Emerging Risks in Financial Crime Prevention in Anguilla

The Caribbean island of Anguilla has been grappling with emerging financial crime risks and vulnerabilities triggered by the COVID-19 pandemic. These risks have necessitated a reassessment of financial crime prevention measures to mitigate potential threats.

Fraudulent Applications for Government-Sponsored Loans

One significant risk is the fraudulent application for government-sponsored loans, such as the Paycheck Protection programme (PPP). This has led to increased scrutiny of deposits and transfers involving funds from these programmes. Employees must be familiar with terms, conditions, and restrictions associated with these schemes.

Informal Value Transfer and Market Manipulation

Another concern is informal value transfer, including manipulation of invoices, exploitation of correspondent accounts, trade diversion schemes, and the use of credit/debit cards by multiple individuals. This has heightened focus on insider trading or market manipulation risks, necessitating adaptive surveillance measures to detect securities fraud and market manipulation.

Increased Scrutiny of Remote Working Arrangements

The pandemic has accelerated digital initiatives, resulting in a need for financial institutions to adapt their compliance activities and outcomes. To mitigate potential risks associated with remote working arrangements, institutions must ensure continuity of critical functions, such as AML/CTF monitoring and sanctions screening.

Best Practices for Financial Institutions

To demonstrate best practices in detecting and preventing misconduct, financial institutions should consider the following:

• Ensure Continuity of Critical Functions: Review resource allocation to adapt to changing social and economic environments.
• Foster Good Governance Practice: Maintain consistent and centralised governance decisioning, rationalise decisions, and document action plans.
• Enhance Financial Intelligence Capabilities: Engage with regulators and law enforcement to monitor emerging threats and prioritise risk-based AML/CTF countermeasures.
• Create Employee Awareness of New and Emerging Risks: Educate staff on risks and typologies through internal communications and training.
• Implement Agile Risk Assessment: Regularly review financial crime risk assessments to reflect changing conditions and articulate the level of control exerted over those risks.

By adopting these best practices, financial institutions in Anguilla can effectively mitigate emerging financial crime risks and vulnerabilities associated with the COVID-19 pandemic.