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Philippines – AMLC: Pandemic causes rise in financial crimes
MANILA, Philippines — The Anti-Money Laundering Council (AMLC) yesterday warned banks and other financial institutions that money launderers and perpetrators of financial crimes are taking advantage of the shift in consumer behavior brought about by the COVID-19 pandemic.
In a report titled “COVID-19 Financial Crime Trend Analysis,” the AMLC said criminals are abusing digitalization, such as the digital know-your-customer (KYC) and customer due diligence (CDD) adopted by banks and financial institutions at the height of the coronavirus lockdown.
“As unemployment rises, the general public could be enticed by criminals to sell their profiles to create pass-through or money mule accounts and take advantage of covered person’s digital account applications and non-physical KYC process,” the AMLC said.
It also said transaction behavior analysis and other innovative CDD methodologies, such as checking the geo-tag of the submitted KYC photo vis-à-vis the declared address, comparing addresses using open-source satellite maps of the address or declared income or business are crucial in the new economy as non-physical transactions become mainstream.
Furthermore, it advised electronic money issuers, money service businesses, and other online fund transfer services to be vigilant as the data for March and April this year compared to the same months in 2019 showed growth in suspicious transactions related to online activities.
According to the AMLC, the value of transactions related or suspected to be related to unlawful activities such as possible money mule or pass-through accounts and unauthorized transactions including phishing, card-skimming, and other violations of the Electronic Commerce Act of 2000 amounted to P341 million from January to April.
Data showed more than 13,000 transactions worth P197 million were flagged as suspected pass-through or money mule accounts by an electronic money issuer, citing possible abuse of digital KYC and CDD.
Of the total number, more than 2,000 newly on-boarded e-money customers made multiple high-value transfers amounting to P180 million to third party accounts between July 2019 and February this year
“These account holders were profiled as tricycle drivers, loading station owners, freelancers, sari-sari store owners, fruit vendors, and private employees, who declared business proceeds and salaries as source of funds,” the AMLC said.
Likewise, it added online sexual exploitation of children or violations of the Anti-Child Pornography Act of 2009 was also one of the top reasons of suspicious transaction report filing, with an estimated value of P11.93 million.
The economic impact of the pandemic, reflected in returned checks due to insufficient funds or business closures accounted for two percent with an estimated value of P148 million.
Social media listening, which may fall under swindling or estafa, yielded an estimated value of P6.2 million, mostly involving fake or bogus selling and overpricing of medical items, such as surgical masks, thermal scanners, and alcohol, among others.
AMLC said other fraudulent acts include possible bulk-cash smuggling using cruise ships, swindling or estafa, emergency fraud and donation scams, possible terrorism financing activities linked to COVID-19, unauthorized purchases or account access, drug trafficking via on-demand courier services as well as various extortion schemes such as sextortion and extortion masked as donation.
Except for the timing of the transactions, AMLC said a direct correlation between the rising suspicious reports and COVID-19 cases has not been established. Report filing of covered persons significantly increased to 104,138 suspicious reports from March 1 to April 24.
“Of these transactions, however, 59 percent have transactions dates that do not fall under or near the enhanced community quarantine, while only 41 percent were considered part of the lockdown sample. Only a smaller subset of only 185 suspicious reports contained COVID-19 related keywords.
The Philippines is in danger of being included in the gray list and facing sanctions from Paris-based global watchdog Financial Action Task Force (FATF) after it was placed under a 12-month observation period by the Asia Pacific Group on Money Laundering (APG).
The country was blacklisted by the FATF in 2000 for failing to address “dirty” money issues paving the way for the enactment of AMLA in 2001. The country was subsequently removed from the blacklist in February 2005.
It narrowly avoided being placed on blacklist in 2012 as it criminalized terrorist financing and pursued quicker freezing of suspect accounts.
Source: https://www.philstar.com/business/2020/08/20/2036492/amlc-pandemic-causes-rise-financial-crimes