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Over the past 12 months the coronavirus pandemic has curtailed countless business activities, with a worrying exception - money laundering. According to the Financial Action Task Force, the intergovernmental watchdog for financial crime, lockdown measures have presented criminals with even greater opportunities to commit offences and launder billions of dollars of proceeds.
Money laundering, the channelling of ill-gotten gains through banks and companies to make it appear legitimate, typically takes three forms - physical cash couriering, bank transactions, and export trade. And use of those last two methods appears to be on the increase. In January this year the FATF warned that as Covid has forced banks to move their customer interactions online, criminals have exploited difficulties in verifying customer identities.
During the crisis it found more than 60m new accounts were opened online, but not every digital ID was reliable. At the same time the pandemic left many businesses in financial need, making it easier for criminals to use reputable but failing enterprises as a front for illegal activity. FATF report cited one network using trade-based money laundering to move $400m over several years.
No precise totals can't be calculated, but a United Nations study has estimated annual criminal proceeds as 3.6 per cent of global GDP, with 2.7 per cent, or $1.6tn, being laundered. And it's rising. In the UK alone a national risk assessment found a 20 per cent increase in suspicious activity reports over 2019 and 2020. But countries are taking action. In the US a new anti-money laundering act gives authorities more powers to demand documents from foreign banks and increase its co-operation with overseas governments.
And in the EU a central anti-money laundering supervisor has been created to increase enforcement. They need to step up the fight. The director-general of the UK's National Economic Crime Centre has admitted the hit rate of people charged is still only 3 per cent.