence or human rights abuse – media stories focusing on violence or sex offences in connection with state-level offences such as human rights abuse.

Criminality – media stories about accounting malpractice, financial crimes, dishonest billing, and predatory lending.

The money mule crime

The coronavirus pandemic has brought an increase in the use of money mules to transit illicit funds. Money mules are people who are legitimately employed by an organization under the pretense of a legitimate job but whose presence is only required to receive illegal cash into personal accounts. The mule would then withdraw that cash and deposit it into the accounts of the money launderer, all while pocketing a sizable commission as payment.

Unfortunately, the COVID-19 situation has driven people who are desperate for money to act as money mules under the pretense of depositing funds to their personal bank account to pay for coronavirus related health problems. The increase in unemployment has regrettably opened the doors for money launderers to approach jobless people to act as mules in the transformation of dirty money. Therefore, AML/CFT teams need to keep a sharp eye for any warning signs that a mule might be at work whenever large sums of money are deposited.

Adjusting compliance

Since the ongoing pandemic poses great uncertainty as to when it will finally be eradicated, banks and financial institutions alike must adjust to the new reality of compliance monitoring. This to accommodate the changing legitimate behaviour of consumers while identifying illegal activity from criminals. The upgrade of monitoring efforts not only includes the sufficient screening of transactions but should also incorporate changes to rule-sets to ensure that the software used is able to capture new typologies, such as the aforementioned money mule tactic.

Therefore, given this increased reliance on a strong AML/CFT platform, organizations should seek out technological solutions to help them in their money laundering compliance efforts. ComplyRadar allows firms to collect, analyze, identify, and report suspicious activities to the competent authorities. In conjunction with skilled compliance personal, ComplyRadar is able to ease the burden of compliance by delivering ongoing monitoring in periods of great change during regulatory upheaval.

Get in touch with us today to book your free, no-obligation demo of ComplyRadar – it pays to comply!

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