A new Refinitiv report has found that Covid-19 substantially increased customer and third-party risks. Yet it also increased focus on ESG and green crime.
Refinitiv has published new research revealing the extent that to which the Covid-19 pandemic has raised customer and third-party risks.
The research report is based on a global survey of 2,920 managers in large organisations across 30 countries, conducted during March 2021. The survey was run across 30 countries.
The report finds that the pandemic forced up to 65 percent of respondent organisations to take shortcuts with KYC and due diligence checks, as a result of burdens to keep operations and disrupted supply chains running.
Only 44 percent of respondents conducted initial formal customer or third-party due diligence checks, a 5 percent point drop from Refinitiv’s 2019 survey (49 percent).
According to the report, 73 percent of survey respondents said they were under extreme pressure to increase revenue because of the pandemic, while 71 percent said remote working practices made cybercrime more difficult to contain.
Covid-19 has made sanctions screening a greater priority for 40 percent of respondents, potentially a result of the need to forge new relationships due to the pandemic’s impact on supply chains.
But, the report says, this is set against “a wider picture of inaction”, where 56 percent of respondents said they have not fully managed risks related to sanctions screening.
Fraud was found to be a major focus of financial crime programmes during the pandemic. Companies allocated 20 percent of overall efforts to combatting fraud, compared to 16 percent for money laundering and 14 percent for cybercrime and theft.
Overall, the pandemic appears to be accelerating the investment in technology to fight financial crime, the report says.
It also noted that Covid-19 has proved to be a watershed for the ESG agenda, with 43 percent of respondents saying the pandemic increased the importance of ESG to them overall.
Up to 43 percent of respondents said they now consider green crime (illegal fishing, illegal logging, illegal wildlife trade, waste dumping) as a priority.
“Looking back at the lessons learned over the past 16 months, it is clear that businesses must close the compliance gap and focus on building a resilient supply chain with due diligence and financial crime prevention at its core,” said Phil Cotter, Global Head, Customer & Third-Party Risk, Refinitiv.
“As organisations slowly recover from the Covid-19 impact, we expect an increase in technology investment as they seek new way to address customer and third-party risk challenges.”
The full report is available here.