Q&A from What an Effective EDD Program Looks Like

Questions and answers from the webinar featuring Andrew Simpson, the Chief Operating Officer at CaseWare RCM and, Nicholas Belani, Refinitiv EDD Transformation Manager.


Q: How long is EDD required for a person who is considered a PEP?

A: Belani: In my previous roles, we would still look at the PEP for quite some time, depending upon the jurisdiction.  I don’t have strict numbers. I would say refer to the BSA FFIEC manual because I do not want to misspeak in terms of what the EDD look back or monitoring should be around a PEP. In my experience, we always took note of a former PEP, but it was somewhat dependent upon the jurisdiction.

Someone who was the mayor of a small town in the U.S. is not necessarily an issue. It might ping in a database, but obviously, someone who is the son of the president of a different country has a different level of risk associated.


Q:  Is a variable name search applied to sanctions only or to negative news as well?

A: Belani: I think you should always be conducting numerous iterations in the name. It’s dependent upon your internal research methodology, but you have to think about transliteration issues, you have to think about people going by variations on their name so, I would always run multiple variations.

It hearkens back to the kind of Boolean research techniques, when in doubt, when you have a name, boil it down, if reasonable, to the most common aspects. My name is Nicholas. If you do not know if I go by Nicholas with a CK or a CH,  boil down to NIC for the first name and then obviously Belani for the last name.

Always err on the side of inclusion with variable names.

Simpson:  When you submit the name, and that goes for the EDD researchers, they will deal with the variations. If you are doing your own sanctions, PEP, or OFAC type screening within the platform, then the platform depending on how you set it up, should be configured to do stuff like that.

So, it would recognize that Nicholas and Nick Belani are the same person, like Andrew and Andy. There is always the matter of the different names in different languages and so on. So the software itself should be handling that for you, as well.


Q: This is the first that I have heard about ESG Due Diligence. Is this being done in the U.S. or international? Are FIs performing this process against customers only or customers and third party providers?

A: Belani:  We are seeing it in the U.S. and internationally as well. We are seeing a fair amount from private equity firms, from certain financial institutions, as well as non-financial institutions conducting this kind of sustainability and ESG research, to get a handle on how companies are looking at environmental, social and governance issues.

Especially with things like climate change, different social issues that have been brought up recently as well as governance.

So it is kind of with the general regulatory push that is moving more into the ESG space.


Q: During COVID, we have refused a particular client for acceptance of a wire, from her bank account, held in Canada, as we have risk rated her as a high risk due to our EDD noting that they are a foreign PEP. We reviewed FINTRAC brochure around foreign PEPs with client who stated that they are not, when our EDD has proven otherwise. When we re-open, can we provide a politically correct suggestion on how to de-risk the client without tipping them off that we consider them high risk? Despite client funds even emanating from a Canadian bank, it would be the original source funds that are in question as well as our proven EDD that they are a foreign PEP.

A: Simpson: In terms of how you go about de-risking the customer, that is just based on your own risk methodology or on risk appetite and how you communicate back, so as not to tip your hand. You should just should be driven by your own internal policies. And I do not think that it necessary has anything to do with whether they are a PEP or whatever. But within your own AML on the risk management program, you should definitely just have your internal policies and procedures on how to handle de-risk.  Also, review how to deal with onboarding a customer.

Belani: I agree that should be more driven by the internal policies and procedures, in terms of how to handle de-risking, and how to communicate that to a potential client.

In terms of not tipping your hand, as Andrew had alluded to, obviously, you want to soften the edges, and as you de-risk and figure that out, I would defer that to the internal policies and procedures around potential client communication.


Q: Given EDD may differ across sectors or industries, for example, real-time versus periodic screening of all transactions, should screenings still be viewed as part of EDD?

A: Belani: Screening is required for those who you want to have it in real time, or need to have in real time. There are a lot of great screening tools out there, but it is not always going to give you the deep diving picture. It will let you know in real time of a change to someone’s profile and ideally their risk profile. It is something that should be tethered to EDD because it will promote a continued understanding of the riskier enterprise and a continued understanding of how you mitigate that risk.

I think monitoring is obviously a great way for you to lessen the load on your analysts and on your compliance department. Because you can be, not necessarily reactive, because it is in real time, but it will, obviously, promote that continued understanding of that client’s risk level.

So, I think monitoring should be a part of the EDD process.


Q: We went through the difference between CDD and EDD. However, it appears that there is some fluidity on what would be considered basic CDD for lower risk customers, versus higher risk customers. When does CDD stop and EDD start?

A: Belani: The stricter definition has CDD being the kind of baseline consideration and EDD ideally, being the escalation for high-risk clients. But what we are actually seeing in the market is it is typically based on industry and your risk appetite.

We are seeing CDD expand gradually. But there is definitely a fluidity between the two wherein more of the research elements that historically would have it considered a kind of escalation to EDD. Specifically, EDD research elements are now becoming part of baseline CDD procedures to effectively vet and get the most fulsome view. Which, previously, would probably would not have been as fulsome.



To view the full webinar, click here. To speak with an Alessa risk specialist about enhanced due diligence click here


What an Effective EDD Program Looks Like

Organizations need to fully understand the implications of engaging any new customer, supplier or other third-party, and not only identify potential risk at the on-boarding stage, but also monitor for change on an ongoing basis. The consequences of failure to comply with regulatory requirements are significant, and include enforcement action, hefty fines and potentially lasting reputational damage.

To manage these risks, Enhanced Due Diligence (EDD) is a must. But what does EDD really look like and how do you conduct it properly?

The presentation will review the steps in an effective EDD program, whether you are a financial institution or a corporation engaging with global suppliers. Topics covered include:

  • What is the difference between customer due diligence (CDD) and EDD
  • Role of technology-enabled EDD in entity, vendor and third-party risk management
  • Why EDD is much more than a sanctions and watch list screen
  • How to enhance the EDD process – what to do when and how
  • How EDD can be used for FCPA and other anti-bribery, anti-corruption programs

Latest News from FinCEN

Keeping on top of the latest advisories and guidances from FinCEN. This blog will update with any new information from the regulator as it becomes available.

May 18, 2020 Advisory


FinCEN issued an advisory that contains red flags, descriptions of COVID-19-related medical scams, case studies, and information on reporting suspicious activity.

Bank Secrecy Act (BSA) data, as well as information from other federal agencies, foreign government partners, and public sources indicate possible illicit activities related to the coronavirus pandemic regarding fraudulent cures, tests, vaccines, and services; non-delivery scams; and price gouging and hoarding of medical-related items, such as face masks and hand sanitizer.

Some of these red flags are common indicators of fraudulent merchant activity committed by shell or fraudulent retail or wholesale business operators. Additionally, some of the red flag indicators outlined below may apply to multiple COVID-19-related fraudulent activities.


SAR filing instructions

FinCEN also addressed some changes it has seen in SAR filings in light of the COVID-19 pandemic.

“Some financial institutions have added COVID-19 statements to their disclaimers or are using SAR narratives to address COVID-19’s impact on their SAR filing abilities.

Financial institutions should not include in the SAR narrative their challenges during the pandemic; the SAR narrative should include COVID-19 when it is tied to suspicious activity only.

FinCEN goes on to say that filers who have already included references to COVID-19 in matters not related to the pandemic do not need to file corrected reports.

Read full May 18, 2020 advisory here.


EDD With Alessa

The ability to perform enhanced due diligence (EDD) is a must for organizations looking to comply with anti-money laundering (AML) regulations, engage with new suppliers, vet parties involved in a merger or acquisition, or meet anti-bribery and anti-corruption obligations.

For this reason, Alessa now offers the ability to order EDD reports from Refinitiv directly from the application. This allows compliance teams to go beyond simply checking whether an entity is on a sanctions or a watch list and instead get detailed background information on individuals and businesses based on comprehensive research by the Refinitiv team.

The solution allows users to

  • Eliminate unreliable and time-consuming internet checks
  • Simplify the EDD process
  • Save time and effort typically required for EDD
  • Integrates EDD risk indicators into the entity’s overall risk score


What an Effective EDD Program Looks Like

May 27, 2020  |  12 pm ET  |  Register Now

Organizations need to fully understand the implications of engaging any new customer, supplier or other third-party, and not only identify potential risk at the onboarding stage, but also monitor for change on an ongoing basis. The consequences of failure to comply with regulatory requirements are significant, and include enforcement action, hefty fines and potentially lasting reputational damage.

To manage these risks, Enhanced Due Diligence (EDD) is a must. But what does EDD really look like and how do you conduct it properly?

In this webinar, Nick Belani, EDD Transformation Manager at Refinitiv and Andrew Simpson, Chief Operating Officer at CaseWare RCM will review the steps in an effective EDD program, whether you are a financial institution or a corporation engaging with global suppliers. Topics covered during this session include:

  • What is the difference between customer due diligence (CDD) and EDD
  • Role of technology-enabled EDD in entity, vendor and third-party risk management
  • Why EDD is much more than a sanctions and watch list screen
  • How to enhance the EDD process – what to do when and how
  • How EDD can be used for FCPA and other anti-bribery, anti-corruption programs

Join us for this information-packed session. Register Now

Novedades en Alessa (antes conocido como CaseWare Monitor)

2 de junio  |  12:00 pm ET  |  04:00 pm UTC  | Regístrese ya

En este webinar, Ronny Miranda y Benjamin Velazquez del Equipo de Soluciones de CaseWare RCM harán un recorrido por las novedades de la versión más reciente de Alessa, entre las cuales se incluyen mejoras en la seguridad, en los flujos de trabajo y en la gestión de casos, tableros de control y visualizaciones adicionales, soporte para Python y más.

Acompáñenos y conozca de estas nuevas y emocionantes mejoras que el Equipo de Soluciones presentará y que le permitirán obtener el máximo provecho de su solución.

Regístrese ya

What AML Teams Need to Know about Working in the Cloud

June 4, 2020  |  12 pm ET  |  Register Now

With the advent of COVID-19, more AML compliance teams are looking at how they can leverage the cloud for better access to data and compliance systems, as well as increased fraud detection capabilities.

In this webinar, Ben Cheng, Cloud Solution Architect at Microsoft, Corie Murray, Software Architect at CaseWare RCM, and James Poulin, Technical Operations Manager at CaseWare RCM will bust some of the myths around cloud adoption as well as share real-life stories of why financial institutions moved their compliance solution to the cloud.

Topics covered during the webinar include:

  • Answers to your questions around data location, security and privacy
  • How cloud deployments improve sanctions screening and transaction monitoring processes
  • The role of cloud in suspicious activity and fraud detection (think AI!)
  • Steps for the most efficient migration to the cloud
  • Answers to your AML compliance and Microsoft Azure questions

Register Now

Writing Effective SARs: Start with Why (CAMS)

June 9, 2020  |  12 pm ET  |  Register Now

June 11, 2020  |  9 am ET  |  Register Now

CAMS Credit: 1

This webinar addresses effective Suspicious Activity Report (SAR) writing in the context of the SAR’s ultimate purpose: to assist law enforcement in investigation and subsequent prosecution of criminal activity.

After an introductory discussion of how submitted SAR data is reviewed and stored, Laurie Kelly, CAMS will present detailed recommendations for constructing an effective SAR narrative. She will also review the appropriate use of SAR form checkboxes, the SAR attachment feature, and the distinction between “new” and “continuing activity” SARs. Finally, Laurie will introduce the concept of SAR case reports as an effective tool in case management as well as providing valuable detailed information to law enforcement upon request.


Register for June 9 Event | Register for June 11 Event

AML Guidance From FIUs During COVID-19

Posted April 15. Updated May 18: FinCEN issues red flags


Financial intelligence units (FIUs) have responded to the current pandemic with warnings about an increase in COVID-19-related crime or guidance to help AML compliance teams focus their priorities to keep business flowing.

Although each has specific roles to play, most agencies have issued similar notices calling for businesses to concentrate on the basics to combat illicit financing and maintain AML obligations during the coronavirus pandemic.

In the U.S., the Financial Crimes Enforcement Network (FinCEN) issued a notice on April 3 cautioning that the situation is fluid. FinCEN said banks should check back regularly for updates to help comply with the American Bank Secrecy Act (BSA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

“Compliance with the Bank Secrecy Act (BSA) remains crucial to protecting our national security by combating money laundering and related crimes, including terrorism and its financing,” FinCEN said. In a statement.

“FinCEN expects financial institutions to continue following a risk-based approach, and to diligently adhere to their BSA obligations.”


Regulatory relief from FinCEN


The FinCEN BSA notice provides some relief to BSA compliance. One of the changes allows exempting from beneficial ownership requirements any new loans extended to existing customers under the (CARES Act) Paycheck Protection Program.

“If the PPP loan is being made to an existing customer and the necessary information was previously verified, you do not need to re-verify the information,” FinCEN said in April 13 in a statement.

Meanwhile, FinCEN has created a COVID-19-specific online contact mechanism, via a specific drop-down category, for financial institutions to communicate to FinCEN any COVID-19-related concerns while adhering to their BSA obligations.

FinCEN is also relaxing filing obligations for Currency Transaction Report (CTR) filing during the pandemic.

“FinCEN will issue further information on these types of CTR filings at an appropriate time with reasonable implementation periods.”


FinCEN issues red flags


FinCEN issued an advisory May 18th to alert financial institutions to rising medical scams related to the COVID-19 pandemic. This advisory contains red flags, descriptions of COVID-19-related medical scams, case studies, and information on reporting suspicious activity.

BSA data, as well as information from other federal agencies, foreign government partners, and public sources indicate possible illicit activities related to the COVID-19 pandemic regarding fraudulent cures, tests, vaccines, and services; non-delivery scams; and price gouging and hoarding of medical-related items, such as face masks and hand sanitizer.

Red flags include:

  • The merchant is requesting payments that are unusual for the type of transaction or unusual for the industry’s pattern of behavior. For example, the merchant requires a pre-paid card, the use of a money services business, convertible virtual currency, or that the buyer send funds via an electronic funds transfer to a high-risk jurisdiction.
  • Financial institutions might detect patterns of high chargebacks and return rates in their customer’s accounts.
  • The merchant does not appear to have a lengthy corporate history, lacks physical presence or address, or lacks an Employer Identification Number. Additionally, if the merchant has an address, there are noticeable discrepancies between the address and a public record search for the company or the street address. Searches in corporate databases reveal that the merchant’s listing contains a vague or inappropriate company name, multiple unrelated names, a suspicious number of name variations, multiple “doing business as” (DBA) names, or does not align with its business model.
  • The merchant claims several last minute and suspicious delays in shipment or receipt of goods. For example, the merchant claims that the equipment was seized at port or by authorities, that customs has not released the shipment, or that the shipment is delayed on a vessel and cannot provide any additional information about the vessel to the customer or their financial institution.
  • Domestic or foreign governments have identified the merchant or its owners are being associated with fraudulent and criminal activities
  • A newly opened account receives a large wire transaction that the account holder failed to mention during the account opening process

For more red flags, read the medical scam advisory here.

Read the reference notice here.


OFAC to consider pandemic effect on enforcement


The U.S. Treasury Department says it will consider the effects of the pandemic on the ability of companies to comply with sanctions as it evaluates possible enforcement actions.

The Treasury’s Office of Foreign Assets Control (OFAC) issued a notice April 20 acknowledging that some companies may need to temporarily reassign sanctions compliance resources due to the pandemic.

The reallocation of those resources could weaken a company’s sanctions compliance efforts, such as its ability to vet business partners or customers and conduct in-person audits.

OFAC has encouraged FIs to tell the agency about pandemic-related compliance concerns, including delays in meeting deadlines.  OFAC said it would evaluate resource issues on a case-by-case basis, but noted companies and individuals are still expected to meet their regulatory requirements.

“This includes requirements related to filing blocking and reject reports within 10 business days as required … and responses to administrative subpoenas, … reports required by general or specific licenses, or any other required reports or submissions,” OFAC stated.


Canadian regulator sets up email hotline


Canadian regulator FINTRAC issued guidance saying reporting entities are expected to meet all of their obligations, including those in relation to reporting.

“However, FINTRAC understands that some reporting entities may find themselves in a situation where they are required to reassign and reprioritize their internal resources in response to COVID-19, which may affect their ability to meet certain obligations,” they said in a statement.

FINTRAC said when it comes to reporting, priority should be given to submitting suspicious transaction reports (STRs). In exceptional circumstances, such as terrorist financing, FINTRAC has published a new email hotline where reporting entities can reach out and have an analyst contact them immediately.

FINTRAC has updated its guidance on What is a suspicious transaction report? and Reporting suspicious transactions to FINTRAC. The update includes amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations that come into force June 1, 2020 and the feedback FINTRAC received from businesses.

The change to the regulations concerns the timeline to submit a Suspicious Transaction Report (STR). Businesses now have 30 days to report a suspicious transaction from the day they detect something that makes them suspect it. As of June 1, they will need to submit a report as soon as practicable after they have completed the measures that allow them to establish reasonable grounds to suspect a suspicious transaction.

The change should not significantly alter businesses’ current practices leading to the submission of suspicious transaction reports, FINTRAC said.


Europe calls for financial safeguards


Meanwhile, the European Banking Authority issued a statement saying it is important to safeguard the integrity of financial markets as a shared objective of the EU’s anti-money laundering and countering the financing of terrorism (AML/CFT) frameworks.

“It remains important to continue to put in place and maintain effective systems and controls to ensure that the EU’s financial system is not abused for money laundering or terrorist financing (ML/TF) purposes,” EBA said in a statement March 31.

It called on financial institutions to ensure the following:

  • Making clear that financial crime remains unacceptable, even in times of crisis such as the COVID-19 outbreak;
  • Continuing to share information on emerging ML/TF risks and setting clear expectations of the steps credit and financial institutions should take to mitigate those risks; and
  • Considering how to adapt the use of their supervisory tools temporarily to ensure ongoing compliance by credit and financial institutions with their AML/CFT obligations.


UK financial services firms get COVID reprieve


The Financial Conduct Authority (FCA) is giving financial services firms in the UK an additional six months to implement strong customer authentication (SCA) for e-commerce. This is to reduce disruption to consumers and merchants due to the COVID crisis.

Firms are required to take all necessary steps to comply with the revised detailed phased implementation plan and critical path to avoid the risk of enforcement action.

FCA said it expects UK Finance, as coordinator for the industry, to discuss the detailed phased implementation plan soon. In the meantime, the regulator says firms should continue with the necessary preparatory activities such as robust end-to-end testing.

The new timeline of September 14, 2021 replaces the March 14, 2021 date.


FATF says fraud schemes on the rise


The Financial Action Task Force (FATF) , the global money laundering and terrorist financing watchdog, warned April 1 that fraudulent schemes are on the rise and that financial institutions need to ensure due diligence is procedures are followed, in particular because in-person banking has been shifting to online banking.

“Use of financial technology (Fintech) provides significant opportunities to manage some of the issues presented by COVID-19. In line with the FATF Standards, the FATF encourages the use of technology, including Fintech, Regtech and Suptech to the fullest extent possible,” FATF president Xiangmin Liu said in a statement.

In addition, the International Monetary Fund (IMF) came out with additional bad news on April 14, warning of a major recession that will affect the world economy. They are predicting the worst year since the Depression.

In May, FATF issued a new paper in response to an increase in COVID-19 related crimes, including fraud, cybercrime, misuse of government funds and international financial aid.

The FATF said COVID-19 and the new remote methods of working create new sources and methods of finding funds for criminals. At the same time, it is hurting the ability of governments and the private sector to fulfil their AML/CFT obligations.

This could create new risks and ways to bypass customer due diligence measures, FATF said.

The FATF said criminals use the unregulated financial sector to launder illicit funds and exploit financial aid and emergency funding. The organization is also concerned that COVID-19 the global economic downturn could see a move to new cash-intensive businesses in developing countries.

The paper describes the ways in which AML/CFT policy responses can help support the swift and effective implementation of measures to respond to COVID-19.


Australia offers pointers for KYC and fraud


Australia issued guidance for dealing with customers at a time when face-to-face procedures are not always available.

“We recognize that some ‘know your customer’ processes cannot be used,” AUSTRAC said in a statement.

The AML/CTF Rules support flexible KYC processes and procedures, it said. AUSTRAC said other ways that you could verify your customers’ identity and fulfil your KYC requirements include:

  • using alternative proof of identity processes
  • using electronic copies (scans or photographs) of reliable and independent documentation, in accordance with your AML/CTF program, to verify the identity of individual customers or companies
  • relying on disclosure certificates to verify certain types of information about customers who are not individuals, where measures put in place by industry as part of their response to the COVID-19 pandemic mean that such information is not otherwise reasonably available from other sources

The Australian FIU stated if institutions choose to verify a customer’s identity using these options, they should still apply the risk-based systems and controls in your AML/CTF program.

AUSTRAC also encouraged FIs to monitor for new and emerging threats and submit suspicious matter reports (SMRs).

The FIU has also identified areas of criminal exploitation where the financial system may be more vulnerable during the COVID-19

  • Targeting of government assistance programs through fraudulent applications and phishing scams.
  • Movement of large amounts of cash following the purchase or sale of illegal or stockpiled goods.
  • Out of character purchases of precious metals and gold bullion
  • Exploitation of workers or trafficking of vulnerable persons in the community.
  • An increase in the risk of online child exploitation following restrictions on travel.
  • A rise in extremist views either against members of the community or the government.

Movement on Beneficial Ownership


While FIUs are busy with COVID-19 related issues, countries are pressing ahead with regulations for shining a light on ultimate beneficial ownership.

In Europe, there has been some movement on implementing AMLD5 – the latest directive for anti-money laundering.

The Dutch lower house of Parliament accepted in April a bill for consideration to implement the EU directive on the ultimate beneficial owner (UBO) register.

The bill in the Netherlands includes measures to oblige companies and legal entities to register their beneficial owners; and require specified beneficial owner details, including the nature and extent of the beneficial owner’s economic interest.

At the end of March, Luxembourg brought in its law to implement the EU directive to enhance the beneficial ownership registry.


US to push ahead on BO Registry


Turning to North America, CaseWare RCM has learned that officials in the U.S. are confident the delays due to COVID will not prevent legislation from passing before the November elections.

The bill has strong bipartisan support in the Senate, as it did in the House,” an insider connected to the legislation told CaseWare RCM. “Before the coronavirus pandemic, the bill was expected to be considered in the Senate Banking Committee and once … we return to regular order in the Congress, we will be able to get the Corporate Transparency Act through the Senate.”

Canada is still a long way away from a central registry for beneficial ownership, but the province of British Columbia has a new registry available online to allow for searches of ultimate beneficial owners of property.

However, COVID crisis has caused the province to delay its full beneficial ownership transparency register until October 1, 2020. Previously, the register was to come into effect on May 1.


Links to the latest statements from some of the major agencies can be found below:

If your business or FI has been affected by COVID-19, ask us how we can help you through the crisis. We may have an immediate solution for you. To speak to a risk specialist from Alessa about AML compliance, regtech or fraud detection, please contact us today.


3 Must-Have RegTech Upgrades for AML Teams in COVID World

RegTech (regulatory technology) can augment the fight against COVID-19, especially at a time when a CaseWare RCM survey found 96 per cent of us are working remotely and 82 per cent of AML compliance teams are using web-based compliance systems.

With its advanced use of artificial intelligence (AI), RegTech, can significantly assist financial institutions and other firms by analyzing and correlating large amounts of data. It also has ability to proactively alert on possible abuses and the ability to quickly adopt new polices and rules.

Khaled Ghadban, director of analytics at CaseWare RCM, says compliance departments will have to start to incorporate more tech than they currently do. Ghadban was recently interviewed on the subject by the Financial Times Group.

“Compliance has become critical to an organization’s day-to-day business operations, but still lags behind in pivoting from manual to automated and dynamic process. Compliance departments need to have a full digital transformation strategy – a rethink of platform, people and process – in place to rapidly respond to regulatory changes,” he says.


Handling data in times of crisis


Given the effects of the coronavirus, remote access and web-based technologies will drive how compliance teams will access data and systems. Innovative new tools and offerings will help to fill in gaps created by the inability to meet with customers face-to-face. Here are some of the changes going forward:

1. Access to enterprise systems: While many organizations have moved to web-based systems, there are still many that rely on some amount of on-premise systems.

This means that they may not be able to access the information they need and have to delay decisions and reporting until they are in the office. Many organizations are going to continue making the move towards web-based systems for legacy systems.

You will also see a greater uptake on cloud technology since it does provide that ubiquitous access to systems and data. Cloud infrastructure also provides greater data storage and backup capacity without the need to invest in expensive IT infrastructure.

2. High-tech identity verification: Without the ability to have a face-to-face meeting in a branch office, companies are going to have to rely on other means to verify the identity of new customers.

Technologies like electronic document/identity verification are part of that equation. You will also see a greater reliance on enhanced due diligence (EDD) reports to not only verify individuals but also to track the history of a business, verify directors and determine the ultimate beneficial owners (UBO) of organizations.

3. Technology for greater emphasis on fraud detection:  Many organizations already have a fraud prevention program in place but with more federal money being distributed in coronavirus-related programs and new and untested trade relationships being forged, companies are going to have to place greater resources on fraud and trade-based money laundering (TBML) prevention programs.

Again, technology-supported EDD reports will also be a key tool for fraud and money laundering prevention, in advance of any new supply chain agreements, in order to ensure that organizations are doing business with reputable companies (before the fraud occurs).


AI plays a larger role


AI is not going to be just for the large players. Smaller companies can now take advantage of this technology by leveraging fraud models that have already been developed and leveraging the cloud for the computing power needed to process the large number of transactions needed to detect unusual activities.

Ghadban says the greatest vulnerabilities in this new environment is that COVID-19 has forced financial institutions to pivot in the way they currently operate.


FIUs still expect full compliance


Regulators have been clear about their expectations from financial institutions during these challenging times.

There are also new risks with the financial programs introduced in response to COVID around the world. The speed and variability of these changes with the introduction of aid programs can introduce new risks. Financial institutions will have to dynamically assess emerging risk and technologies.

Demand for regulatory technology was rising before COVID affected the global marketplace. But as banks, FIs and other corporations are now seeing, the effort required to maintain compliance as well as detect, investigate and report suspicious activities can decrease significantly with investment in RegTech.