The Financial Supervisory Authority (FIN-FSA) urges supervised entities to exercise vigilance in situations in which unusual transactions and money transfers take place in sectors that may be suspected of having been negatively affected by the coronavirus (COVID-19) pandemic. Such sectors are, for example, retail trade, other cash-intensive business activities, and foreign trade involving unknown actors. The FIN-FSA emphasises the views of the European Banking Authority (EBA) and the OECD Financial Action Task Force on Money Laundering (FATF) that exceptional circumstances must not lead to a reduction in the work to combat money laundering and terrorist financing.
Over the past few weeks, there have been cases of attempted scams and frauds related to the coronavirus pandemic. In addition to normal email frauds, cyberattacks and viruses, fraudsters have attempted to install viruses by providing “information” to the general public in a situation of increased information needs.
The largest financial flows naturally relate to the purchase of protective equipment and various medical supplies, in which respect the situation is said to resemble the “Wild West”. With higher demand, prices have increased manyfold, and there is less time to make purchases than would normally be the case. Many entirely new actors in the field have attempted to exploit this situation, as has been reported in the public media.
Economic stagnation and looming payment difficulties may, in turn, lead to an increase in traditional debtor offences or attempts to commit such offences. Tax and debtor offences usually increase in economic downturns, and the rapid change that has now occurred in the economy has caused major problems for many companies.
Greater emphasis on a risk-based approach
Supervised entities should adopt a risk-based approach when considering which measures are necessary to establish the origin of financial flows. This is particularly important if a customer’s business activities are related to sectors affected by the economic recession and coronavirus mitigation measures. Particular attention should be paid to situations where mitigation measures have not affected financial flows in any way, even though they should be reflected in a decrease in income. When monitoring suspicious transactions, supervised entities should therefore seek to detect such unusual cases in relation to the situation.
The FIN-FSA encourages supervised entities to also assess, applying a risk-based approach, situations where:
- grants and support are transferred through charitable organisations. Organisations must be known and the channels they use for transferring funds must be transparent and such that the delivery of assistance can be easily monitored and verified.
- remote identification is not fully possible in accordance with internal instructions due to the coronavirus pandemic but the client has initially been identified in accordance with the law. Where the situation does not concern a new service or a new customer relationship, provision of a service could be temporarily acceptable until the customer has delivered a new identity document as per the instructions. Such a situation may, for example, relate to an expired identity card when applying for an interest-only period on a loan.
The FIN-FSA urges supervised entities to continue reporting suspicious transactions to the Financial Intelligence Unit at a low threshold. Supervised entities are also requested to notify the FIN-FSA of any detected methods of money laundering and terrorist financing related to the exceptional situation caused by the coronavirus pandemic.
For further information, please contact
Pekka Vasara, Head of Division, Anti Money Laundering, tel. +358 9 183 5513 or pekka.vasara(at)fiva.fi