Article: PayThink The pandemic has given launderers a new window

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PayThink The pandemic has given launderers a new window

Martin Cheek, 11 May 2021

The shift to digital has also made it simpler for people to find ways to game the system and commit fraud, money laundering, and other illegal activities.

Thanks to the coronavirus, the vast majority of us now spend more time online than ever. Tasks that we once performed in person, such as going to the grocery store or buying stamps, are now done in the comfort of our own homes. Even going to the bank has become a virtual process, with more and more people opting to deposit checks and manage investments directly from their mobile phones.

In Europe alone, the coronavirus led to a 72% increase in the use of mobile banking and finance apps – in just one week. Obviously, much of this increase was due to the fact that people could no longer (or no longer felt safe to) visit banks in person, but even as the world returns to normal, mobile banking’s popularity doesn’t show any signs of abating. This might be good for consumers, but it puts a greater burden on financial institutions to have adequate safeguards in place to prevent fraudsters or money launderers from finding loopholes they can exploit.

Kenneth Blanco, the director of the Financial Crimes Enforcement Network (FinCen), says that the most prevalent trend the organization has seen with regards to coronavirus-related suspicious activity reports (SARS) “involves fraudsters targeting multiple COVID-19 related government stimulus programs, employing money mules and cyber techniques.” In other words, some malicious actors are exerting considerable efforts to hijack money meant to aid struggling businesses and households, and laundering it to use for their own purposes.

In many cases, these efforts are made easier by the many digital financial platforms now available on the market. Law enforcement officials estimate that over $100 million stolen from pandemic relief funds have been laundered through investment accounts on platforms such as Robinhood, Fidelity, E*Trade and TD Ameritrade thus far, and there is probably a great deal more that is yet to be uncovered.

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