COVID-19 times have presented unique but interesting challenges. While we don’t want to see criminals become so innovative as to find new ways to do crime – we recognise concurrently that they will. As such, AML Compliance in COVID-19 times has meant watching very closely the criminal landscape. The various reports are that:

• new types of financial fraud are occurring; For example, victims were deceptively offered counterfeit medical supplies or medical supplies that don’t exist and asked to make payment in advance via bank transfers.
• exploitation scams such as vendors claiming that illegal medicines were ‘’miracle’’ cures;
• fraudulent investment scams;
• increased phishing schemes;
• fund raising for fake charities;
• increased cybersecurity scams;
• and insider trading,

have all been noted as criminal activity precipitated by the COVID-19 pandemic.

Why this impact?
COVID-19 times have created more opportunities for crime because of the increased use of electronic transaction methods. Additionally, new conditions for exploitation of vulnerable persons have also arisen due to the increased demand for medicines, supplies, and cash.

What’s the response?
The response to these new and emerging typologies of crime and the new challenges presented by COVID-19 is led in large part by the global standard setter for combatting money laundering and terrorist financing, namely the Financial Action Task Force (‘FATF’). The response is also being led by our various Regulators setting new COVID-19 guidelines.
The COVID-19 response of the FATF to combatting money laundering and terrorist financing has been to encourage financial institutions to consider:

• Plying the risk based approach appropriately to address the new COVID-19 challenges. For example, the challenge presented from increased non-face-to face-interaction in a traditionally face-to-face business environment. For example, some businesses may see the time being appropriate to move away from a strict conservative standard risk to high risk based framework to implement more simplified due diligence for specific customer transactions assessed as lower risk.
• Using more technology, particularly digital identity technology. Digital identity may be especially important for businesses already dealing with majority non-face-to-face customers, as an alternative, and perhaps more effective way, to conduct customer due diligence. The FATF has issued guidance on the use of digital technology. An important highlight about digital identity technology is that the FATF is changing somewhat, the traditional thinking behind non-face-to-face business interactions. The said global standard setter has recognised, that while non-face-to-face business interactions are generally high risk, such interactions conducted using reliable and responsible digital identity platforms may present a standard risk or low risk.

What we should see then, during the COVID-19 pandemic is:

• Compliance Managers reviewing their risk-based framework to provide a more flexible yet effective risk based approach to meet the increased demand for business via non-face-face business interactions, where appropriate.
• Compliance Managers updating compliance programs to include new COVID-19 related typologies and new customer due diligence procedures.
• Training for staff on the new anti-money laundering and countering the financing of terrorism techniques as well as new and emerging criminal typologies.
• More regulatory guidance being issued. Compliance Managers should be following very closely their local regulatory guidance on COVID-19. There is also much regulatory guidance which is emerging across the world which might be also useful.
• Compliance Managers becoming familiar with the FATF guidance on digital identity which, if sanctioned by their local Regulators, could become a new way of on-boarding clients.
• Compliance Managers becoming more familiar with Regulatory Technology (RegTech) and Financial Technology (FinTech).
• Regulators becoming more familiar with Supervisory Technology (SupTech) with a view to creating nimble yet effective regulatory supervision.
• Regulators ensuring that financial institutions remain alert to new and emerging financial crime risks occasioned by the COVID-19 pandemic.