Published on May 11, 2020
On 7th May 2020, the Financial Intelligence Analysis Unit (the “FIAU”) issued a guidance note, titled ‘COVID-19: Remaining Vigilant against a Changing Criminal Landscape’, which is published on its website.
This document essentially provides guidance to all subject persons on various obligations they must adhere to during the current challenging circumstances brought about by the novel COVID-19 pandemic.
This guidance note is divided into three parts:
- an outline of some examples of the criminal impact of COVID-19, i.e. a non-exhaustive list of different types of illicit behavior and new criminal activities and trends that are being noted across Europe;
- guidance on how subject persons may mitigate money laundering and terrorist financing risks; and
- a reminder to subject persons that the FIAU Implementing Procedures Part I provide for remote on-boarding procedures, which, they suggest, can easily be resorted to in the current circumstances.
Below is a brief overview of each of these three parts respectively:
A. Due to the suspension of global economic growth brought about immediately with the advent of COVID-19, it has been noted that there is an increase in specific types of illicit behavior. The changing circumstances brought about by COVID-19 and the looming economic crisis, creating long-term effects, it is thought that it will continue to encourage criminal activity. Across Europe, the following new criminal activities and trends are continuously emerging:
- fraudulent sale of medical products;
- benefit and compensation scheme fraud;
- cyber-attacks;
- payment fraud;
- exploitation material; and
- trade in illegal goods.
The guidance note also gives some examples of how the changing circumstances brought about by the pandemic may lead to criminal activity. For instance, cash-intensive businesses that before the pandemic were misused to launder dirty money, have now slowed down or ceased their economic activity altogether. Therefore, as a result there are now large amounts of cash waiting to be laundered, so it stands to reason that criminals would instead turn their attention and try to use the services of small-to-medium enterprises, especially those which suffered great economic loss and consequently risk going bankrupt.
The FIAU, therefore, advises subject persons to always stay up-to-date on such latest trends by referring to reports published by reputable international bodies, such as EUROPOL, FATF, INTERPOL, and UNODC.
B. As a result of the increasing criminal threats indicated in part A of the guidance note, the FIAU urges all subject persons to remain vigilant at all times and to ensure that their own Anti-Money Laundering and Combating the Funding of Terrorism (“AML-CFT”) policies and procedures are updated and comply with the latest relevant legislation and the FIAU Implementing Procedures, as applicable. Subject persons should, in particular, assess whether they need to revise their Business Risk Assessment and their Customer Risk Assessment in the light of the new risks that are presenting themselves, seeing that these are dynamic tools that must evolve in response to current changes (such as the changes in businesses triggered by COVID-19). Through this guidance note, the FIAU also took the opportunity to remind subject persons of their main and generic AML-CFT obligations, i.e. on-boarding customers while always complying with AML-CFT regulations and procedures, including applying the proper Customer Due Diligence (“CDD”) measures; carrying out ongoing monitoring; continuing to provide internal training, and assessing transactions and activities for red flags while filing Suspicious Transaction Reports immediately with the FIAU when required.
C. Since COVID-19 has drastically changed the mode of doing business throughout the world, with most subject persons, authorities, agencies, and businesses now working remotely from home, and imposed social distancing measures restricting the meeting of people, with a surge in virtual meetings, the traditionally used methods of identification and verification procedures that need to be performed by subject persons when carrying out an occasional transaction or in the course of a business relationship, have become increasingly difficult, if not impossible, to adopt. However, the FIAU reminds subject persons in their guidance note that, utilized to their fullest, the FIAU Implementing Procedures provide the flexibility needed for subject persons to adapt to such changes while at the same time remaining effective against ML/FT. In fact, many subject persons may be unaware of the various paperless options, provided in the FIAU Implementing Procedures, that can be used to conduct a CDD exercise. For instance, to verify a customer’s identity in lower-risk scenarios, a subject person can merely peruse digital copies or scans of documents. In other instances, however, subject persons are to consider applying one or more of the additional verification measures (which can all be performed remotely) listed in Section 4.3.1.2 of the FIAU Implementing Procedures Part I. Now is indeed the time, more than ever, for subject persons to resort to these alternative CDD measures, even to safeguard the health of all those involved.
For more information on these remote onboarding procedures, reference should be made to a published article, also on this website, entitled ‘COVID-19 and alternative Customer Due Diligence Measures’, which gives a brief, yet comprehensive, overview of such measures subject persons may adopt.
The FIAU concludes its guidance note by reiterating that it remains available to help subject persons, and any questions they may have on the application of AML-CFT measures can be e-mailed to queries@fiumalta.org.
