Number of suspicious transactions reported surged amid COVID-19 pandemic —AMLC

As many were compelled to use digital payments during the strict lockdowns implemented in the first half of the year due to the COVID-19 pandemic, a dramatic increase in reports of suspicious transactions was seen in the first eight months of the year.

In a virtual press briefing, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the Anti-Money Laundering Council (AMLC) noted a surge in suspicious transaction reports (STRs) related to online activities in its “COVID-19 Financial Crime Trend Analysis and Typologies Brief, Series 2.”

Diokno, who as BSP governor also chairs the AMLC, said the report examines STRs submitted to AMLC from January 1 to August 31, 2020, which covered the months of the enhanced community quarantine (ECQ), modified ECQ, and general community quarantine.

“STR submissions for the period increased by 57% compared with the same months in 2019,” he said.

The central bank chief noted that of the total number of STRs, only 29% occurred between March 16 to August 31.

“STR submissions of electronic money issuers (EMIs) soared by 688%, while those of pawnshops and money service businesses (MSBs) climbed by 51%,” he said.

The AMLC earlier said that the dramatic rise in STRs does not necessarily equate to rising money laundering cases, but only an indication of increased cooperation between the agency and entities under its oversight.

Diokno said the the following are the top reasons for STR filing:

• Unauthorized account access through skimming and phishing, and other violations of the Electronic Commerce Act at 49% with an estimated value of P2.7 billion
• Online sexual exploitation of children and related crimes at 13% with an estimated value of P84.5 million
• Suspected money mules/pass-through accounts at 9% with an estimated value of P406.9 million.

“Because of the increase in the use of the online and e-money space for money laundering, STRs related to electronic banking transactions grew by 1,680% for inward fund transfers and 5,158% for outward fund transfers,” Diokno said.

“STRs, involving cash-in and -out via electronic cash cards, rose by 580% and 197%, respectively,” he added.

The AMLC’s report also noted the following:

• Suspected “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
• Online shopping swindling scheme involving Bitcoin

Other notable red flags include large incoming or outgoing transactions for COVID-19 or other humanitarian causes with no valid documentation and unsubstantiated deposits or fund transfers as alleged payment for products and/or services rendered to government units for COVID-19 relief efforts.

The AMLC also found continuous or unusual account transactions such as cash deposits, cash withdrawals, check issuances, payments to suppliers of businesses adversely affected by the pandemic.

The council also saw 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.

“As covered persons become more aware of these information, AMLC expects a continued rise in STR filing,” Diokno said.

“This is crucial in financial intelligence gathering and investigation against money laundering and its predicate crimes; and terrorism and its financing,” he added.

The AMLC, likewise, emphasized the need for sustained caution and vigilance as money launderers may be abusing digital platforms which have largely been adopted due to the pandemic.

“Proper know-your-customer and customer due diligence procedures must always be conducted, while clients’ risk ratings must be periodically assessed. Likewise, online fund transfer service providers are advised to be vigilant especially during the pandemic,” Diokno said. --KBK, GMA News