In a world that is continuing to become more connected and less restricted by place, there are growing challenges surrounding the increasingly fluid nature of financial crime. Prior to 2020, financial crime in the digital world was already growing. However, with the onset of the pandemic, this practice was set to skyrocket.
“Covid has affected the nature of financially motivated criminality,” said Acuminor CISO and co-founder Johan Landström. As Landström states, there is no doubt that there has been a shift in the practice since the onset of the pandemic.
A survey by PwC last year found that economic crime had reached its highest level in the past two years, with up to 56% of UK firms who were surveyed stating they were impacted by fraud, corruption and other forms of financial crime.
In a link to how a lot of financial crime has become digital since the onset of Covid-19, the survey detailed how 28% of respondents cited cybercrime as the most disruptive type of fraud.
Landström continued, “When Covid-19 materialised across the world to influence movements and equally how we humans must shape our interactions, in the same way, criminal modus operands had to adapt to the situation. We are not done with Covid, and some of the measures that were imposed impacted some criminal threats to explore new business models, which we still see are a lucrative replacement from pre-Covid schemes.”
One of the clear factors that can drive financial crime up exponentially in the digital world is its borderless nature, which means the practice can be scaled up dramatically. Landström explained that with significant restrictions abound, organised crime groups and criminals have shown an ‘extensive capability to adapt’, adding that money laundering ‘adapted to Covid’ and has now seemed to stick.
“Fraud against private individuals and companies has spiked, especially internet-enabled frauds. Since many people were restricted to their homes, new attack vectors target the ones that increased their time at our connected devices. Social engineering attacks against the elderly and romances scams mainly sticks out.”
The Acuminor co-founder also referenced the cyber domain, where he noted there had been a huge spike in ransomware attacks utilising a large group of remote workers in order to gain a foothold to business systems.
He added, “Remote workers who are working from home risk working from a less safe environment to access business-sensitive systems than in an office environment. These hybrid working methods are likely to stick around, giving greater exposure to internet-enabled frauds and cybercrime. So, this will need to be addressed with new or adapted controls to lessen the risk of compromised systems and people who use them.”
While a move to the digital world may simplify many financial processes and transactions for the user, with the great migration online comes significant challenges and potential consequences. With processes such as onboarding required to be done online during the pandemic, this potentially opened the door to some dark actors.
Clausematch CEO Evgeny Likhoded said, “2020 and 2021 saw a substantial increase in financial crime. Statistics show that the last 2 years were even more challenging: markets were subject to increasing cases of fraud rates, stolen cards, bot attacks, and scamming schemes.
“The pandemic looks like it was a catalyst for many fraudsters and financial criminals as banks switched to remote customer onboarding. As digital transactions were being increasingly used when social distancing became mandatory – and these are often associated with digital CDD processes and online authentication – customers who are not technologically savvy were put at an increased risk, becoming more and more vulnerable to fraud attempts.”
Mixing together the ballooning percentage of users who now conduct financially related matters online with the borderless nature of financial crime creates a powerful and potentially harmful cocktail for many everyday online individuals. With an increased focus on digital financial crime by regulators, government and criminals alike, the practice is become more well-known and unfortunately, sophisticated.
Likhoded continued, “Financial crime and money laundering have become a lot more sophisticated. In order to counter that level of sophistication you need advanced technology. 2022 calls for more collaboration between companies and countries, more data use, and more flexibility as the ongoing challenges once again prove that we need a united technology-based approach to fight this ever-evolving challenge.”
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