The Week Of: August 31, 2020
This week’s news and stories of interest to the AML community. If you prefer a news roundup plus other AML/KYC content sent to you, subscribe to This Week Today – our weekly newsletter.
COVID-19 fueling illicit trade, financial flows globally
The COVID-19 pandemic has disrupted economies around the world and criminals are taking advantage of the turmoil.
The World Economic Forum (WEF) estimates that over $2.2 trillion will be lost to illicit trade leakages in 2020.
Developing countries are particularly vulnerable as they are already susceptible to weak regulatory oversight and corruption. Problems include misinvoicing, tax evasion, and the smuggling of cash, illicit goods, and people.
Rick Rowden, a Global Financial Integrity senior economist, said there has been a growing recognition of the threat of illicit ﬁnancial ﬂows to the integrity and stability of the global ﬁnancial system. But the COVID-19 crisis is increasing the illicit ﬁnancial ﬂows scale and scope as governments are distracted and overwhelmed by the unprecedented economic fallout.
Has human trafficking worsened during a pandemic?
Human traffickers continue to capitalize on the ongoing COVID-19 crisis.
Due to state and federal lockdowns, traffickers have gained more access to more vulnerable people “through high unemployment rates, universal economic collapses, increased screen time, loss of community support systems, language barriers and immigration status — all of which open doors for victims to be lured into labor or commercial sexual exploitation by force, fraud or coercion.”
Calls to the National Human Trafficking Hotline have reportedly increased by more than 40% compared to this time last year.
Stay-at-home orders also slowed the processes of the criminal justice system, making it difficult to support victims seeking justice.
‘Cleaning’ ill-gotten money through online games
Using video game currencies to clean illicit money? Money launderers are, if nothing else, creative.
Video games are a multi-billion dollar industry, with billions of users—many of them online and susceptible to hacking and other cyber attacks. In April, Nintendo announced that 160,000 accounts on its network were breached by hackers, exposing dates of birth, country or region, and email addresses, as well as payment services linked to the accounts.
In-game currencies and micro transactions are also ripe for abuse.
An investigation by the UK’s Independent newspaper last year found that stolen credit cards were being used to purchase currency from the popular video game Fortnite. Known as V-bucks, it is normally used to buy outfits, weapons, and other items within the game. However, the illicitly bought V-bucks were being sold at discounted rates to players at the official Fortnite store, effectively cleaning the money for the criminals.
Other reported issues are poor password usage by users and penetration of game developers’ servers that allows hackers to introduce backdoor trojans used to infect gamers’ devices.