Money laundering during a Pandemic?

In one of my previous posts we talked about 5 AMLD and how it would bring about a change in the AML/CFT regime. Now that the directive has been introduced and enacted, how compliant are businesses with it? What measures are being taken to combat financial crimes?

Smart Search conducted a research recently and found out that 26% of business heads actually had no idea about the new regulations and how to comply with them. Around 34% business leaders admitted to being aware about the new regulations and their compliance with the directive. The CEO of smart search stated that, “The new regulations were put in place in order to help tackle rising levels of fraud and eliminate money laundering, which has been a huge concern among UK businesses. However, it is surprising to see so many business leaders and decision-makers ignoring vital changes to the money laundering regulations, which can have a huge impact on their business. It is also worrying that business leaders do not understand their own company’s exposure to potential financial crime. There is a clear knowledge gap here that needs to be filled. We hope that this research will go some way in helping make business leaders to become more aware of the regulation changes, and encourage them to put investment in their anti-money laundering compliance at the forefront of their business plans.”

This research has definitely thrown light on non-compliance of UK business entities with AML/CFT regime especially because of the increase in cyber-attacks and money laundering cases that have risen over the past few months. Several financial institutions all over the world have stressed the significance and need for vigilance during this period.

The European Commission issued an Action plan to strengthen their legal framework and enforce compliance as a result of the the recent turn of events, increasing number of scandals and scams that took place at European banks. To fight financial crime, they introduced a six pillar approach which aims to harmonize EU’s rules on AML/CFT, such as:

1. Effective application of the rules that exist already.
2. Following a single rule book for AML/CFT.
3. Establishing EU-level supervision.
4. Create a support system for Member State Financial Intelligence Units.
5. Implement criminal law provisions by utilising information more judiciously.
6. Strengthen EU’s international AML/CFT position.

This action plan was proposed due to the shortcomings and uneven supervision among financial intelligence units across the EU. They also launched a public consultation platform for feedback from the respondents until the 29th of July.

Since everyone is working flexibly and conducting due diligence checks virtually during this crisis, it is easy for criminals to doctor identification proof, documents, pictures etc. as digital identity and selfies are currently being used for customer onboarding procedures. There is a definite need to act promptly and tackle this issue. Let’s hope that other jurisdictions also adopt and intensify the AML/CFT regulations and help eliminate money laundering and financial crimes from the system during this difficult time.

Hope you have a great weekend! Stay safe.

Please note that all opinions made on this blog should be treated as a guide and not legal advice.