Criminals and terrorists are taking advantage of the COVID-19 pandemic to carry out financial frauds and scams, including advertising and trafficking in counterfeit medicines, offering fraudulent investment opportunities, and engaging in phishing schemes that prey on virus-related fears.
That’s the warning from the Financial Action Task Force (FATF), the global watchdog that sets international AML standards. It believes that the crisis risks creating a perfect storm against fraud prevention, anti money laundering (AML), and counter terrorist financing (CTF) initiatives.
Malicious or fraudulent cybercrimes, misinformation about the coronavirus, fundraising for fake charities, and medical scams will all proliferate, adds the FATF, with criminals attempting to exploit people in urgent need of care. Impostor, investment, and product scams, as well as insider trading in relation to COVID-19, are also likely to increase.
Criminals and terrorists may seek to exploit gaps and weaknesses in established AML and CTF systems while resources are focused elsewhere, making risk-based supervision and enforcement activity “more critical than ever”.
With most banking and finance activities forced online and AML professionals working from home, the FATF has released a statement warning the industry of its heightened obligations to be vigilant.
“As the global standard setter for combating money laundering and the financing of terrorism and proliferation, the FATF encourages governments to work with financial institutions and other businesses 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,” it says.
Continued implementation of FATF standards will foster integrity and security within global payments systems during and after the pandemic, through legitimate and transparent channels and risk-based due diligence, it adds.
Supervisors, financial intelligence units, and law enforcement agencies should continue to share information with the private sector to address key money-laundering risks, particularly those related to fraud, and terrorist financing risks linked to COVID-19.
In the meantime, they can also provide support, guidance, and assistance to companies in how national AML/CFT laws and regulations should be applied during the crisis, says the FATF.
At international level, the organisation is working with the the World Bank and others to help ensure coordinated policy responses for the continued provision of critical payment services.