The scale and scope of illicit financial flows (IFFs) could be increasing as authorities are distracted and overwhelmed by the coronavirus pandemic and its impacts according to Global Financial Integrity (GFI).

The Washington-based think tank that focuses on IFFs says concerns are especially acute in developing countries, many of which are already characterised by poor governance, weak regulatory oversight and corruption.

Dire warnings

The US treasury’s Financial Crime Enforcement Network, the UK’s National Crime Agency and Europol have already documented an increase in cybercrime, insider trading, fraud and trading of counterfeit goods directly linked to those exploiting the chaos of the coronavirus crisis, GFI says.

It also notes that the World Customs Organisation (WCO) has warned of an increase in coronavirus related frauds, particularly the trafficking of counterfeit medical supplies, such as face masks and medical gloves.

Worsening corruption

Corruption is likely to worsen during the crisis according to GFI. It says corrupt officials and those who bribe them utilise existing mechanisms and networks used to hide and launder the proceeds of corruption, and these channels are likely to remain open, even in an emergency context.

When resources and attention are focused elsewhere, GFI says normal standards for supervision, reporting deadlines and due diligence requirements have been loosened.

GFI says many such exploits have already been seen in Saudi Arabia, Uganda and Colombia where the agriculture minister is currently being investigated for alleged misappropriation of emergency coronavirus funds.

GFI’s analysis on the impact of the coronavirus pandemic on IFFs can be found here.

Categories: Trade Based Financial crimes News

Tags: Coronavirus, Europol, GFI, IFFs, US treasury, WCO