In a report published in May 2020, the Financial Action Task Force (FATF) highlighted many COVID-19-related ML/TF risks and policy measures. The FATF has now released an update to its May 2020 report, underscoring the latest developments in this area.
The FATF has used insights from private and public sector webinars conducted in over 200 countries and jurisdictions in July and September 2020s. FATF’s update discusses how ML/TF risks have evolved during the pandemic, and how authorities have addressed them. This update confirms the pandemic-related concerns that the FATF had pointed out in May. Firstly, the pandemic has led to a change in people’s financial behaviors, recording significant increases in online purchases due to lock-downs and temporary closures of most physical services. Secondly, at the same time, financial situation has worsened for many due to the loss of millions of jobs, shutdowns of several companies and a worldwide economic crisis.
The FATF has reiterated that both the public and the private sectors must take a risk-based approach to address the changed risk landscape. ML/TF risks must be eliminated while maintaining all essential and legitimate financial services. There should also be a clear communication between supervisors and clients and employees about the national risk scenario and regulatory requirements.