Covid-19 has wreaked havoc on people, businesses, and industries across the world and anti-money laundering (AML) compliance is no exception. In the wake of the first wave of Covid-19 we combined our expertise with discussions we?ve had with our customers -  compliance officers and executives in New Zealand, Australia and the UK  ?  to understand the impact of the pandemic. The key insights that emerged highlighted the value that a flexible AML programme with underlying technology offers, enabling reporting entities to respond to change, Covid-19 or otherwise with less friction.

Cash losing its appeal

While there were large withdrawals of cash leading into lockdown, physical money quickly lost its appeal due to its potential to spread pathogens around communities. The direct result of this was that card and online spending increased. Since the withdrawals made before lockdown were practically unusable, banks and building societies noticed a surge in cash deposits once lockdown was lifted. It seems likely that Covid-19 is accelerating the move to a cashless society, which may have implications for compliance teams and the activities they monitor.

Digital and phone usage up

The age of digital in the financial sector has arrived. Lockdown caused a steep rise in online banking registrations and usage - a rate which has continued even after restrictions lifted. Shifting from in-person to digital engagements also extended to reporting entities working remotely and utilising digital channels. One reporting entity even undertook a remote implementation of an automated AML solution while under lockdown, which shows how much times have changed.

Fraud on the rise

As traditional avenues for criminal activity closed due to lockdowns, reporting entities saw a rise in fraudulent behaviour. Those with flexible rule engines were more easily able to tweak and create rules to monitor for fraudulent behaviour. These rules included new phone withdrawal methods, online profiles created by vulnerable customers, increased frequency and value of third-party and/or online withdrawals, and customer/account types at risk of social engineering.

Adapting AML programmes

With lower usage of cash, a surge of online and phone transactions, and increases in fraudulent behaviour, reporting entities required new or adjusted transaction monitoring rules to make allowance for the changes they noticed in customer behaviour. Additional controls such as extra security questions for phone banking were also implemented. Overall, these changes were easier to implement for those with flexible AML programmes.

Reporting entities who had modernised their AML programme with automated software appeared to have been less affected by Covid-19. Seeing technology as an enabler, they were better placed to tweak their workflows and transition to working from home.

 Watch our on-demand webinar on this topic here: ?Optimising your AML programme in times of change? 

Digital Innovation Summit - Economic Crime Tech

UK Finance's flagship technology event, the Digital Innovation Summit, has now begun but you can still register and enjoy all content on demand - the agenda is designed so you can dip in and out when it suits you.

This year the event features a dedicated Economic Crime Tech stream to discuss how the industry can defend our customers and systems from organised crime.

The event is free for members and associate members.

View the agenda