Criminals of cyberspace: live by the sword, die by the sword

The coronavirus has bred all new kinds of online criminals. But technology is a double-edged sword: as much as it allows bad guys to rid us of what we hold dear, it can stop them in their tracks too

by | July 17, 2020 | Comarch Finance

Confinement measures have led businesses and individuals to turn to online systems – and developed a whole new green field for criminal activities.

As banks had to re-think and re-organise a great part of their processes with fewer human resources, monitoring suspicious transactions now tends to come as a second priority. This challenge has pushed banks to find new IT solutions to provide to their remote staff but also to deeply reorganise their teams and work processes.

The economic downturn following the pandemic has led to new opportunities for money laundering transfers and placements. More transactions are done remotely, and the overall financial crisis has pushed individuals to seek financing outside of formal economy giving rise to opportunities for money laundering activities.

Cyber criminals also began to benefit from insolvency proceedings that have arisen due to coronavirus. Indeed, as the volatility increases, we are seeing the rise of physical cash transaction due to the swing of values: individuals are liquidating their portfolios and transferring large funds. This trend could skew traditional AML monitoring, as criminals prefer to use cash over other payment methods since the former leaves fewer traces. Financial institutions are requested to implement processes that will automatically assess the distinction between those transactions.

Furthermore, when the market stabilises, following the end of the lock down period and the business recovery, banks will have to deal with a large amount of re-deposit that could lead to a higher risk of funds being laundered. The internal reorganisation of their monitoring processes will also have to consider this bouncing effect.

In May, the European Commission has published an action plan based on the recommendations of the European Bank Federation (EBF) for:

  • Single EU Book with legislative proposals on the AML sectors
  • Better supervision thanks to a single EU body
  • Reinforcement of the criminal law
  • Support for cooperation between member states and financial intelligence units (FIUs).

Indeed, EBF suggested that the harmonisation in the EU AML framework, the empowerment of the institutional architecture, the cooperation in terms of information sharing and the use of new tools and new technologies that could enhance the due diligence processes should become priorities in the fight against money laundering. Leveraging the new possibilities offered by AI tools has been highlighted as a new smarter way to address AML. Financial institutions are called to review their monitoring process for more innovative solutions and smarter ways to tackle this issue.

As solution providers, our main challenge is to help the financial sector reach all the points mentioned above. And fight bad guys with pretty much the same weapons they use themselves.

Emilie Marie Peyroche D’Arnaud De Sarazignac is business development manager, Comarch



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