Legal Brief: Global Financial Community Acts Against COVID-19

By legal writers Silas Bartels, Larissa Bernardes, Laura Cruz and Leily Faridzadeh

Editor’s Note: In a more in-depth 13th installment of our series, the legal team reviews how governments and organizations across the globe are addressing the risks of financial crime prompted by the new coronavirus pandemic.

Over the past month, several U.S. and state agencies have warned of financial crimes associated with COVID-19, including the IRS, FBI, Justice Department, Commodity Futures Trading Commission, Financial Industry Regulatory Authority, New York State Attorney General and California’s Attorney General.

Their warnings shine light on schemes to peddle fake cures from the U.S. Centers for Disease Control and Prevention, manipulative market scams and efforts to defraud those receiving economic impact payments during the crisis.

In addition to warning of COVID-19 driven crimes, the Financial Crimes Enforcement Network instructed financial institutions in guidance on how to meet their compliance obligations during the pandemic, urged them to use innovative approaches and advised them to use a new, online mechanism to directly contact the bureau in response to urgent COVID-19 related problems.

Most recently, on April 9, the Treasury Department responded to international criticism, including from U.N. High Commissioner for Human Rights Michelle Bachelet, by reiterating its commitment to ensure that humanitarian assistance and medical supplies flow to sanctioned countries during the pandemic, including Venezuela, Syria and North Korea.

Meanwhile, Canada’s Financial Transactions and Reports Analysis Centre has instructed banks to focus more on flagging and reporting suspicious activity during the crisis, while farther south, regulators in the Caribbean, Central America and South America have issued various COVID-19 related notices and advisories of their own.

On April 1, the Bahamas’ Compliance Commission notified financial institutions that their duties under the Register of Beneficial Ownership Act 2018 have been temporarily suspended as a result of commerce-related restrictions triggered by the new coronavirus.

Six days earlier, Barbados’ central bank advised compliance departments to assess the difficulty of compliance with AML and other rules in light of social distancing and other interruptions, warned of an increased risk of cybercrime and recommended that financial institutions ensure their remote access systems are up to date.

Mexico’s financial intelligence unit asked banks to use a special email address to notify the agency of any delays in meeting their reporting obligations, and Chile’s FIU issued similar instructions.

Argentina’s FIU advised financial institutions on March 20 to prioritize suspicious activity reporting, and counterterrorist financing in particular.

Across the pond, the U.K. National Crime Agency has warned of an increase in spear-phishing attacks, and noted that organized criminals were using malicious mobile applications and websites to exploit the pandemic. The Financial Conduct Authority has also warned of COVID-19 related fraud, as has UK Finance, in March 25 and March 30 statements.

Malta’s Financial Services Authority issued a similar missive on March 24.

Last month also saw the European Anti-Fraud Office open a case in connection to imports of fraudulent, high-demand products during the pandemic, such as masks, medical devices, disinfectants, sanitizers and test kits, and various European regulators acted to mitigate the impact of COVID-19 on compliance and the financial system in general.

On March 31, the European Banking Authority issued a statement emphasizing the need for a flexible approach to anti-money laundering and counterterrorist financing supervision—steps that the Bank of Italy, Financial Supervisory Authority of Sweden, Jersey Financial Services Commission, Malta Financial Services Authority and others have already taken.

Asian regulators have focused on balancing the need for commercial efficiency with the need to address a heightened risk of financial crime.

In the Philippines, the Anti-Money Laundering Council, or AMLC, and the country’s central bank, Bangko Sentral NG Pilipinas, issued notices on March 18 and March 30 to inform licensed entities of their decision to relax certain regulatory obligations, particularly those pertaining to AML and know-your-customer requirements.

Regulators in Australia and New Zealand underscored their expectations that financial institutions continue to meet their AML and counterterrorist financing obligations, especially those pertaining to the monitoring of suspicious transactions, but also relaxed reporting deadlines and KYC requirements.

Despite the rise in crime, officials in India and Pakistan focused on easing COVID-19 related fears of the public and financial service sector alike.

On March 18, the State Bank of Pakistan took measures to promote the use of digital payments, and on March 30 the Securities and Exchange Board of India focused on easing access to funds while noting the need for vigilant cybersecurity measures.

Promoting public access to funds and safeguarding entities and consumers has also been a focus in Africa, where on April 1 the Bank of Botswana sought to encourage the use of digital payment platforms by raising limits on mobile money transactions.

On March 30, Nigeria’s Police Force warned of a number of emerging crime trends, including fraud relating to websites, ecommerce platforms and fake social media accounts.

International organizations have also sought to unify the global approach against financial crime and also address sanctions, money laundering and terrorist financing concerns during the pandemic.

On March 13, Interpol issued guidance warning law enforcement and the public of various COVID-19 scams, and advising customers seeking to purchase medical supplies online to verify the legitimacy of the sellers and be wary of sending payments to accounts outside their countries.

In an April 11 statement, the Financial Action Task Force encouraged governments to collaborate with financial institutions and other businesses on establishing a flexible, risk-based approach to compliance during the COVID-19 outbreak. In the statement, FATF provided detailed guidance on digital onboarding and simplifying due-diligence procedures.

Topics : Anti-money laundering , Counterterrorist Financing , Know Your Customer , Fraud , Sanctions , Consumer Protection , Info. Security/Cybercrime
Source: Argentina , Australia , Botswana , Canada , Chile , European Union , FATF , India , International , Interpol , Japan , Netherlands , Nigeria , Pakistan , Philippines , Transparency International , U.S.: CFTC , U.S.: Department of Justice , U.S.: Department of Treasury , U.S.: FinCEN , U.S.: IRS , U.S.: Law Enforcement , U.S.: NCUA , U.S.: State Attorneys General , U.S.: State Financial Regulators , United Kingdom , United Nations
Document Date: April 15, 2020