It is pertinent that companies continue to perform onboarding and ongoing checks on suppliers to ensure clear visibility over third-party risks. If companies have let “workarounds” creep into business processes in the emergency phase of the crisis, now is the time to assess these and adopt a complete process that’s been adapted to new ways of working, while maintaining standards. Organizations need to continue to remediate and address internal control deficiencies identified, and provide the necessary infrastructure to work from home, including security connections to the business network.
Not only do companies need to ensure that they are not inadvertently taking part in illicit supply chains or facilitating money laundering, they will also have to monitor the chain for sanction evasions. In the confusion, sanctioned regimes may look for new ways to secure goods or raise revenue as their access to the global financial system will be impacted.
Sanctioned regimes will struggle to manage the socio-economic implications of COVID-19 and many are already attempting to find new methods of securing goods or raising revenue. For example, there has been an increase in North Korea’s state-sponsored cyber-crime to drive revenue 5. There is also the potential for North Korean garment manufacturers to try to benefit from decreased productivity in China and South Korea 6.
It is difficult for businesses to predict how long the pandemic will last or what the ongoing impacts might be. However, every company needs to work on financial crime risk assessment, adjust working practices for what could be the new normal and develop business continuity plans that will see them through this and any other coming crises.
Contact HSBC to discuss how we can help you and your business mitigate financial crime risks – and watch a replay of our webinar Responding to COVID-19: Implications on fraud for corporations for further information.