FINANCIAL CRIME RISKS POST-COVID-19
Financial crime has transformed significantly in recent years. Technology has allowed criminals to expand the geographical reach of their operations and increase the sophistication of their methods. Lucrative new avenues to perpetrate financial crime have led to an increase in its volume and velocity.
According to the UK Financial Conduct Authority (FCA), for example, it is estimated that the serious organised crime facilitated by money laundering costs the UK economy £37bn every year, while the estimated annual cost of fraud in the UK stands at £190bn.
Capitalising on crisis
Financial crime risks have intensified over the last 18 months as the COVID-19 pandemic has disrupted normal daily life. As noted by the Financial Action Task Force (FATF), the pandemic has contributed to changes in the financial behaviour of governments, businesses and people in many parts of the world, giving rise to new money laundering and financial fraud risks. Cyber crime, in particular, has flourished as malicious actors took advantage of these opportune conditions to exploit vulnerabilities in existing controls, or to bypass them completely.
The US Financial Crimes Enforcement Network (FinCEN) noted that a significant proportion of cyber crime money laundering during the pandemic has primarily involved virtual currency. Europol reported an intensification of cyber attacks during the pandemic and a shorter period between an initial ransomware infection and activation of the attack, as well as ongoing use of dark web platforms to distribute illicit goods and services. In addition, according to INTERPOL there has been an increase in malicious and high-risk domains registered with COVID-related keywords.
Jul-Sep 2021 Issue
Richard Summerfield