COVID-19-related fin’l crimes worth P3.2 B filed with AMLC

Published November 22, 2020, 6:00 AM

by Lee C. Chipongian

Some P3.19 billion of COVID-19 financial crimes have been filed as suspicious transaction reports (STRs) from January to August this year, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.

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 Diokno, also chairperson of the Anti-Money Laundering Council (AMLC), said Friday that online fraudulent activities is a top reason for STR filing which he described as unauthorized account access through skimming and phishing, and other violations of the Electronic Commerce Act.

 Online fraudulent activities was estimated at P2.7 billion and accounted for 49 percent of STRs. STRs are transactions of covered persons such as banks, of “any of the suspicious circumstances” listed in the Anti-Money Laundering Act of 2001, regardless of amount involved.

 Another 13 percent of STRs were about online sexual exploitation of children and related crimes with an estimated value of P84.5 million while nine percent of STRs were on suspected money mules/pass-through accounts valued at P406.9 million.

 Diokno said AMLC analyzed the financial crime landscape using the STRs, and the first study or Series 1 was in July and Series 2 (“COVID-19 Financial Crime Trend Analysis and Typologies Brief, Series 2) updated the first one for the period January to August and covered the months when most areas in the country were in community quarantines.

 In the second report, Diokno said AMLC has underscored the “need for covered persons to remain cautious as money launderers and other criminals may be abusing digital platforms, which have been largely adopted due to the pandemic.”

 “Electronic money issuers, money service businesses, and other online fund transfer service providers are advised to be vigilant amid a surge in STRs related to online activities,” said Diokno. He said proper know-your-customer/customer due diligence procedures should be conducted at all times.

 “Clients’ risk ratings must be periodically assessed in view of irregular and questionable financial transactions,” he added.

 STRs increased by 57 percent during the Series 2 period, compared to last year’s report. Of the total number, only 29 percent occurred during the lockdown months of March 16 to August 31.

 Based on the report, STR submissions of electronic money issuers increased by 688 percent and by 51 percent for pawnshops and money service businesses.

 STRs on electronic banking transactions, in the meantime, increased by 1680 percent for inward fund transfers and 5,158 percent for outward fund transfers, said Diokno. STRs, involving cash-in and -out via electronic cash cards, increased by 580 percent and 197 percent, respectively.

 The BSP said AMLC expects a continued rise in STR filing. “This is crucial in financial intelligence gathering and investigation against money laundering and its predicate crimes; and terrorism and its financing,” it said.

 AMLC’s report included typologies such as: “smurfing” scheme and money mule/pass-through accounts; fraudsters pretending to be affiliated with a government unit and a government agency in soliciting COVID-19 donations; and online shopping swindling scheme involving Bitcoin. The BSP said smurfing is the use of multiple individuals and/or multiple transactions for making cash deposits, buying monetary instruments or bank drafts.

 The report also included other notable red flags including: large incoming or outgoing transactions for COVID-19 or other humanitarian causes with no valid documentation; unsubstantiated deposits or fund transfers as alleged payment for products and/or services rendered to government units for COVID-19 relief efforts; continuous or unusual account transactions (such as cash deposits, cash withdrawals, check issuances, payments to suppliers) of businesses adversely affected by the pandemic; receipt of large deposits allegedly caused by changes in the nature of employment and/or business (allegedly due to the pandemic) vis-à-vis the client account information during the on-boarding process; receipt of large deposits allegedly for the sale of medical items or donations for COVID-19 relief efforts from unusual senders or channels, such as virtual currency companies; and small-value and fast-moving funds to multiple account holders with immediate cash-outs but with no underlying justification.