Journal of Money Laundering Control
- Emerald Group Publishing Limited
- Publication date:
- Nbr. 22-1, January 2019
- Nbr. 21-4, October 2018
- Nbr. 21-3, July 2018
- Nbr. 21-2, May 2018
- Nbr. 21-1, January 2018
- Nbr. 20-4, October 2017
- Nbr. 20-3, July 2017
- Nbr. 20-2, May 2017
- Nbr. 20-1, January 2017
- Nbr. 19-4, October 2016
- Nbr. 19-3, July 2016
- Nbr. 19-2, May 2016
- Nbr. 19-1, January 2016
- Nbr. 18-4, October 2015
- Nbr. 18-3, July 2015
- Nbr. 18-2, May 2015
- Nbr. 18-1, January 2015
- Nbr. 17-4, October 2014
- Nbr. 17-2, April 2014
- Nbr. 17-1, January 2014
- The role of the police in anti-money laundering
Purpose This paper aims to describe and discuss the role of the police in anti-money laundering, with particular reference to the situation in the Republic of Macedonia. Design/methodology/approach A doctrinal approach is used to describe the role of the police in anti-money laundering policy, as well as to discuss whether the police is the central and main body in the fight against this crime. Deductive and inductive methods are used to analyze the collected data about Macedonian activities, provided by domestic and international organizations and institutions. Government agencies, institutions and bodies with different capacities for identifying and combating money laundering are included. Findings According to global statistics, about $2tn is laundered annually. Money laundering directly affects general economic and social life and the entire development, which shows why the concerns about this phenomenon have been growing worldwide. The most important issue in combating money laundering refers to preventing and detecting the problem. The police have the central role in combating money laundering in the Republic of Macedonia, but they must co-operate with public prosecutors and other agencies to fight this crime with more success. Even though Macedonian legislation is harmonized with European Union (EU) directives, there are a lot of activities in the field of money laundering to be done to fulfill EU standards. Relevant collected data were acquired from MONEYVAL reports, annual reports from the Ministry of Interior, Public Bureau of Statistics and statistics from the public prosecutor’s office, including all published documents. Originality/value The paper answers questions related to the role and effectiveness of the police by examining different authorizations and powers. Different approaches in implementing the law are specified and suggestions to overcome “two voices” are given. A comparative approach is also used to demonstrate the number of criminal charges per year, mainly collected by the public prosecutor’s office. The authors analyze whether additional training is needed for the police. All institutions should collaborate with the police because money laundering offences may be disclosed during investigations of other offences.
- Assessing the introduction of anti-money laundering regulations on bank stock valuation. An empirical analysis
Purpose This paper aims to analyze the impact of the introduction of anti-money laundering (AML) regulations on bank stock valuations in the USA. Regulations can have a negative impact on financial returns as a result of increased operational costs, potentially driving down stock valuations and loss of profitability. However, regulations can also have a positive impact on valuations because of greater oversight and increased investor confidence. Findings are useful for assessing the market impact of future regulations. Design/methodology/approach Event studies and cross-sectional regression analysis are used to determine the impact on bank stock valuations together with specific characteristics of bank size and geographic headquarter location of the bank for identified AML regulations. Hypothesis related to the impact of the introduction of AML regulations are empirically tested based on the statistical significance of cumulative abnormal returns of markets. Findings AML regulations introduced in 1998 had a positive impact on bank stock valuations, while the USA PATRIOT Act legislation of 2001 had a negative impact. These findings suggest that recent AML regulation is a cost compliance burden for banks, where the costs of operations outweigh the benefits of improved processes. Larger banks see a more negative impact on their bank stock valuations compared to smaller banks, suggesting the market perceives greater cost and less profit for larger banks. Results also show that the location of bank’s headquarters does not significantly impact bank stock valuations. Originality/value This paper specifically focuses on the impact of AML regulations on the US banking sector, providing investors, academics and regulators additional insight on the market dynamics of regulations. Identifying whether the introduction of regulations has a significant impact on a bank’s performance will provide both banks and regulators clarity as to the net benefits associated with the current and future AML legislation.
- Money laundering and terrorism financing through consulting companies
Purpose The purpose of this paper is to illustrate how criminals need to proceed to launder money and finance terrorism through the use of consulting firms. Design/methodology/approach A qualitative content analysis of 58 semi-standardized expert interviews with both illegal financial services providers and prevention experts led to the identification of concrete techniques for money laundering and terrorism financing through consulting companies. Findings Consulting firms could be considered to be “criminals’ best friends”. Terrorists could either buy or set up consulting firms in reputable countries, such as Switzerland or the UK. Subsequently, they could combine real consulting services along with fake clients to cover their illicit activities. Research limitations/implications As the findings are based on semi-standardized interviews, they are limited to the 58 interviewees’ perspectives. Practical implications The identification of gaps in current prevention mechanisms is meant to provide legislators, compliance officers, law enforcement agencies and intelligence offices with insights into how criminals finance terrorism and launder money. Originality/value While the existing literature focuses on simply naming areas that could play a part in money laundering or the financing of terrorism, this paper describes a concrete method. It takes both prevention and criminal perspectives into account.
- Tax compliance of financial services firms: a developing economy perspective
Purpose The purpose of this study is to examine the contribution of tax morale, compliance costs and tax compliance of financial services firms in Uganda. Design/methodology/approach This study is cross-sectional and correlational and adopts firm-level data collected using a questionnaire survey of 210 financial services firms in Uganda from which usable questionnaires were received from 152 financial services firms. Findings Tax morale and compliance costs contribute up to 20.6 per cent of the variance in tax compliance of the financial services firms. Tax morale and tax compliance are positively and significantly associated. Results further indicate that compliance costs and tax compliance are positively and significantly associated. National pride and trust in government and its legal systems as dimensions of tax morale independently are significantly associated with tax compliance. Results also indicate that administration costs and specialist costs as dimensions of compliance costs individually are significantly associated with tax compliance. Research limitations/implications This study results should be generalized with caution, as they are limited to the financial services firms in Uganda. Originality/value Whereas there has been a number of studies on tax compliance in both developed and developing countries, this is the first study on the African scene to examine the contribution of tax morale and compliance costs on tax compliance of financial services firms in a single suite. It is unbelievable that the financial services firms, especially commercial banks which are highly regulated by the central bank in many developing countries, can afford to report tax payables year after year.
- An investigation of the fraud risk and fraud scheme methods in Greek commercial banks
Purpose The purpose of this study is to examine types of fraud risk and fraud scheme methods in Greek commercial banks. Design/methodology/approach Data used for this study were obtained from primary source through questionnaires. This method of data collection was followed and was considered appropriate because the information sought is not publicly available and middle management and internal auditors are in a good position to know the answers to the questions asked. Questionnaires were sent to a sample of 230 persons, all bank branch employees (internal auditors were excluded), in the city of Athens (capital city of Greece), in five banks, National Bank of Greece, Piraeus Bank, Alpha Bank, Eurobank and Postal Bank, during February 2017-March 2017. Finally, of the 230 questionnaires distributed, 225 completed and returned but only 203 of them were usable questionnaires. Cronbach’s alpha was used to test the reliability of variables. Findings Results showed that forgeries, bribery and money laundering are the most important types of fraud risk, and the best fraud scheme methods are using dormant accounts and checks. Based on the empirical findings, the study recommends that there is a need for banks to implement a code of conduct and a code of ethics for staff, staff training, signature verification, control over dormant accounts, asking employees about their opinions and the way they feel about their bank, conducting surprise audits and using a hot line for whistleblowing. Practical implications The study will help banks in fraud risk management and in the development of policies to reduce risk within the banking sector. Also, will be useful to all categories of potential bank clients and users of financial services including shareholders, creditors, debtors and fund providers. Originality/value To the best of the authors’ knowledge, this is the first study examining middle management and staff opinions about fraud risk and fraud scheme methods in Greek commercial banks.
- The PRC exchange control-related compliance duties of Swiss banks towards PRC residents’ deposits
Purpose This paper aims to discuss the compliance duties of Swiss banks toward the Chinese exchange control in case of PRC residents’ deposits. Design/methodology/approach The paper matches the Swiss regulatory framework and practice in matter of banks diligence with that of the PRC exchange control and tentatively identifies the consequences resulting thereof for Swiss banks. Findings The paper finds that exchange control does fall within the scope of the Diligence Code. It suggests that banks should broadly interpret the related provisions. While in case of infringement, Chinese penalties can still be rated as a remote and moderate threat, they might strengthen. Meanwhile, the Swiss ones, under the Code, are serious. Research limitations/implications The paper does not cover other forms of overseas investment from China, namely, commercial investment. Besides, there is no related jurisprudence or practice as of yet; therefore, the findings of the paper need to be tested. Practical implications The paper suggests that the compliance officers of Swiss banks should familiarize themselves with the specificities of the PRC exchange control to anticipate the related risks. Originality/value Sino-Swiss compliance and bilateral assistance in financial matters are still unchartered waters. Because the Greater China market is of growing significance for Swiss banks, they might welcome early guidance to avoid repeating their mistakes with the USA and the EU.
- Local intelligence – the missing link in CTF regulation in the banking sector
Purpose This paper aims to examine the current challenges that banking counter-terrorism financing (CTF) regulation faces in the fight against global terrorism. The paper examines the potential impact on the banking sector of the current civil cases that have been taken against several of the leading global banks by victims and their families. Design/methodology/approach The paper reviews current academic thinking on CTF regulation and analyses these in context of several legal challenges that have been made against some of the larger global banks, including, HSBC, the Arab Bank and NatWest. Findings The paper finds that current approaches towards CTF compliance are no longer a viable option for banks, as court cases have found that additional factors need to be included in risk assessment frameworks. The main finding is that risk-based approaches need to find ways to incorporate local intelligence into their risk systems and that banks can no longer rely on basic tick box compliance measures. Research limitations/implications There are implications for the banking and regulatory sectors developing anti-money laundering /CTF policies. There are also legal implications for the banking sector who may be seeking to defend accusations of supporting terrorism. Originality/value The paper’s originality is that this level of analysis of CTF regulation using legal case studies has not been followed before.
- Following the cyber money trail. Global challenges when investigating ransomware attacks and how regulation can help
Purpose The purpose of this paper is to show how global regulation of cryptocurrencies and other cybercurrencies can assist in addressing the challenges of attribution when investigating ransomware attacks and other types of cybercrime using these payment methods. Design/methodology/approach A literature review, looking at current academic research and discourse on the topic cryptocurrency regulation, is conducted to highlight current thinking and perceived difficulties in implanting a global regulatory framework. In addition, the research explores how governments have addressed the risks posed by cryptocurrencies and how regulation has been implemented. The research focuses on the regulatory approaches of Australia, Europe and the Americas to determine whether they could feasibly address the risks posed by cryptocurrencies and be implemented on a global scale. Findings To date, few sustained efforts have been made to regulate Bitcoin or other cybercurrencies. Where regulation has been introduced, it has often proven too costly to implement, thereby, stifling Bitcoin industry growth, or too ad hoc to function effectively. These regulatory pitfalls are substantiated by the continuing difficulty faced by law enforcement agencies, in identifying individual Bitcoin users and separating those that are using them for nefarious purposes from those that are using them for legitimate ones. These challenges appear to grow exponentially when it comes to prosecuting criminals for Bitcoin-related offences, due to the enormous lack of agreement within the justice system of most countries as to the appropriate legal definition for Bitcoin. This research highlights three characteristics that will be vital to the success of any global regulatory framework. These are consistency, clarity and cost-effective implementation. A regulatory framework for Bitcoin that lacks any one of these elements will fail to meet the requirements of every stakeholder in the regulatory process. A framework that is too costly to implement will stifle fintech innovation, subsequently depriving national economies of the multitude of potential benefits promised by fostering fintech entrepreneurship. Equally, a framework that is inconsistent will hamper the global cooperation necessary to combat Bitcoin-related crime. Originality/value This research evaluates research, discourse and regulatory responses from academic and governmental sources and discusses how a global response to cryptocurrency regulation will help address the growing problem of attribution when it comes to ransomware attacks, which has experienced a considerable spike in recent months.
- Hurdling the sovereign wall. How governments can recover the proceeds of crimes that cross national boundaries
Purpose The globalization of crime has made it possible for international money launderers, kleptocrats and fraudsters to commit crimes in one jurisdiction while remaining safe in another and hiding their assets in a third. At the same time, law enforcement officials remain constrained by the rules of national sovereignty that inhibit their ability to recover assets located beyond the territorial jurisdiction of their courts. Three recent cases, however, illustrate that governments have begun to find ways to hurdle the walls that have traditionally made the recovery of assets in other countries so difficult. This paper aims to sketch the facts of those cases, the legal issues presented and the ways in which the obstacles presented by the walls of sovereignty were overcome. Design/methodology/approach This paper is the study of three recent cases. Findings The cases illustrate how obstacles presented by national sovereignty have been overcome. Originality/value The cases will serve as a guide to future international cooperation.
- Anti-money laundering and counter-terrorist financing threats posed by mobile money
Purpose The purpose of this paper is to explore the various characteristics of mobile money transactions and the threats they present to anti-money laundering (AML) and counter terrorist financing regimes. Design/methodology/approach A thorough literature review was conducted on mobile money transactions and the associated money-laundering and terrorist financing threats. Four key themes were identified in relations to the three stages of money laundering and effective law enforcement. Findings The findings indicate that as money laundering and terrorist financing transactions continue to gravitate towards the weaknesses in the financial system, mobile money provides yet another avenue for criminals to exploit. Risk factors associated with anonymity, elusiveness, rapidity and lack of oversights were all integral considerations in building an effective AML regime. The use of cash is considered a higher threat than mobile money prior to implementation of systems and controls. Practical implications This rapidly changing environment of how individuals manage their money during transactions is set to further explode globally, which poses new problems for regulators and governments alike. Unless there is a unified concentration to heighten global awareness, the imposing threat of mobile money is set to increase at a rapid rate if appropriate actions are not taken. Originality/value The findings from this study can be used to gain greater insights on mobile money transactions and raise further awareness of the ever-increasing threat to global financial integrity.
- Money laundering and terrorism financing in virtual environments: a feasibility study
Purpose – There is a clear consensus of opinion that virtual environments and virtual currencies pose a money laundering and terrorism financing threat. What is less clear, however, is the level of risk that they pose. This paper aims to clarify the suitability of virtual environments for...
- Customer due diligence (CDD) mandate and the propensity of its application as a global AML paradigm
Purpose – It has become customary for states or regulatory domains to come together and evolve normative regimes to deal with overlapping exigencies such as money laundering. Over the past two decades, there has been a proliferation of global AML laws designed to foster international cooperation...
- The exploitation of offshore financial centres
Purpose – The paper aims to highlight the relationship between money laundering and banking confidentiality in offshore financial centres – particularly following the recent publicity and BBC expose surrounding the criminal use of offshore financial centres. It proposes that there has long been...
- The role and responsibility of credit rating agencies in promoting soundness and integrity
Purpose – The purpose of this paper is to investigate the role and responsibility of credit rating agencies in promoting soundness and integrity, especially in the course of their business activities. Design/methodology/approach – The paper describes, and uses, the framework for the activities of...
- AML-CTF: a forced marriage post 9/11 and its effect on financial institutions
Purpose – The purpose of this paper is to explain the incompatibility of anti-money laundering (AML) and counter-terrorist financing (CTF) measures as a hasty over-reaction after 9/11, focusing on the compliance burdens that this imposes on the regulated sector, most notably financial institutions. ...
- Institutionalization of risk management framework in Islamic NGOs for suppressing terrorism financing
Purpose – The aim of this paper is to propose solutions for improving internal controls and transparency to alleviate concerns of international community over alleged linked with terrorist groups. Design/methodology/approach – The authors explore the counter-insurgency theory and political process...
- The viability of enforcement mechanisms under money laundering and anti-terrorism offences in Malaysia
Purpose – The purpose of this paper is to give a better insight to the legal society, practitioners and legislators of the working mechanisms of money laundering activities, as well as the functionalities of the Anti-Money Laundering and Anti-terrorism Financing Act 2003 (AMLATFA) in Malaysia, in...
- Money laundering, new technologies, FATF and Spanish penal reform
Purpose – This paper attempts to examine new technologies, typologies, FATF recommendations and the last Spanish penal reform on money laundering. Design/methodology/approach – The paper describes the potential provided via internet and electronic transfers, prepaid cards and payment services with...
- Combating money laundering and the future of banking secrecy laws in Malaysia
Purpose – The purpose of this paper is to analyze banking secrecy laws against the background of the Malaysian anti-money laundering laws. It has been argued that the anti-money laundering law makes greater inroads into the banking secrecy rule when compared to the common law or other statutes....
- The taxing business of money laundering: South Africa
Purpose – The OECD recently identified tax crime as one of the top three sources of money laundering. In the context of increased acknowledgement that tax evasion, capital flight and money laundering are key threats to the economic stability of developing countries, South Africa, like many other...