COVID-19 Financial Crime: Stay Resilient

COVID-19 Financial Crime: An Invisible Threat

COVID-19 is one of today’s most significant global challenges – governments around the globe are taking extraordinary measures to curb its spread and we’re all adjusting to an evolving normal. But for criminals, it is business as usual – they view times of uncertainty as an opportunity to capitalize on the most vulnerable.

Only last week, in an unusual move, the UK intelligence agencies issued a warning to the UK public to be extra vigilant to criminals exploiting peoples’ fear of COVID-19. City of London police have also reported that they are already seeing evidence of COVID-19 related frauds.

This is where we need to continue the fight against financial crime. Now more than ever, we need to identify unusual or suspicious behavior, investigate it thoroughly and when we determine suspected fraud, we need to stop the funds from leaving the victim’s account and report to the appropriate authorities. The same approach is true for anti-money laundering teams. We must remain vigilant and rational to identify potential criminal behavior.

Not only is there a threat that criminals will exploit peoples’ fear to profit, they are also likely to exploit the decline in global activity and asset values to stock up on illicit goods and attempt to move their illicit assets at a reduced price. If I am correct in my assessment, then we may see an increase in illicit movements of wealth through the financial sector, at a time when resilience and business continuity is challenged. Therefore, we need to pull together at this critical time and ensure we are still identifying and reporting unusual or suspicious behavior in a timely manner.

Stay Resilient During COVID-19

Resilience is critical for all organizations to allow them to continue to operate as near to business as usual as possible. Compliance is a core function that requires contingency plans to maintain normal operations. All organizations have, or they should have, a contingency plan for unexpected events such as these. The contingency plans should include information such as what backup sites will be used outside of normal locations, what is a minimum staffing level in which the firm can continue operating business as usual, and what activity needs to be prioritized should staffing fall to a level which adversely impacts operations. Over the last few weeks, we have seen more and more financial institutions close, or restrict access to their main offices and move their staff to remote locations, or mandate that their staff work from home as part of these plans.

As such, regulators such as the FCA have released guidance to firms on responding to COVID-19. Ultimately, financial institutions still have a responsibility to monitor their customers’ activity, identify and investigate unusual or suspicious behavior and report this to the relevant authorities in a reasonable time. Financial crime compliance functions need to continue to monitor, investigate and report suspicious behavior, even through these challenging times.

The Main Focus for Compliance Teams

It should seem obvious, but if staffing is significantly reduced due to illness, the higher risk alerts and cases should take priority. Even during these times, there is still a requirement to file a SAR as soon as possible after identifying an event as suspicious. It stands to reason that investigators should focus on the alerts which are more likely to result in SARs. Transaction monitoring and case management platforms can now predict how likely it is for an alert to result in a SAR and auto route it to the relevant team, taking away any manual management review of these alerts. If your organisation does not have this technology, then you should use the risk score generated for the alert. Failing this, it will be a manual review of the information to identify which alert is more likely to result in a SAR. All financial institutions should be following this approach already, but in the current difficult circumstances it is even more important that firms remain efficient and effective.

Another challenge is staff management. Though organisations may expect their staff to work from home, there will inevitably be challenges in maintaining quality and consistency. It is imperative, even with the additional stress and worry we are all facing, that organisations maintain investigation quality. It’s important to investigate all alerts thoroughly to understand whether the customer activity is normal or not, and if appropriate ensure our SAR reports are thorough and provide sufficient detail to assist law enforcement authorities.

Managers need to step up and lead their teams through this:

• Compliance staff should feel supported, have access to the right technology and be confident to ask for help whilst isolated at home. One way to ensure staff feel supported is to have a daily or bi-daily video huddle, where individuals can share ideas and concerns.
• Managers need to ensure that standards are maintained and there is sufficient audit on investigation quality and outputs. Some staff may not be used to this new way of working or feel less able to ask for help or advice when they are uncertain about an investigation or process.
• Feeling part of a team has never been as important as it is right now. Managers also, more than ever, need to check that a quality investigation has been conducted and disposal decisions are appropriate and accurate. Failure to provide sufficient support to staff or to maintain effective controls of the investigation process could result in suspicious events not being appropriately identified or reported. This exposes organisations to significant risk, which could amount to a regulatory or a criminal breach of legislation.

Staying Ahead of COVID-19

Given the current situation, we must stay ahead of these new challenges to maintain the ‘normal’ standards that financial institutions and the authorities have become accustomed to.

Technology can and should play a part at this difficult time. Technology can help with alert management by using AI and machine learning to predict how likely an alert is to result in a SAR, allowing investigators to focus on what is important when resources are diminished. Technology solutions can also help with workflow management, taking away manual allocation of alerts freeing up management to focus on outcomes and support staff who may be struggling. Automation technology can ensure investigation quality and consistency is maintained, taking away manual processing and ensuring the investigator is provided with all the information they need to make an informed and accurate disposal decision. With the majority, if not all compliance staff working from home for the foreseeable future, financial institutions need to ensure their systems are accessible from remote locations and put in place enough controls to ensure the remote access is not abused. Failure to do this could result in reduced operational capacity or compliance breaches. Financial crime technology solutions, if properly implemented, can provide a comprehensive management signoff workflow, a full audit trail and extensive quality assurance management. Ensuring all investigators are maintaining high investigation standards, outcomes are accurate and appropriate and alerting on any activity which falls below expected standards.

Things will eventually return to normal and I believe that this will open the door for organisations to reassess how they currently operate. Even in compliance, firms will review their working practices and if productivity, quality and consistency is maintained they will adopt a more flexible way of working, reducing fixed costs that come with office working.

Until things are back to normal, we need to work together as an industry and support each other to hold the front line against the criminals, maintaining our investigation quality and reporting standards. As they say in the UK, we need to keep calm and carry on!