Moneyval: AML/CFT supervision during the COVID-19 pandemic

On the 25th of January 2022, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) published a Typologies Report entitled ‘AML/CTF supervision in times of crisis and challenging external factors'.

This report is based primarily on information collected from supervisors across MONEYVAL jurisdictions and other international actors on the measures they have taken to overcome the difficulties and challenges which arose as a result of the COVID-19 pandemic. Such challenges include operational limitations, perhaps the most obvious of which being the physical movement restrictions obstructing the execution of on-site visits, limited human resources and technical complications.

Key findings identified throughout the report

The Typologies report identified that Business Continuity Plans (“BCPs”) have proved to be a useful tool for supervisory authorities to swiftly overcome situations of crisis. Whilst BCPs were already being implemented amongst supervisors, pandemics scenarios were mostly omitted in all countries bar the outlier. To mitigate emerging money laundering and terrorism financing (ML/TF) risks, supervisors and reporting entities were prompted to rapidly increase the digitalization of their core functions to maintain operational continuity.

The report further noted that IT solutions, both software and hardware, were crucial when it came to accessing information from reporting entities on ML/TF risks and to enable shifting to remote supervision or hybrid inspections using video conferencing tools. Offsite examinations are now seen as being particularly useful for those reporting entities that have limited or no physical presence in a given jurisdiction.

In order to ensure data security, new protocols were implemented, and staff were trained on issues pertaining to cybersecurity and data protection. Other measures with positive results included setting-up of coordination committees when the AML/CTF supervision was dissipated amongst several supervisors.

The digitalisation of core functions proved key for both supervisors and reporting entities. Some supervisors developed guidelines and/or regulations to allow the use of digital ID systems by reporting entities. They also explored the exceptional use of simplified customer due diligence in low-risk scenarios, for reporting entities to on-board clients and facilitate the delivery of government benefits in response to the pandemic.

The report concludes that clear and direct communication on the ML/TF risks in challenging circumstances is a useful tool in continuing AML/CTF compliance by the private sector. At the same time, cross-border cooperation between supervisors could be enhanced by simplifying existing regulations and procedures relating to cross-border data exchange.

About the Author

This article has been authored by Simon Mangion, CSB Group Junior Advisor. For further information or any assistance, you may contact one of our experts on [email protected].