The views and opinions expressed in this article are those of the thought leaders as individuals, and are not attributed to CeFPro or any particular organization.
By Ken Jones, Senior Managing Director, FTI Consulting
Why have we seen increased fraud and money laundering as a result of Covid-19 stimulus?
The answer to this is simple, in the government’s rush to push out funding, federal, state, local government agencies and corporate partners responsible for distributing the funds were not prepared with the proper controls to prevent fraud, waste and abuse. We have seen this happen following the financial crisis of 2008 and it was predictable again. As an example, financial institutions were required to take on recipients of CARES Act funding that were not existing clients. Thus, there was no track record of those individuals or corporations from a client risk perspective. As a result, sophisticated (and some not so sophisticated) criminal organizations were able to take advantage of the loopholes in the controls and fraudulently access government funding.