Following the FATF paper on “COVID-19-related Money Laundering and Terrorist Financing Risks and Policy Responses” published in May 2020, the Council of Europe’s MONEYVAL Committee issued a new report on the same topic on 2 September 2020.
The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism – MONEYVAL is a permanent monitoring body of the Council of Europe whose primary function is to assess European countries’ compliance with international AML/CFT standards and the effectiveness of their implementation.
In this new report, the Committee analyses the following areas to assist policymakers, practitioners and the private sector in applying a more targeted and effective response to money laundering risks during the pandemic:
- Emerging trends and threads, including fraud and embezzlement, crimes related to the urgent need to acquire specialised medical equipment and supplies, cybercrime and corruption
- Changes in the financial behaviour of bank clients and reporting behaviour of supervised institutions
- Specific challenges encountered by law enforcement authorities (LEAs) such as delays in certain types of examinations by law enforcement agencies or in criminal trials
- Measures introduced by countries to mitigate the impact of COVID-19 in the area of economic relief, financial inclusion and direct outreach to financial institutions to inform them of the heightened money laundering risks determined by the pandemic.
At the end of the report, MONEYVAL sets out a number of recommendations that jurisdictions might consider taking on board in response to the emerging risks around:
- Compliance with the FATF Standards
- Guidance and outreach to the private sector
- Risk-based approach
- International cooperation
- Domestic cooperation
- Continuation of monitoring of the COVID-19 crisis impact
On the topic of supervision, the report highlights how authorities flagged their challenges in conducting on-site supervisory controls during the pandemic. To address the situation and effectively complete the off-site monitoring, “supervisors found innovative ways to exchange sensitive information such as client files, by using secure electronic means, or reviewing these documents remotely e.g. through the shared screen facilities offered by video conferencing”. This is an interesting change in the way supervisions and audits have been carried out during the pandemic and it highlights an additional benefit of secure RegTech solutions and digital compliance platforms for both reporting entities and supervisory bodies. Through the implementation of such solutions – which can be safely accessed remotely by designated supervisors to review all AML activities and information on new and existing clients – financial institutions can facilitate the required controls in a less disruptive and invasive way.
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