By Dr Wael Saghir and Dimitrios Kafteranis
As the current health pandemic continues to affect our daily lives as consumers, employees, businesses and investors, one may wonder what its impact has been on financial crime. Has COVID-19 contributed to the increase in financial crime (particularly in the digital sphere)?
It goes without saying that organised crime groups involved in money laundering have a long history of exploiting the ‘system’, made notorious by figures such as Al Capone, and today by the shadower figures exploiting digital banking and finance.
According to the latest statistics, digital fraud increased by 599% in 2019 alone. There may well be a further significant increase in 2020, as reliance on digital finance has increased due to the COVID-19 pandemic. Not to mention, as the majority of white-collar work is now done remotely (from home) this may reduce financial institutions’ capabilities to monitor, control and report operations.
This may be one of the main drivers behind the Financial Action Task Force’s (FATF) promotion of digital ID. This raises the question of whether digital ID is enough to combat digital money laundering during crises such as the one through which we are currently living.
Could Blockchain Technology perhaps also play a role in mitigating these numbers? And what can regulators do other than issuing non-binding recommendations and naming and shaming non-compliant banking operators? Finally, what should policies be for minimising both the risk and the harm of money laundering and other financial crimes, to the most vulnerable sectors of society? These are all matters we are currently examining in our Working Paper. Please get in touch if you have any thoughts to share.