To spot financial crime, banks look for anomalies in customers’ day-to-day banking activities. But the coronavirus has caused customer behavior to change radically and quickly. Much more activity has become an anomaly. For example, some customers are having their accounts and payment cards blocked because their activity has dropped off due to quarantine.
As a result, many banks must manage a spike in alerts with fewer staff. And it's possible that some new types of illicit activity aren't even triggering alerts. For example, fraudulent businesses offering fake cures for the virus in an effort to obtain financial account information from bank customers may not yet be on banks radar screens.
Update analytical models. Banks need to tweak behavioral anomaly detection models to account for buying patterns encouraged by social distancing.
Conduct forensic analysis. To determine illicit activity spurred by the crisis, banks should conduct forensic analysis of transactions since its start. Such analyses may reveal, for example, customers making unusually large payments or a series of payments to a single company, or a business receiving payments and then immediately redistributing funds to a shell or offshore company.
Triage transaction-monitoring efforts. Banks should prioritize and focus on scenarios that are more likely to indicate fraud, cybercrime, and money laundering considering which businesses are still running. Unchanged activity levels among restaurants or bars, for example, might be a sign of potential laundering activities.
And don’t forget to document the rationale for changes to your transaction-monitoring processes for auditors and regulators.
