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Over the last two years, perpetrators of money laundering have taken advantage of economic upheaval and technological developments to pursue increased opportunities for financial crime. Digital payments and blockchain technology, for example, have helped create avenues for criminals to launder funds at new levels. Meanwhile, the backdrop of the coronavirus (COVID-19) pandemic has played into their hands, allowing criminals to capitalise on sudden, widespread change and disruption.

UNITED STATES

Guidehouse

“The growth in digital payments and blockchain technology is creating new opportunities for criminals to launder funds at faster speeds and larger scales than they might have been able to previously. For example, through the use of convertible virtual currencies (CVC), criminals are becoming more sophisticated with respect to the techniques they are using to obscure the source of illicit funds, which includes the use of mixers, tumblers, decentralised exchanges and a web of unhosted CVC wallets. This growing trend has certainly received the attention and focus of the US government.”

CANADA

McCarthy Tétrault LLP

“In line with global trends, financial crime continues to grow in frequency and complexity in Canada. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), Canada’s financial intelligence unit, has reported that its unique disclosures of actionable financial intelligence to law enforcement and national security agencies have risen over the past five years, and that these agencies are seeking out FINTRAC’s financial intelligence in record numbers. The coronavirus (COVID-19) pandemic has also had implications for organised crime by creating new opportunities, or expanding existing opportunities, for the perpetration of fraud.”

CAYMAN ISLANDS

Walkers Global

“While not a recent trend as such, as a major international financial centre the Cayman Islands is confronted with inherent money laundering and terrorist financing risks and threats emanating from global criminal activities. The jurisdiction has one of the largest banking sectors in the world and is the leading domicile for alternative investment funds. The role the Cayman Islands plays in the global economy necessitates that there is a suitable framework in place to mitigate the use of the Cayman Islands as a potential means to launder funds and, as such, the jurisdiction itself is subject to heightened scrutiny and held to higher standards.”

UNITED KINGDOM

Guidehouse

“The UK’s anti-money laundering (AML) regime is mature and overall considered effective. Despite this, the UK, and London in particular, has been referred to as the ‘money-laundering (ML) capital of the world’, and a ‘laundromat’ for corrupt money. Economic crime is estimated to run to tens or hundreds of billions of pounds per year. London remains a key financial centre with a high influx of foreign money. A sector recently highlighted as posing a major ML risk is the UK’s growing e-money sector. British e-money institutions (EMIs) processed transactions of more than £500bn in 2020/21.”

REPUBLIC OF IRELAND

Grant Thornton Ireland

“In Ireland, over the past 10 years there has been a shift in mindset and approach to managing financial crime risk. Initially, the goal for a lot of firms was ensuring that they had implemented policies and procedures to ensure compliance with national anti-money laundering (AML) legislation. However, now we can see across industry that firms are spending considerable amounts to further enhance these processes to ensure that they are not only meeting basic legal requirements but more so effectively managing financial crime risk within their own institutions.”

GERMANY

StoneTurn

“According to the 2020 annual report of Germany’s Financial Intelligence Unit, reporting of financial crime has been increasing significantly with the annual total number of suspicious transaction reports (STRs) received in Germany increasing 12-fold in the last 10 years. We are also seeing an interesting trend in the rise of cryptocurrency exchanges and digital challenger banks. These non-traditional financial institutions (FIs) with lower fees and no physical branches are providing convenience and affordability which is attracting more users.”

LUXEMBOURG

CMS Luxembourg

“Recent trends show that financial crime is still very present and continues to adapt to circumstances. For example, the coronavirus (COVID-19) pandemic has accelerated the digitalisation of the financial sector, which, in turn, has led to an increased risk of fraud. This trend has been verified by the Luxembourg financial intelligence unit which, in its 2020 annual report, noted that there had been an increased number of suspicious activity reports related primarily to fraud, tax evasion and corruption. The techniques used by criminals in this respect range from traditional spam emails assuming the identity of an employee, to the setting up of complex structures with multiple layers.”

AUSTRALIA

Herbert Smith Freehills

“Australia has seen a sharp rise in financial crime. Cyber-related financial crime, including scams, phishing and baiting attacks, fraudulent impersonations, blackmail and extortion is reported to have increased by around 30 percent during 2020 and 2021 and crime statistics report that financial crime has increased by over 50 percent over the past five years. Australia’s anti-money laundering (AML) regulator, Australian Transaction Reports and Analysis Centre (AUSTRAC), received over 300,000 suspicious matter reports in 2020-21.”

SOUTH AFRICA

KPMG South Africa

“The coronavirus (COVID-19) pandemic has worsened the existing high levels of poverty and social inequality in South Africa. 2021 was marked by unrest and a return to pre-pandemic level high crime rates, and more than half of reported crimes are proceed-generating crime. Also, the role of South Africa as a financial hub in the region exposes the economy to international crime networks. South Africa also suffered from a period of ‘state capture’. The main financial crimes include bribery and corruption, tax crimes, fraud schemes and cyber crime. Crypto-related crimes are also an increasing trend.”

CONTRIBUTORS

CMS Luxembourg

Grant Thornton Ireland

Guidehouse

Herbert Smith Freehills

KPMG South Africa

McCarthy Tétrault LLP

StoneTurn

Walkers Global