COVID-19 and the Rise of Financial Crime

Financial crime has significantly increased with the arrival of the COVID-19 pandemic. In this article, we look at the emerging risks during the pandemic, what this rise in financial crime means for financial firms, and how they can adapt to the new normal in an industry that is heavily regulated.

A survey by American Banker showed that before the pandemic and the introduction of social distancing measures, 82% of bank customers preferred to physically visit the bank and only 63% were likely to use a digital app.

However, with lockdowns and other safety concerns, most banks in the US and around the world have had to close their branches. This has led to a major shift in the digital landscape and created not only a rise in digital transactions, but also an explosion of financial crime.

Here are 5 ways COVID-19 is bringing change to the AML and fraud landscape:

Increased Number of Employees Working from Home

Since early 2020, close to a third of the world’s population has been in a form of lockdown with varying levels of restrictions.

The lockdowns have created major challenges for companies forcing many to allow their staff to work remotely and created opportunities for cybercriminals to exploit the increased number of vulnerabilities.

A Profusion of Untrusted Connections and Devices

These same employees are today connecting to corporate networks from all sorts of untrusted devices such as mobile phones, tablets, and computers. They are also actively communicating through chat and video platforms sometimes using unsecured means.

Thus, most companies are facing new challenges such as ensuring all external connections used by staff are protected, robust, and properly encrypted.

Since the arrival of this pandemic, the need for increased flexibility opened the door to threats that have yet to be addressed.

Increased Ransomware, Malware, and Phishing Attacks

In lax environments, cybercriminals are indeed getting more opportunities to exploit the trust humans tend to put in their untested systems and processes. Often using ransomware, malware, and phishing attacks, these cybercriminals get access to critical information and systems. They have even targeted major organizations such as the WHO and the US Federal Government agencies by creating fake portals that they can manipulate to capture personally identifying data.

The SolarWinds incident is a good example of a successful, large-scale hacking attempt on a leading data security company and trusted organizations.

Increased Money Laundering Incidences

Business emails are often the first to become compromised and used in elaborate scams. These fraudulent operations aim at manipulating corporate system accesses and transferring money to illegitimate recipients.

The rising number of threats has made it crucial for institutions to closely monitor their systems and employee access, as well as ensure customers are protected from financial crimes or do not themselves become agents (knowingly or not) for criminal organizations.

Increased Identity and Fraud Risks

Identity theft and fraud often constitute yet again another steppingstone in a successful hack. Financial institutions now have to confront AML related risks as well as identity and fraud risks.

Regulatory bodies across the world are strongly recommending the enhancement of identity verification and KYC protocols through state-of-the-art, always-on AI tools.

More than ever, it is now critical to know who is who by matching names with the right identities. This is the first line of defense against the increasing number of financial crimes.

Thanks to Screena we have made the tedious process of matching names and identity screening a breeze. Fewer False Positives and almost no False Negatives. You can rely on Screena for building fast, accurate and highly effective digital identity verification solutions.