FATF highlights the risks of financial crimes and required policy changes amid the ongoing COVID-19 crisis


The Financial Action Task Force (FATF) recently published a paper informing that frauds and cyber-crimes have soared amid the COVID-19 crisis. Criminals are propagating frauds through impersonation of government officials, counterfeiting of medical supplies and medicines, fundraising scams by creating fake charities and fraudulent investment schemes. Similarly, cyber crimes including an onslaught of phishing emails and ransomware attacks are also posing a grave danger. Exploitation of vulnerable groups, such as workers and children, is yet another concern.

More and more people are engaging in online financial transactions as many banks are closed due to ongoing lockdowns. In this changing situation, those new to the online platforms are more susceptible to online frauds. Moreover, as governments announce and disburse enormous stimulus packages to strengthen faltering economies, malicious entities could target vulnerable groups to obtain their financial information by impersonating government officials. International aid to fight COVID-19 is also prone to misappropriation by certain corrupt officials unless appropriate measures are installed.

To be prepared to fight a new wave of financial crimes, the FATF has provided various recommendations. Firstly, governments must focus on a risk-based approach to customer due diligence when preventing diversion of funds to terrorist organizations. They must also strengthen their communication and collaboration with the private sector in these times. Authorities should encourage digital payments so that lockdown norms are not flouted. Additionally, they must publish appropriate AML/CFT guidelines for economic relief packages.