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Sunday, 4 April 2021

The lockdown has been good to money launderers

Money laundering has flourished during the covid-19 pandemic: While the pandemic has put a dent on much business activity worldwide, lockdown measures have presented criminals with the ideal situation to commit laundering offences, said the US’s Financial Action Task Force — the intergovernmental watchdog for financial crime — according to a Financial Times video (watch, runtime: 02:42). The UK reported a 20% y-o-y increase in suspicious activity reports in FY2019-2020, while January of that year saw a 116% rise in case submissions from the country’s anti-laundering agency, according to a National Crime Agency report.

How has lockdown helped launderers? Money laundering generally takes the form of bulk money smuggling, bank transactions, or export trade transactions. The latter two methods appeared to increase during the pandemic, as criminals took advantage of banks moving customer interactions online by exploiting difficulties in verifying customer identity. With the pandemic also leaving many businesses in financial need, criminals began to use legitimate, but failing businesses as a front for illegal activity.

What are countries doing to prevent this? The US introduced the Anti-Money Laundering Act last year which obliged banks and other financial institutions to take stricter measures to detect suspicious activity while also giving more power to authorities to demand documents from foreign banks. In the EU, a central money laundering supervisor has been created by the European Central Bank to increase enforcement, and has adopted an Anti-Money Laundering Action Plan that coordinates the exchange of information between more than 50 authorities concerned with combating money laundering.

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