The Financial Action Task Force (FATF) issued a paper identifying challenges, best practices, and policy responses to the unprecedented global challenges emerging as a result of the COVID-19 pandemic. Increased COVID-19 related crimes, including fraud, cybercrime, misdirection or exploitation of government funds or international financial assistance are all creating new avenues of illicit crimes.
Emerging risks and vulnerabilities are identified in the paper that could result in criminals finding ways to:
- Bypass customer due diligence measures.
- Increase misuse of online financial services and virtual assets to move and conceal illicit funds.
- Exploit economic stimulus measures and insolvency schemes as a means for natural and legal persons to conceal and launder illicit proceeds.
- Increase use of the unregulated financial sector, creating additional opportunities for criminals to launder illicit funds.
- Misuse and misappropriation of domestic and international financial aid and emergency funding.
- Exploit COVID-19 and the associated economic downturn to move into new cash-intensive and high-liquidity lines of business in developing countries.
European Commission Releases Money Laundering & Terrorist Financing Action Plan
On May 7, a “Communication from the Commission on an Action Plan for a comprehensive Union policy on preventing money laundering and terrorist financing” was published in conjunction with the launch of their public consultation requesting feedback on the actions proposed by the Commission to achieve a comprehensive European Union (EU) policy on preventing money laundering and terrorist financing, and the best way to implement these actions.
The Commission’s Action Plan stresses their commitment to combating both EU and global money laundering and terrorist financing (ML/TF) issues, and the increased instances of criminal activity stemming for the COVID-19 pandemic. The Commission hopes to create a stronger AML/CFT framework and an integrated EU AML/CFT system. It also “intends to implement a comprehensive AML/CFT policy, adapted to the specific threats, risks and vulnerabilities currently facing the EU14 and designed in a manner that can evolve efficiently while taking into account innovation.”
The Action Plan outlines how the Commission plans to carry out their objectives by building on the following six pillars:
- Ensuring the effective implementation of the existing EU AML/CFT framework;
- Establishing a single EU rule book on AML/CFT;
- Bringing about EU-level AML/CFT supervision;
- Establishing a support and cooperation mechanism for FIUs;
- Enforcing EU-level criminal law provisions and information exchange;
- Strengthening the international dimension of the EU AML/CFT framework.
WOCCU looks forward to responding to the Commission’s consultation and supporting the consideration of credit unions in the formulation and implementation of their action items addressing ML/TF prevention.
Posts on both of these items originally appeared on World Council's Advocate Blog.