Financial Action Task Force: COVID-19 update and guidance

The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. FATF’s members and observers comprise over 200 countries and jurisdictions. As an inter-governmental body, FATF sets international standards and seeks to generate national legislative and regulatory reforms.

In the President's statement, FATF reiterated the importance that governments and organisations continue to implement the FATF Standards, to maintain the 'integrity and security of the global payments system during and after the pandemic through legitimate and transparent channels with appropriate levels of risk-based due diligence'. FATF also clarified that it 'encourages the fullest use of responsible digital customer onboarding and delivery of digital financial services in light of social distancing measures' during this time. 

The statement contained the following, more specific, guidance:

Addressing COVID-19-related financial crime risks by remaining vigilant

• Criminals are seeking to take advantage of the pandemic with a range of COVID-19-related scams, including advertising and trafficking in counterfeit medicines, fundraising for fake charities, offering fraudulent investment opportunities, and engaging in phishing schemes that prey on virus-related fears. The number of such scams is likely to increase as the pandemic continues.
• Supervisors, financial intelligence units and law enforcement agencies should continue to share information with the private sector to prioritise and address key money laundering (ML) risks, particularly those related to fraud and terrorist financing (TF) risks linked to COVID-19.
• At a time when criminals may seek to exploit a perceived reduction of resources and focus on ML/TF risks, financial institutions and other businesses should remain vigilant to emerging risks and ensure that they continue to effectively mitigate these risks and are able to detect and report suspicious activity.

Digital onboarding and simplified due diligence

• FATF encourages the use of technology, including Fintech, Regtech and Suptech to the fullest extent possible, to help reduce the risk of spreading the virus by traditional physical means.
• FATF calls on countries to explore using digital identity, as appropriate, to aid financial transactions while managing ML/TF risks during this crisis (and has recently released related Guidance on Digital ID).
• FATF encourages countries and financial service providers to explore the appropriate use of simplified measures (where lower ML/TF risks are identified) to facilitate the delivery of government benefits in response to the pandemic.

Delivery of aid through non-profit organisations (NPOs)

• National authorities and financial institutions should apply a risk-based approach to ensure that legitimate NPO activity is not unnecessarily delayed, disrupted or discouraged.

Ongoing outreach and advice

• FATF acknowledges that regulators, supervisors, financial intelligence units, law enforcement authorities and other relevant agencies can provide support, guidance and assistance for the private sector on how national anti-ML/counter-TF laws and regulations will be applied during the current crisis. FATF notes that such guidance can reassure financial institutions and businesses and that mechanisms by which victims, financial institutions, and other businesses can report COVID-19 related fraud may be especially useful. .
• FATF continues to coordinate matters internationally, including by working with the Committee on Payment and Market Infrastructures and the World Bank to help ensure coordinated policy responses for the continued provision of critical payment services against the backdrop of the COVID-19 crisis.

If you have any questions about the above, please contact Sam Aldous or your usual Burges Salmon contact.