The pandemic has exacerbated financial crime globally, as cyberfraudsters look to take advantage of the increased amount of time people are now spending online and other factors, says Stuart Davis, Scotiabank’s Executive Vice-President, Financial Crimes Risk Management and Group Chief Anti-Money Laundering Officer.
In the latest episode of Pandenomics – our podcast series looking at the impact of COVID-19 on the economy – Davis explains how the nature of financial crime has changed as quickly as the nature of the COVID-19 pandemic itself.
In addition to more time spent on computers and phones at home, large government relief programs being rolled out globally has been another factor, said Davis.
“The fraudsters took advantage of that, to be frank. That money finds its way into banking institutions, so we have to be very diligent to identify that and assist the government and law enforcement in stopping those types of financial crime."
Globally, each year, hundreds of billions of dollars, if not trillions, are laundered through various means, such as through shell corporations and via the real estate sector.
These transactions can be the proceeds of serious offences such as organized crime and human trafficking, said Davis, the latter of which has increased significantly.
“Human trafficking is labour trafficking, sex trafficking. It's online child exploitation of children. These are the crimes that have hit Canada hard and the global world hard, especially in the time of the pandemic. The amount of online activity and grooming has just grown by leaps and bounds,” he said, noting that Feb. 22 marks National Human Trafficking Awareness Day in Canada.
Money laundering can range from large transactions to transfers as small as $50, he adds. The Bank relies on various monitoring and scanning tools, to determine which of those seemingly mundane transactions are nefarious and try to stay ahead of the perpetrators.
“You start identifying one thread of something that looks suspicious and you pull on it,” following the trail to find the core problem, Davis says.
The Bank shares what it finds with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as part of a broader effort with Canadian law enforcement agencies to follow the money and find the bad actors, he adds.
“We feel like we can make a difference by finding these criminal behaviors and getting them in the hands of the authorities. And so, there is a passion that drives many of us in AML, beyond just, you know, coming to work for a job, right? This is a personal motivating thing.”
Davis was instrumental in launching Project Shadow, a public-private partnership co-led by Scotiabank and the Canadian Centre for Child Protection and supported by FINTRAC and law enforcement. The aim of the project is to improve understanding of the threat and better identify the patterns of financial activity associated with online child sexual exploitation in order to stop it.
The Bank is also involved in efforts to help victims of human trafficking to rebuild their financial independence. Davis also led the development of Scotiabank’s Financial Access Program, creating a referral system with non-government organizations (NGOs), linking survivors to financial services, such as chequing and savings accounts, a credit card and financial literacy training. Davis says he remains hopeful that by expanding partnerships with NGOs across Canada — such as Voice Found in Ottawa and Covenant House in Toronto — the Bank will be able to connect and financially empower more survivors.
Working to fight financial crime and help victims has been a passion for Davis for about six years now, and he is ever more motivated.
“The bad guys aren't stopping just because of the pandemic, and nor are we."
Listen to Pandenomics Ep. 10: A post-vaccine retail rebound? here.
Listen to Pandenomics Ep. 9: Preparing for the unpredictable here.
Listen to Pandenomics Ep. 8: A brighter economic outlook for 2021 here.
Listen to Pandenomics Ep. 7: Markets recover as COVID cases surge here.
Listen to Pandenomics Ep. 6: Biden pros, cons for Canada here.
Listen to Pandenomics Ep. 5: COVID and real estate, Part 2 here.
Listen to Pandenomics Ep. 4: The COVID housing boom here.
Listen to Pandenomics Ep. 3: COVID-19 and business here.
Listen to Pandenomics Ep. 2: COVID-19's impact on jobs here.
Listen to Pandenomics Ep. 1: COVID-19 and Canada's economy here.