Coronavirus (COVID-19)—financial crime implications for financial institutions

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Coronavirus (COVID-19)—financial crime implications for financial institutions
  • Financial crime systems and controls—FCA expectations
  • Operational challenges
  • Client identify verification and flexibility within FCA rules
  • Furloughing of Money Laundering Reporting Officers
  • Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS)
  • EBA statement on actions to mitigate financial crime risks in the coronavirus pandemic
  • Financial Action Task Force
  • Coronavirus-related money laundering and terrorist financing risks and policy responses
  • Extension of assessment and follow-up deadlines

Coronavirus (COVID-19)—financial crime implications for financial institutions

Some criminals have taken advantage of the coronavirus (COVID-19) pandemic to carry out fraud and exploitation scams through a variety of methods, including cyber-enabled fraud. National authorities and international bodies are alerting citizens and businesses of these scams, which include impostor, investment and product scams, as well as insider trading in relation to coronavirus. Those seeking to launder criminal proceeds or finance terrorism are also likely to exploit any weaknesses in firms’ systems.

Governments and financial institutions are focused on responding to the coronavirus pandemic, which is impacting their ability 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 co-operation. 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 misappropriate domestic and international financial aid and emergency funding

  6. exploit coronavirus and the associated economic downturn to move into new cash-intensive and high-liquidity lines of business in developing countries

This Practice

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