Money Laundering Surges During Pandemic

Reuters is reporting that 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, in reporting over the weekend.

The central bank claimed that illicit actors have increased their use of unlicensed money service providers during the coronavirus crisis. The central bank also pointed to the use of e-commerce to launder money.

The report concluded that, "Widespread lockdowns have resulted in a significant surge in e-commerce. The central bank reasoned that the pandemic made it more difficult for illicit actors to move funds and goods. In response, it calculated, those actors turned to e-commerce as a money laundering tool.

Financial analysts widely view the U.S. as a money laundering haven. Until recently, the U.S. permitted actors to form corporations and other legal entities without disclosing the beneficial ownership of those entities. Congress changed that policy with the 2020 Corporate Transparency Act.

When the Act is implemented by the Treasury Department's Financial Crimes Enforcement Network, or FinCEN, the Act will require most private companies to register the names of their beneficial owners.

Regulators fight money laundering because of the role it plays in organized crime and the financing of terrorism.

About The Author

Jonathan Wilson is the co-founder of FinCEN Report Company with 31 years of experience in corporate, M&A and securities matters. He is the author of The Corporate Transparency Act Compliance Guide (to be published by Lexis Nexis in the summer of 2023) and the Lexis Practical Guidance Practice Note on the Corporate Transparency Act.

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