Financial Criminals See Opportunities as Europe Reels from Virus

(Bloomberg) --

Criminals are increasingly trying to profit from the turmoil unleashed by the coronavirus pandemic, posing a new challenge to bankers who are expected to continue guarding against illicit financial flows.

Austria’s financial regulator on Thursday became the latest authority to warn of a jump in criminal activity as the drastic changes in working conditions and chaotic markets make it more difficult to maintain controls.

“Fraudulent activities on financial markets in connection with the corona pandemic are increasing strongly,” Austria’s Financial Market Authority said in a statement. “Often, these are known types of scams that now appear in new packaging due to the particular challenges of the Covid-19 crisis.”

In one scam known as “CEO fraud,” the criminals try to get executives to transfer money, hoping that security checks don’t kick in amid the unusual working arrangements. Others are using the stock market slump to make fraudulent offers for haven investments including gold, wine and whiskey, according to French regulator Autorite des Marches Financiers.

European banks have been under pressure to improve their money-laundering controls after cases involving billions of euros in illegal money flows came to light last year. Prior to the virus crisis, regulators and government leaders were pushing to improve Europe-wide policing of dirty money, and several lenders were forced to spend millions of euros to improve their own controls.

Criminals and terrorists could seek to exploit “gaps and weaknesses” in national anti-money laundering systems as resources are focused elsewhere, the Financial Action Task Force, a global body focused on financial crime, warned on Wednesday.

“It remains important to continue to put in place and maintain effective systems and controls to ensure that the EU’s financial system is not abused for money laundering or terrorist financing,” the European Banking Authority, which coordinates supervision across the bloc, said this week. Firms were told to pay particular attention to transactions in sectors that are particularly hit by the coronavirus, like retail businesses.

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