The United Arab Emirates’ central bank sees increased risks of illicit financial flows emerging from the COVID-19 pandemic, including money laundering and terrorism financing, it said in a report published on Sunday.
The use of unlicensed money service providers for money laundering increased during the COVID-19 crisis last year, as well as the use of e-commerce to launder money, the report said.
“Widespread lockdowns have resulted in a significant surge in e-commerce. Due to limited ability to move funds and goods during the pandemic, illicit actors are turning to e-commerce as a money laundering tool,” the report said.
The number of so-called “money mules” — people who receive illicit funds into their bank accounts to hold or withdraw and wire elsewhere, taking a commission for their services — increased, the bank said, adding that accounts in the majority of cases belonged to low income individuals from Africa and Asia.
The bank identified fraud risks linked to the pandemic, such as firms or individuals submitting false claims to qualify for government stimulus support.
“As we continue to monitor and learn more about the spread of COVID-19 in our communities, we have recently observed heightened external fraud threat, especially with cybercriminals exploiting both traditional and digital channels, to remotely perpetrate cyber-enabled fraud attacks at scale in a rapidly evolving environment,” it said.
The report comes as the central bank steps up efforts to combat illicit financial flows.
The Financial Action Task Force, an intergovernmental anti-money laundering monitor, last year said that “fundamental and major improvements” were needed to avoid it placing the United Arab Emirates on its “gray list” of countries under increased monitoring.
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