Impacts of COVID-19 and the Increasing Use of Technology for Financial Institutions
May 27, 2022
Impacts of COVID-19 and the Increasing Use of Technology for Financial InstitutionsDownloadsDownload Article
This article from ICLG - Anti Money Laundering was published in May 2022. The entire publication is available at: https://iclg.com/practice-areas/anti-money-laundering-laws-and-regulations/7-impacts-of-covid-19-and-the-increasing-use-of-technology-for-financial-institutions
The COVID-19 pandemic has exposed vulnerabilities at many banks and financial institutions that increased money laundering activity. A report from the Financial Action Task Force found that criminals were exploiting conditions during the pandemic to bypass customer due diligence, misuse online financial services, exploit economic stimulus programs, and misappropriate financial aid - all increasing the risk of corruption and money laundering.
Banks have responded to these increased risks by updating their rules and implementing Artificial Intelligence and Machine Learning tools to augment their anti-AML compliance processes. Regulators also continue to move the goalposts by expecting greater KYC, fraud prevention, and AML measures, putting tremendous pressure on banks to stay current. Regulators have encouraged banks to implement innovative approaches to meet their compliance obligations and to better protect the financial system from illicit financial activity. Banks are continuing to look for more intelligent, data-driven processing to combat financial crime.
The rise of digital assets and virtual currencies, often used for ransomware payments and other criminal enterprises, has also added to the risk of money laundering, sanctions and financial crimes, further threatening the stability of FIs. In a rapidly evolving industry, each FI should continue to assess its readiness for increased oversight and apply new technologies and techniques to achieve the highest standards of compliance.
Published and reproduced with kind permission by Global Legal Group Ltd, London
May 27, 2022
Senior Managing Director, Leader of Financial Services