The Financial Action Task Force (FATF) – which sets international standards designed to fight money laundering and other financial crime – has issued a paper which “identifies challenges, good practices and policy responses to new money laundering and terrorist financing threats and vulnerabilities arising from the COVID-19 crisis.”

FATF says it believes that all of the following have played a part in increasing financial crime risks:

  • Many people have made greater use of online platforms, either because they are working remotely, or they have been prevented from meeting friends and family in person
  • Many businesses are now doing more business online as their retail premises have been closed by their national government
  • Some banks have restricted face-to-face banking services, which may have implications in areas such as verification of identity. Customers who have been forced to use online services when they would not normally do so may be especially vulnerable to scams
  • There has been a massive demand for items such as personal protective equipment and ventilators
  • Large scale unemployment or furloughing of workers, together with loss of government revenue and a general economic recession will undoubtedly have an impact on the financial and social behaviour of businesses and individuals
  • Many governments have prioritised fighting Covid-19 over other areas and have diverted resources from these other areas of their normal work
  • In many countries, on-site financial crime inspections have reduced or ceased altogether

The report says that the principal fraudulent activities appear to be:

  • Fraudsters impersonating government officials with a view to obtaining cash or bank account details
  • Scams relating to medical supplies, personal protective equipment and pharmaceutical products, where the criminals take payment for the goods but then either never deliver the product, or deliver goods that are substandard
  • Requesting donations for COVID-19-related fundraising campaigns, claiming that they are acting on behalf of a charity
  • Government officials misusing and misappropriating domestic and international financial aid and Covid-related emergency funding

FATF President Xiangmin Liu commented:

“The members of the FATF, both domestically and multilaterally, are applying every available resource to combat the Covid-19 pandemic. 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.

“Criminals are taking advantage of the Covid-19 pandemic to carry out financial fraud and exploitation scams, including advertising and trafficking in counterfeit medicines, offering fraudulent investment opportunities, and engaging in phishing schemes that prey on virus-related fears. Malicious or fraudulent cybercrimes, fundraising for fake charities, and various medical scams targeting innocent victims are likely to increase, with criminals attempting to profit from the pandemic by exploiting people in urgent need of care and the goodwill of the general public and spreading misinformation about Covid-19.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article