Communication no. 23 of the General Inspector of Financial Information regarding threats in the area of money laundering and financing of terrorism, related to the spread of COVID-19.
The spreading COVID-19 pandemic has resulted in a number of actions aimed at supporting the Polish economy and the private sector, undertaken by the Government of the Republic of Poland, e.g. by introducing the so-called anti-crisis shield, and with respect to the Act on Counteracting Money Laundering and Financing of Terrorism – by postponing the final deadline for registration of companies established before 13 October 2019 in the Central Register of Beneficial Owners until 13 July 2020. Targeted social actions and measures have also be taken to limit the spread of the epidemic on Polish territory, e.g. by restricting the movement of people, both within Poland and outside its borders. Most public administration institutions work from home. Similar principles have also been introduced by a number of private sector institutions. The criminal world can take advantage of the COVID-19 pandemic to launder illegal income or finance terrorism.
Based on documents issued by international organizations, the General Inspector of Financial Information points out the following threats that may be associated with money laundering and financing of terrorism.
Increasing scale of fraud: reports of international organizations and information of states consistently show that criminals try to benefit from the pandemic by fraudulently raising funds for fake charities, various types of fraud related to the medical sector or online sales of counterfeit medicines and medical supplies, such as test kits and personal protective equipment. In some cases, criminals also pretend to be officers of the police or other services, including health services, to get to their victims’ flats or obtain access to their personal data, among others to steal information on payments, accounts owned and other information.
Cybercrime: To install malware on personal computers or mobile devices, criminals take advantage of social concerns regarding COVID-19, by impersonating representatives of various types of public administration institutions, energy suppliers, or other international entities or institutions. Phishing attempts, involving creating fake emails from the World Health Organization and installing malware in mobile applications by criminals, have been reported worldwide. Criminals may pretend to be health care providers, requesting for payment for treatment or promising to assistance in emergency, where medical intervention is required.
Investment in real estate: in times of economic downturn, criminals and terrorists may seek to invest in real estate or businesses threatened by going bankrupt, that can be used to generate cash and disguise illegal income, or to carry out corporate bankruptcy proceedings to disguise fund sources.
Other actions on financial markets: criminals can introduce illegal proceeds into the financial system when customers are looking for new ways to restructure loans and credit lines. There is a risk that large cash withdrawals, liquidation of stock portfolios and investing in gold bullions can be an opportunity for criminals to mix funds. Due to the fact that numerous financial institutions around the world close down their branches and offices or operate on a limited time basis, an increase in mobile transactions is recorded.
A number of countries have seen an increase in cash withdrawals, fund transfers and the sale of securities. Customers unfamiliar with online platforms may be more susceptible to online fraud, while those without access to online financing options may transfer their assets to the grey economy
Financing of terrorism: terrorist groups may also take advantage of the COVID-19 pandemic period to raise or transfer funds, among others through illegal activity, darknet market activity, fundraising under the guise of actions aimed at combating the effects of the pandemic.
In view of the above, based on international studies, the General Inspector of Financial Information points out possible risks of money laundering and financing of terrorism, resulting from the above-mentioned threats:
- Enhanced use of online schemes and/or virtual assets as methods of disguising funds for the purposes of money laundering;
- Possible increase in transactions inconsistent with the customer profile, use of the informal economy to obtain institutional financing, and increase in cash flow;
- The use of legal persons to fraudulently raise funds earmarked for financial aid for companies and enterprises, the use of legal enterprises to disguise funds by declaring the company’s insolvency;
- Transferring operation to new types of cash-intensive businesses requiring significant financial liquidity, which in turn enables the laundering of income from illegal sources.
The General Inspector of Financial Information also reminds of actions taken to improve communication with the private sector.
- Communications of the General Inspector of Financial Information regarding COV-19:
Due to the situation related to the spread of coronavirus and the ensuing changes in the organization of work of Obligated Institutions, as well as the current epidemic, the General Inspector of Financial Information:
- enables obligated institutions to replace the existing form of correspondence pursued by fax with correspondence sent via electronic mail.
Communication No. 20: https://www.gov.pl/web/finanse/komunikat-nr-20-w-sprawie-mozliwosc-otrzymywania-korespondencji-od-giif-za-posrednictwem-poczty-elektronicznej
- requests obligated institutions to forward, if possible, notifications referred to in Article 86 of the Act of 1 March 2018 on Counteracting Money Laundering and Financing of Terrorism (Journal of Laws of 2019, item 1115 as amended) between 11:00 a.m. and 2:00 p.m.00.
Communication No. 21: https://www.gov.pl/web/finanse/komunikat-nr-21-w-sprawie-przekazywania-do-generalnego-inspektora-zawiadomien-o-ktorych-mowa-w-art-86-ustawy-aml
- Other important communications of the General Inspector of Financial Information:
- A communication regarding the identification of a client of an obligated institution and verification of his/her identity in the absence of his/her physical presence to determine whether the physical absence of the client when establishing business relations or conducting occasional transactions obliges the obligated institution to apply enhanced customer due diligence measures.
- E-learning course entitled “Counteracting money laundering and financing of terrorism”:
The General Inspector of Financial Information also reminds of free access to the e-learning course entitled “Counteracting money laundering and financing of terrorism”. Participation in the course fulfils the obligation specified in Article 52 of the abovementioned Act. The purpose of the course is to present the issues of counteracting money laundering and financing of terrorism under applicable regulations.
The course is available at https://kursy.tomorrow.pro/
Other helpful communications and positions:
- The position of the UKNF (Polish Financial Supervision Authority) of 5 June 2019 regarding client identification and verification of his/her identity in banks and branches of credit institutions using video verification (consulted with the GIFI):
Link https://www.knf.gov.pl/o_nas/komunikaty?articleId=66067&p_id=18
- The position of the EBA of 31 March 2020 on measures aimed at reducing the risk of financial crime relating to the COVID-19 pandemic
The EBA calls on the competent authorities to cooperate closely with financial institutions, among others to identify new risks and typologies in the area of money laundering and financing of terrorism, as well as raise awareness in this respect, and to ensure ongoing monitoring of transactions and reporting cases of suspected money laundering and financing of terrorism to competent FIUs by financial institutions.
Linkhttps://eba.europa.eu/eba-provides-additional-clarity-on-measures-mitigate-impact-covid-19-eu-banking-sector -> Statement on actions to mitigate financial crime risks in the COVID-19 pandemic
Global recommendations and guidelines regarding COVID-19 with respect to AML/CFT that are worth paying special attention to:
- United States – FinCEN Press Release, FinCEN Encourages Financial Institutions to Communicate Concerns Related to COVID-19 and to Remain Alert to Related Illicit Financial Activity:
- FATF - Statement by the FATF President: COVID-19 and measures to combat illicit financing
https://www.fatf-gafi.org/publications/fatfgeneral/documents/statement-covid-19.html
- ECB - FAQs on ECB supervisory measures in reaction to the coronavirus
- ESMA - COVID-19