Page 90 - ACAMS-Today-V20N3

[ STAFF NOTES ]
The changing times for AFC professionals
FIs will be required to adjust and adapt to a cashless economy, as criminals will find new ways to perform their criminal activities. For instance, there has been a surge in online fraud during the national lockdowns. For example, in the U.K., mobile banking——through which more than 85% of transactions are made——has been particularly targeted by fraudsters in 2020, especially among the most vulnerable customers who could not visit their local branch.27 In addition, there has been an increase in criminals recruiting money mules, particularly among younger people, who were mostly impacted by the recent restrictions.28 A cashless society would likely increase these trends further.
In a cashless society, FIs will have to ensure their transaction monitoring and fraud detection systems are more robust. Information security and access control steps such as multi-factor authentication will be even more important. The use of intelligent solutions with algorithms consuming multiple data points will be essential to ensure any sign of wrong- doing is picked up and acted on. An improved data sharing system between FIs and the public sector will become a necessity. Fraud and cybercrime are likely to be at the front and at the center of FIs’ concerns. Cross-border crime is likely to increase in a context where actors based out of the country will have the ability to defraud through digital connectivity. The cross-border reach will have to improve drastically to be effective, probably encouraging public-private partnerships on a more global level. FIs may also have to rethink their second line of defense and bring together departments that used to work separately, as seen with fraud and AML, which has been gaining traction over the years.
In conclusion
Amid all the benefits that digital payments can offer, it could also have negative consequences on financial inclusion. Those struggling to access the banking
Cross-border crime is
likely to increase in a context where actors based out of the country will have the ability to defraud through digital connectivity
system or broadband and/or mobile connectivity could be left behind, as the World Economic Forum pointed out in May 2019.29 If left behind, reliance on hawala and other informal systems that use muling may increase.
From a political standpoint, a country operating solely on digital transactions will have the power, if the regime turns undemocratic, to monitor citizens and infer their political obedience based on their transactions. Privacy needs to be safeguarded to ensure that traceability that is deemed necessary for anti-money laundering/counter-terrorist financing measures is not weaponized against the population.30
While the idea of a cashless society sounds like a boon to AML efforts, the reality is more complex. The regulatory framework needs upheaval. Mutual legal assistance across borders becomes extremely important and current measures do not suffice. The skills, resources and expertise needed to investigate and bring bad actors to account needs rearchitecting. Vulnerabilities of digital payments including cybercrime need to be at the front and at the center of the defense against money laundering. The risk of leaving behind vulnerable members of society may act as a deterrent enough to hold on to cash for longer. Nonetheless, the decreasing use of cash is our new reality and anti-financial crime professionals will need to start adapting to the ramifications of an increasingly cashless society.
Shilpa Arora, CAMS, AML director——Europe, Middle East and Africa, ACAMS Sandra Saadi, CAMS, AML researcher and writer, ACAMS
90 [ JUNE–AUGUST 2021 ]