Changes in consumer behavior combined with a rush by financial institutions to provide more digital services has played a part in ushering in new money-laundering and terrorism-financing issues across the globe.
That was one of the main takeaways from a feature presentation by Financial Action Task Force Policy Analyst Shana Krishnan during the webinar, COVID-19 Related Money-Laundering and Terrorism-Financing Risk, presented by World Council of Credit Unions' (WOCCU) COVID-19 Response Committee.
More than 200 credit union professionals from over 20 countries tuned it to hear Krishnan describe the new threats and vulnerabilities their institutions are facing as a result of the pandemic. She presented the findings of the FATF COVID-19-related Money Laundering and Terrorist Financing Report from May 2020, including details on how the agency has seen an increase in identity theft, and malware and ransomware attacks as criminals take advantage of consumers who are conducting more financial transactions online, and financial institutions that are offering more digital services to streamline those transactions..
The pandemic has also led to more scammers to pose online as financial institution officials to obtain member/customer account information, allowing them to potentially take over and exploit accounts related to individuals. The scammers are also posing as:
- companies selling personal protective equipment that either doesn't exist or is defective.
- charities seeking money for first responders and other vulnerable people impacted by COVID-19.
- fictitious companies to obtain government stimulus money.
- legitimate healthcare-related companies used to launder money.
According to Krishnan, financial institutions that have good risk assessment and strong contingency plans in place are faring better with these threats, as are those with effective monitoring tools and technologies in place.
"Coordination between different areas, between the frontline business areas and the compliance areas, those are really important to ensure that you're taking a fully integrated risk-based approach," said Krishnan.
World Council Senior Vice President of Advocacy Andrew Price and John Byrne, Executive Vice President and Chairman of the AML Rightsource Advisory Board, joined Krishnan for a panel discussion of the issues put forth in her presentation. Price used that time to urge attendees to ensure their credit unions advocate for clear regulatory guidance on these issues.
"It's really important for our credit unions. When there's more communication horizontally among the regulators, and then vertically down to financial institutions and credit unions, I think the whole system works better and more efficiently," said Price.
Byrne said credit unions and other financial institutions also have to make a decision on how they are going to manage risk on their own.
"The issue is - can you appease your regulator that what you've done is sufficient. To Andy's point, the challenge is that they are, the regulators, a little fearful. They want to make sure that if the institution is mitigating a risk, that it doesn't come back on the regulator for allowing something to occur," said Byrne.
You can watch this video in its entirety on the World Council YouTube Channel.
Next COVID-19 Response Committee webinar
A Virtual Global Financial Symposium: The Economic Impacts of COVID-19 on Credit Unions will be held on Tuesday, November 24 at 9:00 a.m. U.S. Central Standard Time. For more information and to register, click here.