Journal of Financial Crime
- Emerald Group Publishing Limited
- Publication date:
- Nbr. 26-2, April 2019
- Nbr. 26-1, January 2019
- Nbr. 25-4, October 2018
- Nbr. 25-3, July 2018
- Nbr. 25-2, May 2018
- Nbr. 25-1, January 2018
- Nbr. 24-4, October 2017
- Nbr. 24-3, July 2017
- Nbr. 24-2, May 2017
- Nbr. 24-1, January 2017
- Nbr. 23-4, October 2016
- Nbr. 23-3, July 2016
- Nbr. 23-2, May 2016
- Nbr. 23-1, January 2016
- Nbr. 22-4, October 2015
- Nbr. 22-3, July 2015
- Nbr. 22-2, May 2015
- Nbr. 22-1, January 2015
- Nbr. 21-4, September 2014
- Nbr. 21-1, January 2014
- Incentive systems in anti-bribery whistleblowing
Purpose While existing literature focusses on the causes and negative consequences of corruption, this paper illustrates the potential use of whistleblowing incentives to combat bribery in multinational corporations. The purpose of the present study is to highlight that anti-bribery mechanisms, which have already been successfully applied in the public sector, may also be deployed in multinational organisations. Design/methodology/approach A two-step qualitative research process was used. Informal interviews were conducted with 35 corrupt public officials, followed by formal interviews with 35 compliance experts and law enforcement officers. During the interviews, the advantages and disadvantages of whistleblowing incentives in multinational corporations were discussed. The interviewees’ responses were subjected to content analysis. Findings The principal finding was that rewarding employees with significant monetary bonuses may help to increase anti-bribery whistleblowing. However, such bonus payments should be made in only major cases of bribery to safeguard multinational corporations, company cultures and trust among employees. Research limitations/implications The findings convey the perspectives of the 70 interviewees based in Austria, Germany, Liechtenstein and Switzerland. Practical implications The paper offers suggestions to multinational corporations on how to effectively combat corruption and other forms of white-collar crime. Originality/value While the empirical findings are based on a European sample, the results may be applied globally.
- Does insider trading pay?. An analysis of trading and tipping activities in insider trading litigation
Purpose This paper analyzes trading and tipping activities in insider trading litigation decided by federal courts from January 1, 2012 to December 31, 2014. Design/methodology/approach Legal documents from the US Securities and Exchange Commission, LexisNexis and Westlaw databases were coded to determine profile, patterns of trading and settlement outcomes. Findings Results of statistical analysis indicate that a defendant in both civil and criminal cases is more likely to trade on the information when he/she receives a direct, financial benefit from breaching his/her duty of confidentiality. The defendant tipper is also more likely to pass on the information to a close personal friend, business associate or family member. The average amount of profit of defendants in both civil and criminal proceedings substantially exceeds the average amount of their settlements. Originality/value This paper offers support for the rational choice model - insider trading is often based on rational calculations of benefits not only to the defendant but also to his/her family and associates. Although the threat of civil enforcement and criminal proceedings may possibly deter him/her from committing the crime, results indicate that the amounts of settlement in both proceedings are considerably lower than the amount of profits obtained from the offense.
- A strategic approach for the crime of tax evasion
Purpose Crime games cannot be simply read with mixed strategies. These strategies are inconclusive of how the players act rationally. This is undeniably true for the crime of tax evasion, where dishonest taxpayers are rational agents, motivated by the comparison of payoffs, when considering the risk of non-compliance. The purpose of this paper is to illustrate that in the presence of a small “private disturbance” of the players’ payoff, the Nash equilibrium in mixed strategies provides us with the necessary information on equilibria in pure strategies that will be played. Design/methodology/approach In tax-evasion games, an equilibrium must necessarily be interpreted in pure strategies, and the only way to do this is to insert some private information into the game and reinterpret it in a Bayesian scheme. We show that taxpayers’ private,subjective considerations on the effective implementation of the penalty and the revenue agency’s private information on the cost of monitoring and conviction can lead to Bayesian equilibria in pure strategies. The present paper takes issue with this Bayesian equilibrium and the implications for comparative-statics results. Findings In this context, tougher sentencing deters crime, although, as the Italian experience teaches, the necessary condition required is the certainty of punishment and the ability of the government to enforce it. The equilibrium strategies with incomplete information reveal whether it is convenient for the two agents to maintain their “private disturbance” as private information or, on the contrary, it is convenient to expect it to be “common knowledge.” Originality/value A distinct set of studies has adopted a game theoretic approach and shows that the standard economic approach to crime deterrence inspired by Gary Beker’s seminal paper might be flawed. See, among others, Saha and Poole (2000), Tsebelis (1989) and Andreozzi (2010). This paper shows that a greater severity of the penalty and a higher certainty of punishment (a lower possibility of appealing against sanctions and no discounts on due penalties) necessarily lead to a unique Bayesian equilibrium without evasion.
- United Nations vs transnational organized crime: a glimpse of the future?
Purpose The purpose of this paper is threefold; first, to show the role played by the United Nations (UN) in the fight against transnational organized crime; second, to analyze two subject areas, commercial sexual exploitation of children and mutilation of albinos, in which the Organization gives voice to the often voiceless victims; and third, to examine the role the UN may or should be called on to play in the postulated cooperation between high-level investigative means and personnel on the ground. Design/methodology/approach The paper relies on information generated by international organizations (Red Cross and UN) and media reports. Findings Although commercial sexual exploitation of children in many if not most advanced jurisdicitions is a crime with extraterritorial jurisdiction in the sense that perpetrator can be tried in, say, an advanced country for violations in a developing country, and considering that this crime has a strong international component, it has proved difficult to investigate. This is caused by the procedural difficulties in collecting proofs in one jurisdiction for use in another, transport of victims and witnesses, etc. Therefore, among many other measures, advanced countries should further tighten the investigation of so-called sex tourism clearly targeting children. Mutilation of persons with albinism is strongly linked to superstition and although often involving international trade, must be strongly countered by information. Again the UN plays and should play a leading role. Research limitations/implications Research in these and similar areas is quite obvious hindered by the so-called “dark number syndrome”, i.e. as the subject-matter is both illegal and the target of strong moral condemnation, it is difficult to get more than a small, hopefully representative, set of cases to examine. Practical implications Advanced countries must assist in limiting and hopefully stopping the overseas sex tourism involving underage individuals. Also, through the UN, the only moral arbiter we have, the international community should assist in informing and teaching, in particular, in the countries around the big lakes in Africa and in Malawi to bring to an end this kind of superstition. Likewise, the UN should act as a bridge, allowing sophisticated investigative means to link up with less sophisticated ones, in particular in the area of abuse of the environment (pachyderms in Africa and protected fisheries breeding grounds). Social implications From the previous paragraph, it is obvious, so it seems, that at least the commercial sexual exploitation of children and the mutilation of albinos can only be countered though a conscious effort at training aimed at the social layers - mostly in rural areas - where both superstition (albinos and brains of bald males) and the habitual view of children, in particular, but not only girls, as a source of income are prevalent. Originality/value The paper does not attempt to present original material. Rather it emphasizes the role of the UN in protecting the unprotected and promotes ideas with which to commence pushing back against the serious destruction of animals, including fishes.
- Fraud and guilt: rationalization strategies and the relevance of Kierkegaardian life-views
Purpose The purpose of this paper is to use Kierkegaard’s life-views (aesthetical, ethicist and religious life-views) for better understanding the way fraudsters are dealing with their ontic-existentiell guilt, while developing rationalization tactics. Design/methodology/approach Rationalization tactics make possible to neutralize moral discomfort about fraudulent practices. Endorsing Kierkegaard life-views actually unveils three basic patterns fraudsters could agree with (consciously or not): the focus for individualization processes, the ontic-existentiell quest and the attitude towards guilt. Each Kierkegaardian life-view has deepened this threefold pattern in a very different way. Findings The aesthetician life-view is so emphasizing immediacy and pleasure that it strengthens an amoral perspective. Fraudsters could easily adopt such life-view. The ethicist is so basically concerned with morality (distinction between good and evil) that he/she cannot consciously favour fraudulent practices. At best, fraudsters may be “would-be ethicists”. As long as they are unable to feel repentance, fraudsters will not be able to fully embrace the religious life-view. At best, they may be “would-be religious”. Research limitations/implications The way Kierkegaard’s life-views could put light on fraudsters’ rationalization tactics has not been empirically assessed. Empirical studies that would be focussed on such topics should deepen the relevance and meaning of fraudsters’ psychological, sociological, cultural and religious/spiritual traits. Originality/value The paper analyzes to what extent fraudsters could feel psychological guilt, as well as ontic-existentiell guilt, as it is grounded on ontological-existential guilt (guilt as an ontological category). Taking Kierkegaard’s life-views as reference pattern, it presents the implications of being oriented towards immediacy/pleasure (avoiding guilt, at any cost), towards freedom (being aware of one’s guilt) or towards the infinite (being fully aware of one’s guilt).
- Who can spot an online romance scam?
Purpose This paper aims to examine predictors (personality, belief systems, expertise and response time) of detecting online romance scams. Design/methodology/approach The online study asked 261 participants to rate whether a profile was a scam or a genuine profile. Participants were also asked to complete a personality inventory, belief scales and demographic, descriptive questions. The online study was also designed to measure response time. Findings It was found that those who scored low in romantic beliefs, high in impulsivity, high in consideration of future consequences, had previously spotted a romance scam and took longer response times were more likely to accurately distinguish scams from genuine profiles. Notably, the research also found that it was difficult to detect scams. The research also found that it was important to adapt Whitty’s (2013) “Scammers Persuasive Techniques Model” to include a stage named: “human detection of scam versus genuine profiles”. Originality/value This is the first study, to the author’s knowledge, that examines predictors of human accuracy in detecting romance scams. Dating sites and government e-safety sites might draw upon these findings to help improve human detection and protect users from this financial and psychologically harmful cyberscam.
- The cost of corruption
Purpose The purpose of this paper is to examine the ways for the formulation of a model for calculating the cost of corruption per country, taking into account the social cost. Design/methodology/approach The methodology is practical exploration; the model is formulated along with the social cost of specific calculation. Based on two specific acts of corruption, bribery and overpricing of public works, these acts are private and public corruption. From there, the model is formulated along with the social cost of specific calculation, based on two specific acts of corruption, bribery and overpricing of public works. Findings This paper concludes that the model is applicable to all the countries of the world, based on their tax structure. Research limitations/implications Limitations do not exist in the model; the additional implications are the extension of the model. The model can be used for local governments or countries. Practical implications Countries can calculate the theoretical cost of corruption in their local, regional or national economies, based on two specific acts of corruption, in political, private and public corruption; bribery and overpricing of public works. Social implications The social implications include knowing the theoretical cost of corruption and their effects. Originality/value The model calculates the cost of corruption and its economic and social impact.
- The psychology of the corrupt: some preliminary findings
Purpose This paper aims to present findings based on the psychological profile of 17 offenders who have been convicted of occupational fraud, bribery or related offences. It provides findings on their specific psychological profiles using well-established psychological techniques to gauge personality. The study is also aimed to provide the foundations for further research on such profiles, which could eventually provide a screening tool to identify individuals who might be a higher risk of engaging in corrupt behaviours for organisations. Design/methodology/approach The research is based upon 17 interviews with white-collar offenders who were also asked to complete an Eysenck Personality Questionnaire to identify their profile. Findings This study postulates that sensation seeking, risk appetite, impulsivity and lower non-aggressive self-regulation dominate the E scale traits of white-collar offenders. Originality/value This paper is very much original in its design with few studies having been performed in this area.
- Asset confiscation in Europe – past, present, and future challenges
Purpose The purpose of this paper is to paint a general picture of the asset confiscation regimes used in Europe and to outline potential challenges, practical and related to issues of principle, associated with the current development with regard to the confiscation of the proceeds of crime and criminals’ proceeds. Design/methodology/approach The paper endeavours to analyse the various steps of the confiscation process, and the various approaches to the confiscation of proceeds of crime and criminals’ proceeds from a holistic perspective. The findings of the paper are based on a literature review along with a legal analysis of the existent legal frameworks. Findings It is suggested that the efficiency of asset confiscation should be looked at from a holistic perspective involving the entire confiscation process, and not only focus on the confiscation powers awarded to the courts. Challenges relating to efficiency exist along the entire process, from the stage of financial investigations to the enforcement stage. Some of the methods used for confiscating criminal proceeds are becoming very far-reaching and raise concerns related to basic principles of criminal law and criminal procedural law. Research limitations/implications This paper is not based on empirical research relating to, for example, the efficiency of confiscation. More empirical research would, however, be welcome in this field. Practical implications The paper suggests that the efficiency of asset confiscation is contingent on the entire confiscation chain functioning efficiently. Before new and more repressive measures are introduced, the existing legal framework should be fully deployed and the concrete needs for new tools clearly delineated. Originality/value The paper analyses confiscation with a view to the entire chain rather than merely looking at a particular confiscation scheme.
- The juxtaposition of success and failure of corporate governance procedures. The interplay between rules and practice
Purpose The paper aims to explore a multiplicity of corporate governance issues in the narrow purview of different corporate governance systems and procedures across jurisdictional contexts. It shows a correlation between proper implementation of rules and procedures in a corporation for...
- Failure of the Dodd-Frank Act
Purpose - This paper aims to explain the weaknesses and inconsistencies inherent in the Dodd-Frank Act of 2010 (USA). Design/methodology/approach - The approach is entirely theoretical and multi-disciplinary (and relies on some third-party ...
- Sight beyond sight. Foreseeing corruption in the Indonesian government through behavioral analysis
Purpose The purpose of this paper, which is based on the author’s study, is to explore the potential use of behavioral analysis in predicting corruption among public officials in Indonesia as part of the corruption prevention measures. Design/methodology/approach This study examines...
- Internal auditor’s compliance to code of ethics. Empirical findings from Malaysian Government-linked companies
Purpose The purpose of this study was to determine the professional competency levels acquired by internal auditors in detecting unethical behaviour, to evaluate the position of internal auditors on objectivity and integrity in dealing with unethical behaviour and to examine the extent of...
- Transfer pricing, earnings management and tax avoidance of firms in Ghana
Purpose This paper aims to investigate how transfer pricing (TP) and earnings management affect tax avoidance of firms in Ghana. Design/methodology/approach The authors use a panel data set from 2008 to 2015 to further shed light on transfer pricing-tax avoidance nexus by examining...
- The major issues that need to be addressed by effective corporate governance in the 21st century
Purpose This paper aims to underline and evaluate what corporations are as artificial entities, the concept of corporate governance (CG) in the twentieth century and whether a corporation owes allegiance to its key stakeholders in the twenty-first century. Design/methodology/approach ...
- Identity theft and university students: do they know, do they care?
Purpose - This study aims to explain what factors influence the relationship between the university students’ knowledge of the risk of identity theft and the preventive measures they take. Design/methodology/approach - A series of semi-stru...
- General strain and procedural justice in retail banking. A qualitative case study with a multi-theoretical approach to improving compliance policy
Purpose The purpose of the current study is to examine the applicability of general strain and procedural justice theories to retail banking deviance in an effort to improve compliance programs. Design/methodology/approach This objective is achieved through a qualitative case study ...
- Incentive systems in anti-bribery whistleblowing
Purpose While existing literature focusses on the causes and negative consequences of corruption, this paper illustrates the potential use of whistleblowing incentives to combat bribery in multinational corporations. The purpose of the present study is to highlight that anti-bribery mechanisms,...
- Bitcoin transactions: a digital discovery of illicit activity on the blockchain
Purpose The purpose of this paper is to determine if Bitcoin transactions could be de-anonymised by analysing the Bitcoin blockchain and transactions conducted through the blockchain. In addition, graph analysis and the use of modern social media technology were examined to determine how they...