COVID-19, lockdown and the mass transition to remote working has created fertile ground for fraudulent activity in the UK. Needless to say, the pandemic has caused widespread panic, financial stress and business instability.
Recently, we’ve seen a rise in opportunistic fraudsters impersonating charities and government authorities in order to take advantage of the widespread effects on society.
In one instance, thousands of text messages were sent out using the guise of the government’s track and trace app in an effort to convince unsuspecting users that they had come into contact with the virus, only to harvest log-in credentials and payment details when prompted.The disruption caused by COVID-19 does not stop at credential-harvesting attacks or phone scams: depressed asset values and struggling businesses offer an attractive route through which criminals can invest, launder and mask other illicit activities.
Logistically, the transition to remote working and a digital environment has also made it much harder for banks and other financial institutions to tackle these crimes.
As a result of branch closures and social distancing, some organisations have found it more difficult to verify the identities of customers, retrieve important physical documents and complete the necessary customer due diligence checks in order to prevent financial crime. What’s more, delays between country borders may mean information on foreign clients or business is difficult to obtain.
Additionally, extremely strained business resources, means institutions in a variety of sectors have been running skeleton crews on limited digital tools in a from-home environment, meaning many businesses no longer have the necessary technology to deal with the influx of financial crime facing them.
Many institutions are also faced with legacy, on-premise core banking technology that cannot easily be accessed remotely, prompting The Financial Action Task Force (FATF) to call for the increased adoption of RegTech solutions, given the accessibility benefits of Software as a Service. (SaaS)
As lockdown begins to lift, we should expect to see a surge in money laundering, as financial criminals move to re-deposit ‘dirty’ cash by investing in reputable institutions. Tackling the issue requires a concerted effort across all operations, and, whilst we must appreciate that many businesses are in dire straits, as well as the economic downturn facing UK markets, it’s essential that background checks, customer due diligence and client security are prioritised.
Fortunately, combating money laundering and financial fraud needn’t be too cost or labour intensive, and most of these tasks can be automated via cutting edge RegTech (regulatory technology).
Automation can execute repetitive information gathering tasks efficiently and safely, freeing up time for skilled professionals to focus on complex issues that require human reasoning. The productivity gains offered by advanced technology are especially critical to increasingly over-stretched customer onboarding and compliance teams.
Advanced intelligent process automation can build a complete visual picture of a customer from multiple data sources in minutes, compared to the hours or even days taken for a human to complete the same tasks.
In addition to efficiency gains, automation eliminates the risk of human error, ensuring KYC is performed accurately for optimal protection from risk.
The pandemic has pushed digital transformation up the boardroom agenda and accelerated initiatives to implement RegTech solutions. Now is the time to invest in advanced technology that offers the best possible defence against a shifting financial crime landscape.
This first appeared on TechRound.