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«This raises the risk of dubious recipients of the money, who in turn transfer the funds onwards. We've also observed typical patterns of money laundering as well,» Buetterlin said. One is so-called money mules, who win a small kickback if they allow their bank accounts to be used to transfer illicit cash for others (known as «smurfs»). If automated transaction monitoring systems at banks don't sniff out the fresh pattern, the money passes through.

The second major problem in the banks' line of defense is the sheer volume of the loan bazookas unleashed globally in March and April. The sharp rise in alleged wrong-doing threatens to overpower regular control mechanisms, according to Capco partner Ingo Rauser. «The mechanisms are stretched to their limits because of fewer resources in times of crisis as well as limited technological capacity,» he told finews.com.

99 Percent of False Warnings

And how: «Banks are experiencing an extreme increase in suspicious activities,» Rauser said. For the most part, these alerts can be managed through modern systems and additional resources. But some firms are still working through a backlog in order of priorities, the consultant said.

The crisis lays care that banks are still dealing with considerable heft: many firms are reporting a rate of so-called «false positive» notifications at between 95 and 99 percent. Each of these alerts needs to be attended manually, tying up an enormous amount of human capital. 

Crime: New Normal?

Normally banks shoulder the full business risk of their anti-money laundering practices – and thus can ill afford to take any shortcuts. «Since the pandemic is going to occupy us for quite a while longer, we can assume that combating white-collar crime is going to become the new normal,» Rauser said.

Banks should rethink their processes and investment in more powerful defense systems, he argues. This can ultimately help lower costs: carefully calibrated systems are nimbler at catching the mules without stopping the herd.