Finance

Has COVID-19 made money laundering a bigger problem than ever before?

Author:    Crosspay   |   November 23, 2021

The United Nations (UN) has cautioned the world about how offenders exploited the COVID-19 crisis through immoral distributions of fake medicines, drugs, and vaccines in the market. According to the cases of arrests and investigations around Europe, a well-thought and well-planned fraud scheme using compromised emails, money transfer fraud, and various other cases of money laundering scams has been exposed by local financial authorities and institutions across Germany, Ireland, and the Netherlands.
In the initial quarter of the year, many countries were under lockdown and facing other adversities due to the COVID-19 outbreak, especially in medical supplies. The governments and other state officials were ordering supplies all over, but due to the acute shortage, many business channels and individual firms followed a new lead into black marketing and money laundering scams. As the entire COVID-19 situation was tough to handle all over the globe, and supplies were in huge demand but sparsely supplied, also, advance money payment was a must for placing supply orders. To meet these demands in time, it paved the way for a chain of fraudsters, money launderers, illegitimate business channels, and individuals who took advantage of the crisis.
Companies all over Europe and other countries claimed to supply masks, sanitisers, drugs, and other medical goods, but barely half of them were received. It feels miserable to realise that, on one hand, some lives are battling to survive, and on the other hand, some people are just making deals over the dead.
One sector that equally affected people was the banking sector. Due to lockdown, banking organisations were temporarily shut down to reduce the spread of COVID-19. So, people have started relying on online banking and online money transfers for their needs, particularly international transfers. As people found it difficult regarding the anonymous charges to pay for every transfer, they sought other sources and later fell prey to tricks like the cheapest way to send money, and were often falling victim to money laundering scammers who were busy setting up illegal links to trap people.
A few such incidents occurred during the middle of April in India, where the spread of the virus was rapid and was increasingly killing many. As the situation was worsening, many countries offered support through donations and charities, both financial and medical aid. While the world was fighting COVID-19, some people were busy installing viruses, preparing illegal websites, and planning to black-market the needed supplies. The buyers transferred their money, but the supplies never arrived. An investigative committee was set up to probe the matter. It was later found that a company’s website name and logo were cloned to mask the real identity of the fraudsters, and no official record existed of the supply order or money transfer. Soon, the buyers informed the authorities to introspect the funds. Many people were arrested in the cases filed during an investigation, and almost all the parties were found to have no linkages with the medical or equipment industry. They were just money swindlers who saw an opportunity within the outbreak of COVID-19 and planned to scam people for huge profits. 

Has COVID-19 aggravated the issue of money laundering?

Though money laundering is a practise that was being followed even before the internet generation, the internet made it easier by hiding behind a website, application, and social media. But we can say that yes, money laundering scams were increased during COVID-19. It was the biggest opportunity for these fraudsters to make a fool out of people’s worries, anxieties, and helplessness when their loved ones were on the verge of dying and the government was trying to take every step to save their people’s lives in every way possible.
The scammers used their sales pitches to take undue advantage of the strained supply chains and the severe exploitation of demand, and they planned to make big money profits. At that time, we were not just fighting the pandemic, but also the more serious infodemic, wherein false information, treatments, and myths were going viral all over the internet, and the government had to control all of them at once to save their respective countries.
As India was most severely affected, many companies made fake platforms quoting ‘cheapest way to send money’, and people were being trapped in the situation and were getting looted of their small and large savings that they wanted to send to help people in India. In such situations, essential controls should be put in place to restrict this practice, to prevent people from getting scammed.
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