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COVID-19-related Risks

COVID-19-related ML/TF Risks

  • by EB 13 Jun, 2020
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Publication type Paper
Language English
Publication date 04.05.2020
Number of pages 34

COVID-19-related Money Laundering and Terrorist Financing Risks and Policy Responses published by the Financial Action Task Force (FATF).

The COVID-19 pandemic has led to unprecedented global challenges, human suffering and economic disruption. It has also led to an increase in COVID-19-related crimes, including fraud, cybercrime, misdirection or exploitation of government funds or international financial assistance, which is creating new sources of proceeds for illicit actors. Using information provided to the members of the FATF Global Network on 7 and 23 April, this paper identifies challenges, good practices and policy responses to new money laundering and terrorist financing threats and vulnerabilities arising from the COVID-19 crisis.

As the world is focusing on responding to the COVID-19 pandemic, it is impacting on the ability of government and the private sector to implement anti-money laundering and counter terrorist financing (AML/CFT) obligations in areas including supervision, regulation and policy reform, suspicious transaction reporting and international cooperation. This could lead to emerging risks and vulnerabilities that could result in criminals finding ways to:
1) Bypass customer due diligence measures;
2) Increase misuse of online financial services and virtual assets to move and conceal illicit funds;
3) Exploit economic stimulus measures and insolvency schemes as a means for natural and legal persons to conceal and launder illicit proceeds;
4) Increase use of the unregulated financial sector, creating additional opportunities for criminals to launder illicit funds;
5) Misuse and misappropriation of domestic and international financial aid and emergency funding;
6) Exploit COVID-19 and the associated economic downturn to move into new cash-intensive and high-liquidity lines of business in developing countries.

AML/CFT policy responses can help support the swift and effective implementation of measures to respond to COVID-19, while managing new risks and vulnerabilities. This paper provides examples of such responses, which include:
a) Domestic coordination to assess the impact of COVID-19 on AML/CFT risks and systems;
b) Strengthened communication with the private sector;
c) Encouraging the full use of a risk-based approach to customer due diligence;
d) Supporting electronic and digital payment options.

About the Financial Action Task Force (FATF)

FATF is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas. With more than 200 countries and jurisdictions committed to implementing them. The FATF has developed the FATF Recommendations, or FATF Standards, which ensure a co-ordinated global response to prevent organised crime, corruption and terrorism. They help authorities go after the money of criminals dealing in illegal drugs, human trafficking and other crimes. The FATF also works to stop funding for weapons of mass destruction. The FATF reviews money laundering and terrorist financing techniques and continuously strengthens its standards to address new risks, such as the regulation of virtual assets, which have spread as cryptocurrencies gain popularity. The FATF monitors countries to ensure they implement the FATF Standards fully and effectively, and holds countries to account that do not comply.


Read the FATF „COVID-19-related Money Laundering and Terrorist Financing Risks”

See also Staying Compliant During a Pandemic webinar

Source:
1. The Financial Action Task Force (FATF), COVID-19-related Money Laundering and Terrorist Financing Risks and Policy Responses (04.05.2020),
2. The Financial Action Task Force (FATF), About, Who we are.

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