The pandemic provided fertile ground for illicit financial activity. Now more than ever, concerted and coordinated action is needed to fight financial crime and terrorism financing
The global impact of COVID-19 provided a fertile environment for criminals to increase their illicit financial gains through cyberattacks, hacking, phishing, malware and fraudulent investment schemes. Organised crime groups adjusted their modus operandi to profit from the context of the health emergency created by the pandemic. In just two examples, INTERPOL provided assistance in cases of fraud from the non-delivery of surgical masks worth more than €15 million, and from business email compromise involving non-existent medical equipment worth €3 million.
National lockdowns made people more vulnerable to online fraudulent schemes such as fake governmental websites targeting personal and financial information and fake e-commerce and COVID-19 donation websites.
Criminals also exploited the crisis-triggered financial vulnerabilities of legitimate businesses to launder their illicit profits. Economic sectors under pressure, such as tourism and hospitality, transportation and entertainment, were more exposed to infiltration by organised crime groups.
Factoring in the nexus between organised crime and terrorism, the migration of criminals to cyberspace makes detecting and investigating terrorism financing more challenging. Terrorist financiers are expected to combine emerging and traditional means, such as the use of crypto-assets as part of obfuscation measures, coupled with other non-virtual financing methods such as hawala, a method of moving money without any physical money actually moving.
Intercepting illicit funds
In the wake of the pandemic, INTERPOL launched the Global Financial Crime Task Force to provide on-the-ground operational and investigative support to its 195 member countries, with a focus on tackling cyber-enabled COVID-19–related fraud and money laundering schemes. This was followed in January 2022 by the creation of the INTERPOL Financial Crime and Anti-Corruption Centre to provide a global coordinated response to the exponential growth in transnational financial crime, with an emphasis on targeting fraud and payment crime, corruption, money laundering and asset recovery.
In addition to purple and orange notices to warn of new modus operandi and imminent threats, INTERPOL’s new Anti-Money Laundering Rapid Protocol has proved critical to successfully intercepting illicit funds.
Operation Unmasked coordinated a transnational case of a non-delivery scam and enabled authorities across Germany, Ireland and the Netherlands to arrest four suspects and intercept most of the €2.3 million in advance payments made by the victim company.
Throughout 2020 and 2021, Operations Maharlika III, Neptune III and HOTSPOT disrupted terrorist financial networks by identifying new trends of terrorist mobility and smuggling of cash and other terrorism financing commodities, such as works of art, jewellery and weapons.
However, the global law enforcement community remains confronted by multiple challenges that further complicate its fight against financial crime and terrorist financing.
The complexity of the global payment ecosystem, combined with the high speed of financial transactions, make tracing and intercepting illicit financial flows a constant challenge. Furthermore, many of INTERPOL’s members are in the developmental phase of their stop-payment and financial investigation capabilities. This is why INTERPOL works in close partnership with major relevant stakeholders beyond the law enforcement community, such as the Financial Action Task Force and the Egmont Group, as well as regulatory bodies, think tanks and the private sector.
G7 partners are a key supporter of INTERPOL and its global efforts in the fight against transnational organised crime and terrorism. In their 2021 commitments, G7 interior and security ministers reiterated their intention to further develop INTERPOL’s tools and services and ensure all member countries can access these.
Of particular relevance to the fight against financial crime and terrorism financing is supporting the extension of access to INTERPOL’s databases on crime and criminals to members’ financial intelligence units. These units are at the forefront of the fight against financial crimes, acting as the national centre for the receipt and analysis of suspicious transaction reports and other information relevant to money laundering and terrorism financing. However, they face the constant challenge of receiving and processing an overwhelming volume of reports daily. Granting FIUs access to INTERPOL’s databases will enhance their ability to focus and prioritise their investigations to target suspects and bank accounts linked to INTERPOL notices and databases.
With an estimated less than 1% of criminal funds flowing through the international financial system currently intercepted by law enforcement, concerted and coordinated action is needed more than ever.