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ANALYSIS: Pandemic Crime Threats Demand Ongoing AML Vigilance

Aug. 11, 2020, 4:38 PM

With the Covid-19 pandemic entering its sixth month, the elevated financial crime threats and workplace disruptions have complicated anti-money laundering/ combating the financing of terrorism (AML/CFT) compliance and drawn the attention of regulators.

Bloomberg Law has launched a survey to gain insight into how firms are dealing with these challenges.

The Financial Crimes Enforcement Network (FinCEN) has issued several advisories on various financial crime threats since March. FINRA has also issued a recent notice on the threat of fraudulent account openings and other fraud, including stealing government stimulus funds and payments.

Available data indicates that these risks are continuing unabated. One example is identity theft, a significant money laundering risk that rose during the pandemic and has remained elevated. According to Federal Trade Commission (FTC) data, identity theft reports have soared in 2020, with a significant jump around the time of the start of the pandemic crisis in the U.S. in mid-March and April. By Aug. 6, the FTC had received 24,182 complaints of identity theft, peaking at more than 7,800 in May. The number of complaints fell after May but remained high, at more than 4,800 in July.

Identity theft activities can test the effectiveness of an AML program’s Customer Due Diligence (CDD) procedures. These procedures require the collection of customer information for customer risk profiles, which can help identify red flags indicating potential crimes. FinCEN issued new Frequently Asked Questions (FAQs) on maintaining CDD requirements at the outset of a customer relationship and throughout, with the frequency and scope of monitoring determined by the relationship’s risk.

As noted above, Bloomberg Law wants to hear from you on how the pandemic is impacting your AML compliance controls. We have a short survey, released in July, seeking information on firms’ responses to these challenges, any resulting changes to compliance controls, and possible regulatory relief that may be needed.

Please complete the survey before it closes next week.