Risk channel for money laundering and increased digital criminality

The COVID-19 pandemic has had a profound impact on the business environment. With crypto currency as a growing part of international transactions, most businesses have exposure to crypto currency, while rogue actors are intensifying their activity in the Dark Web. 

The impact of COVID-19 has made certain businesses such as online gaming, gambling and financial institutions more vulnerable to criminal practices and threats. This includes: 

  • Criminals finding ways to exploit temporary challenges in internal controls caused by remote working situations, in order to conceal proceeds of crime and launder illicit funds; 

  • Increased misuse of online financial services and virtual assets/crypto-currencies to move and conceal illicit funds; 

  • Exploiting economic stimulus measures and insolvency schemes as a means for natural and legal persons to conceal and launder illicit proceeds; 

  • An increased use of the unregulated financial sector, creating additional opportunities for criminals to launder illicit funds, as individuals move money out of the banking system due to financial instability and increased supervision; 

  • Misuse and misappropriation of domestic and international financial aid and emergency funding by avoiding standard procurement procedures, resulting in increased corruption and consequent money laundering risks; and

  • Criminals exploiting COVID-19 and the associated economic downturn to move into new cash-intensive and high-liquidity lines of business in developing countries, both for the laundering of proceeds of crime as well as to fund their operations, as well as fraudulently claiming to be charities to raise funds online. 

“We assist clients with designing and implementing strategies that identify and mitigate risks relating to money laundering and criminal financing, while ensuring they are compliant with the relevant legislation at the EU and national level”, says partner Michael Huertas, Co-head of Dentons’ Financial Institutions Regulatory practice group in Europe. 

“Innovation and technology lie at the very core of Dentons – we’re not only leveraging them to optimize our services, we are actually assisting clients in those very areas, thus opening new practice sectors that until recently have not been the focus of legal services”, added partner Raul Mihu, Head of Dentons’ Competition, Data Privacy and Compliance in Romania.

Dentons’ Bucharest-based and international Financial Institutions Regulatory lawyers and professionals are able to provide clients with legal advice and insights into EU Regulatory developments to prevent and protect them against money laundering and financial crime through the unique AML Compliance Solutions combining client-tailored technology solutions with traditional advisory services. 

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