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Key Takeaways from Webinar on Managing AML Risk, Operations and Continuity During the COVID-19 Pandemic

Fintelekt Advisory Services hosted a webinar on Managing AML Risk, Operations and Continuity During the COVID-19 Pandemic in association with the Asian Bankers Association (ABA) on March 26, 2020.

Guy Sheppard, Head of Asia-Pacific Financial Crime, Intelligence and Cyber, SWIFT and Suveer Khanna, Partner – KPMG India were the speakers at this webinar, which was moderated by Shirish Pathak, Managing Director, Fintelekt Advisory Services.

The panel discussed operational issues and risks arising from the Covid-19 pandemic and strategies to manage business continuity during the outbreak period.

Some of the key takeaways from this session for AML compliance officers are summarized below:

  • AML teams at most banks are working by rotation or working from home. Many of the teams are operating at reduced staff strength due to limitations with infrastructure.
  • Most banks have a business continuity plan (BCP) in place, which is being invoked at this time. However, adequacy of these plans will be put to test in the current scenario. Further, it is likely that the true extent of challenges is not yet known.
  • There is a sudden spurt in financial crime typologies especially in retail banking in areas such as cyber frauds and email phishing, and in capital markets in areas such as insider trading.
  • There is likely to be an increase in money laundering risks in areas such as human trafficking, smuggling, and organized criminal activities.
  • A holistic response to the COVID-19 situation is required, that involves internal and external training and awareness initiatives, control effectiveness management approaches, communications and operational resilience responses.
  • Regulatory reporting will be more challenging for banks due to the disruptions. Many banks may be dealing with backlogs in transactions monitoring and regulatory reporting. Cost of reporting is also likely to be higher due to the disruptions, delays in querying, etc.
  • Regulators are showing more flexibility and are making themselves available for communication if financial institutions are facing any delays or other problems due to the pandemic situation. However, banks should not expect extensions on reporting obligations and timelines.
  • The focus in many banks will shift to survival and on growing the topline. In the face of rising defaults and disruptions in most industries, credit risk is likely to get much more attention, leading to shifts in risk appetites of banks and in the profile of customers onboarded in future.
  • There will be pressure on compliance to downplay risks or red flags in order to maintain customer relationships. Discretionary AML spending may also be impacted in the near future.
  • AML compliance officers should ensure that financial crime risks are an integral part of the organisational risk strategy going forward. AML should maintain a hard line when it comes to sanctions risks or obvious money laundering red flags, as lapses in these areas could lead to heavy regulatory penalties.
  • When business returns to normal, an audit and review of preparedness during the pandemic should be carried out and learnings should be applied to business continuity planning for the future.
  • The impact of the pandemic may result in greater comfort with remote operations and employees working from out of office in future too. Reviews of access and privileges, managing sensitive data or systems may be carried out to accommodate this change.

A full recording of this webinar is available on www.fintelekt.academy