Co- Authored
Karl Diacono
Krista Fonde
At times of crisis it becomes that much more important to ensure that good business is the only business that can be allowed through your door. With the pressures on all industries and service sectors, a good number of whom are in survival mode, the pressure to let things ‘slide’, grows. The pressure between operational needs to keep businesses running, cashflows moving and the implementation of policies and procedures to move in line with the compliance regime, start to grow.
Criminals are on the constant look out for opportunities to find cracks in systems and to launder their ill-gotten profits. Times of crisis presents new opportunities to criminals. In fact, as recently as the 3rd of April 2020, the Financial Crime Enforcement Network (FINCEN) in the US issued a release related to the COVID-19 crisis, reminding financial institutions “to review information from other relevant functional regulators as updates become available. FinCEN’s March 16 COVID-19 Notice alerted financial institutions to imposter scams, investment scams, product scams, and insider trading. FinCEN also advised financial institutions to remain alert for malicious or fraudulent transactions similar to those that occur in the wake of natural disasters”
The Council of Europe have outlined that the Covid-19 pandemic has made individuals and society in general extremely vulnerable in all aspects. This is because we are all relying on computer systems, mobile devices and use the internet for our daily needs more than ever before. Criminals are using the pandemic to exploit vulnerabilities to their advantage. Offenders have also tried to obtain access to company systems by targeting employees working remotely.
In the UK, the National Crime Agency (NCA), issued a warning related to criminals exploiting the pandemic with malicious apps, sale of fake medical equipment, email phishing and identity theft, creating new money laundering risks for professionals.
The Malta Financial Services Authority has also issued various notices to operators and consumers related to Covid-19 where they also warned that ,”During these times, the general public is also being advised to be cautious of fraudulent schemes or financial scams which may try to take advantage of the COVID-19 outbreak to misappropriate funds or obtain sensitive personal information”.
Malta, as an International Financial Services Centre, is also exposed to risk in time of crisis and must therefore be prepared and vigilant. It is at times like this that the investment in a strong compliance system reaps dividends. A strong system reduces your risk exposure. Persons with an obligation to get to know their clients and collect due diligence under the Prevention of Money Laundering and Funding of Terrorism regulations, known as Subject Persons, who have invested in drafting strong and clear polices and implemented robust internal procedures, are well placed to manage their operations in difficult times. At times like these, unprecedented in recent history, the risk exposure grows exponentially and therefore subject persons need to be on top of their game.
It is also at times like this that subject persons need to stop and think, no ifs, no buts – loopholes need to be closed. With the world in lock down and perhaps some free time on your hands it may be wise to sit down, blow the dust off written policies and give them a good read to ensure that they are up to date and in line with all recent legal obligations and ensuring that the procedures are AML 5 proof.
Earlier this year, several amendments to the Prevention of Money Laundering and Funding of Terrorism Regulations came into force transposing a number of provisions of the European Union’s 5th Anti Money Laundering Directive (5AMLD).
Over the last few years, Fenlex Group and its subsidiaries, licensed by the Malta Financial Services Authority to provide Trust and Corporate Services, has invested heavily in developing strong AML policies and procedures as well as systems to help monitor client activity. Recognising that we needed technology to assist us cope with compliance requirements we sat down with one of our technology partners and scoped out a Know Your Client solution that today has become a leading KYC solution. We use this system extensively and assist third parties implement this solution within their own organisations. We have also assisted clients by providing training, assistance in drafting Business Risk Assessments, Customer Acceptance policies and AML related policies and procedures. We have also acted as external auditors on AML systems and provided assistance in implementing changes on short comings found during the exercise.
If you need any assistance in understanding your obligations as a subject person or guidance on becoming compliant please feel free to contact us at compliance@fenlex.com
©Fenlex Corporate Services Ltd.
Disclaimer │ The information provided on this Update does not, and is not intended to, constitute legal advice. All information, content, and materials available are for general informational purposes only. This Update may not constitute the most up-to-date legal or other information and you are advised to seek updated advice.
