The Pandemic Has Changed How Criminals Hide Their Cash
upstart writes in with an IRC submission:
The pandemic has changed how criminals hide their cash:
The pandemic has forced criminal gangs to come up with new ways to move money around. In turn, this has upped the stakes for anti-money laundering (AML) teams tasked with detecting suspicious financial transactions and following them back to their source.
Key to their strategies are new AI tools. While some larger, older financial institutions have been slower to adapt their rule-based legacy systems, smaller, newer firms are using machine learning to look out for anomalous activity, whatever it might be.
It is hard to assess the exact scale of the problem. But according to the United Nations Office on Drugs and Crime, between 2% and 5% of global GDP-between $800 billion and $2 trillion at current figures-is laundered every year. Most goes undetected. Estimates suggest that only around 1% of profits earned by criminals is seized.
And that was before covid-19 hit. Fraud is up, with fears around covid-19 creating a lucrative market for counterfeit protective gear or medication. More people spending time online also creates a bigger pool for phishing attacks and other scams. And, of course, drugs are still being bought and sold.
Lockdown made it harder to hide the proceeds-at least to begin with. The problem for criminals is that many of the best businesses for laundering money were also those hit hardest by the pandemic. Small shops, restaurants, bars, and clubs are favored because they are cash-heavy, which makes it easier to mix up ill-gotten gains with legal income.
With bank branches closed, it has been harder to make large cash deposits. Wire transfer services like Western Union-which usually allow anyone to walk in off the street and send money overseas-shut their premises, too.
But criminals are nothing if not opportunistic. As the normal channels for money laundering closed, new ones opened up. Vast sums of money have started flowing into small businesses again thanks to government bailouts. This creates a flurry of financial activity that provides cover for money laundering.
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