Covid Relief Fraud and Money Laundering in the United States

In an effort to mitigate the effects of Covid-related shutdowns, the U.S. government poured trillions of dollars into relief programs, providing loans to businesses in need and sending checks to people whose incomes qualified them for a help. However, without adequate controls in place, nothing prevented fraudsters from taking advantage of government largesse to collect ever-increasing sums of money for their own benefit. According to one estimate, at least $ 100 million stolen Covid relief funds have been laundered through the four major online investment platforms – and that’s just the tip of the iceberg.

The ease with which people have managed to trick the government into giving them millions of dollars in loans demonstrates with extreme clarity why it is so important to have strict and sophisticated processes in place to verify identity and report potentially activity. suspicious.

While the US Department of Justice (MJ) touted his response as “a model of, a high-impact white-collar app ”that enabled them“ to quickly secure accountability for wrongdoing in the midst of a national crisis and sent a strong deterrent message, ”the truth is that no matter how diligent with which DOJ is working to prosecute accused wrongdoers, there will always be people who slip through the net with their ill-gotten gains intact.

Instead of tasking the Justice Department with identifying scammers, there needs to be more checks throughout the process, making it harder for said scammers to get their hands on the money in the first place.

The Special House Subcommittee on the Coronavirus Crisis said that the decision not to “implement basic controls” in the paycheck protection and economic disaster loan protection programs led to $ 84 billion in potentially fraudulent loans, of which only $ 626 million were collected by the GM

Of course, neither the CARES Act nor subsequent relief programs should become the pillars of government policy. In addition, they were drafted and adopted in a climate of extreme urgency, when the need to help struggling households and businesses was most pressing. But the lack of provisions to prevent fraud meant that the money that should have gone to the people who needed it most ended up in the hands of those whose only thought was to get rich. While the government has now implemented automatic fraud checks and manual reviews for some loans, one cannot help but wonder how much greater the impacts of relief funds could have been if they had not. had not been surreptitiously hijacked.

The prevalence of Covid relief fraud also helps to illustrate how modern financial tools, such as online investment platforms, can be easily turned into money laundering devices in the absence of monitoring protocols and anti-money laundering measures. It shows how any business, from family owned shops to established and savvy institutions, can be deceived quite easily – and highlights how important it is for businesses to be able to verify whether a business or individual is legitimate. From checking to see if a business actually exists to verifying that an individual is who they say they are (and not on a sanctions list), the verification process can be straightforward, aided by the latest technology.

As the extent of Covid-related fraud in the United States shows, there are many ways that funds can be diverted and funneled into illegal operations, and many people are ready to take advantage of an opportunity as soon as they are. they see one. In this case, the impact of fraud and money laundering is clear: it allows criminals to get rich at the expense of the needy and prevents legitimate businesses from getting the funds they need to stay alive. Any transaction, regardless of its size, must be subject to appropriate due diligence. It is not a complicated process, and it can be completed in seconds; in other words, there is no downside.

Martin plays is vice-president of Smart search, an anti-money laundering verification service provider based in Lehi, Utah.

Previous Is it time to put New York Community Bancorp (NYSE: NYCB) on your watchlist?