• Journal of Money Laundering Control

Publisher:
Emerald Group Publishing Limited
Publication date:
2011-12-21
ISBN:
1368-5201

Latest documents

  • Anti-money laundering and combating the financing of terrorism compliance. Are FATF member states just scratching the surface?

    Purpose
 The purpose of this paper is to investigate how well countries comply with global anti-money laundering and counter-financing of terrorism (AML/CFT) regulations.
 Design/methodology/approach
 With the help of an AML/CFT compliance index composed by the author, this study is able to numerically quantify countries’ AML/CFT compliance levels. Countries were selected based on their membership with the Financial Action Task Force (FATF), precisely members who have gone through at least one round mutual evaluation and have duly submitted a report to the task force. The AML/CFT index was composed by assigning numeric values to the individual country ratings across all 49 FATF recommendations contained in their mutual evaluation reports (MER).
 Findings
 Some notable findings include the yearly global level of AML/CFT compliance between the period 2004 and 2016, as well as compliance levels across continents for the same period. Compliance levels for the seven components of the FATF recommendations were also reported to help assess which set of recommendations countries comply with the most and why they do. It was also found that countries’ lack of compliance was as a result of high cost of compliance with FATF recommendations.
 Research limitations/implications
 The main limitation of this study was a lack of high-frequency AML data of countries, especially less-developed countries.
 Originality/value
 The uniqueness of this paper lies in the fact that the AML/CFT compliance index constructed and used in the study is the first of its kind.

  • Dirty money in the banking sector

    Purpose
 The purpose of this study is to analyze the Lebanese anti-money laundering (AML) paradigm in light of banking secrecy law. The phenomenon of money laundering that was first associated with the crime of drug trafficking developed a lot since the early 1900s to become a major threat to the world’s economy today. The fight against this ever-growing crime, with multiple sources and origins, has been the centre of attention of the biggest countries in the world. Thus, the need for international AML standards was required, by which countries must abide, to ensure an effective fight against this crime. The issue of banking secrecy regulations was important to study along with the AML framework as the principles of the first totally contradict those of the latter.
 Design/methodology/approach
 The scope of this study first entails a qualitative technique. It will start with analysing existing legal provisions on money laundering and studying the AML framework internationally and in accordance with the Lebanese banking system. For that, websites such as GoogleScholar and HeinOnline were used to collect many scholars articles. Additionally, Laws, Regulations and Directives have been examined for the purpose of establishing the legal basis for the fight against money laundering. Moreover, an interview was conducted in 2018 with the Lebanese Financial Prosecutor, which served as data related to the operations of the Special Investigation Commission (SIC) in Lebanon, which is the Lebanese Financial Intelligence Unit. Second, quantitative research has been done. Reports of the Association of Banks in Lebanon, Financial Action Task Force Report and Annual Reports of the SIC of Lebanon have been used to gather information related to the AML/combating the financing of terrorism framework, such as customer due to diligence provisions and know-your-customer requirements and to collect statistics of suspicious reports.
 Findings
 The question of “How to balance the confidentiality of the Lebanese banking sector with the interest of the international community in the fight against money laundering?” was interesting to study, as it turned out that the existence of such professional secrecy does not affect the effective implementation of the AML guidelines by banks and other financial institutions. This can only happen when there is a special judicial organ to which banking secrecy is not opposable at any time, and which is the sole organ entrusted with lifting off this professional secrecy and allowing the disclosure of information to the competent authorities. Thus, the Lebanese banking system can ensure total compliance with the AML framework while still adopting banking secrecy regulations.
 Originality/value
 The choice of Lebanon was compelling because of the special level of protection its banking secrecy law offers.

  • The financial intelligence unit and money laundering control in Tanzania. The law, potential and challenges

    Purpose
 This paper aims to explore the role of the financial intelligence unit in Tanzania in fighting against money laundering and its predicate offences, examine its potential in controlling the problem and describe factors that undermine its efficacy.
 Design/methodology/approach
 The doctrinal research approach is used to analyse Tanzania’s anti-money laundering law and appraise its effectiveness in facilitating operations of the financial intelligence unit in fighting against money laundering and its predicate offences. The law-in-context approach is applied to interrogate the anti-money laundering law and describe non-law factors that impinge on the efficiency of Tanzania’s financial intelligence unit.
 Findings
 The law vests the financial intelligence unit with powers to perform a number of functions that are significant in fighting against money laundering and its predicate offences in Tanzania. The unit has been instrumental in curbing money laundering. The efficacy of this anti-money laundering agency, which is at its infancy stage, is emasculated by law-related, institutional and non-law factors. These factors undercut the potency of the agency.
 Practical implications
 There is a need for Tanzania to undertake policy, legislative and institutional reforms to augment the efficacy of the financial intelligence unit. The reforms should be implemented concurrently with other measures, which will enhance the country’s anti-money money laundering regime.
 Originality/value
 This paper applies the legal and non-law perspectives to evaluate the effectiveness of the financial intelligence unit as an essential component of Tanzania’s anti-money laundering regime. It proposes law-related and non-law approaches to augment the efficiency of the unit and the country’s anti-money laundering regime in general.

  • How seriously do taxpayers regard tax evasion? A survey of opinion in England

    Purpose
 Numerous studies have been done on various aspects of tax evasion in recent years. Some studies focus on compliance, while others examine more esoteric topics, such as optimum tax evasion. A third group of studies discusses theoretical issues, such as when tax evasion can be justified on moral grounds. A few studies have addressed the relative seriousness of tax evasion compared to other infractions. The purpose of this paper is in the latter category.
 Design/methodology/approach
 Wave 6 of the World Values Surveys (2010-2014) asked hundreds of questions to participants in 57 countries. One of those questions asked whether it was justifiable to evade taxes if one had the opportunity to do so. Another question asked whether it was justifiable to pay cash to avoid paying taxes. It also asked questions about other ethical issues such as bribery, avoiding a fare on public transport, claiming government benefits and buying stolen goods. The present study included those questions in a survey that was distributed to 485 students and faculty members at the University of Exeter in England to determine the relative seriousness of each act. They were asked to select a number from 1 (never justifiable) to 10 (always justifiable) to show the extent of their agreement or disagreement with the commission of the six acts. The goal was to determine how serious tax evasion was compared to other acts that might be considered unethical. One-sample t-test and one-way analysis of variance (ANOVA) methods were used for the data analysis.
 Findings
 The results of the study show that the act considered least serious was paying cash for services to avoid tax followed in order of seriousness by avoiding a fare on public transport, cheating on taxes if you have a chance, buying stolen goods, claiming benefits without entitlement and, with least justification, accepting a bribe in the course of one’s duty. Some interesting results emerged by examining the responses of different groups. Like other studies, the results indicate older groups tend to have a higher respect for the law than younger ones. This was true for the cheating on taxes possibility, but the 30-49 years age group were more opposed than the other two groups to paying cash for services to avoid taxes. In terms of gender, females were significantly more opposed than males to cheating on taxes if you have a chance. The respondents who are married were more opposed to the six acts, including of course, the two tax ones, than non-married persons. There was also evidence that the level of higher education makes a difference to individuals’ opinions.
 Originality/value
 This is an important study in relation to England. It is the first study to do so. The relative seriousness of tax evasion is compared to other offenses. Mean scores are used to rank the various offenses in terms of relative seriousness. Various demographics are also examined to see whether some groups view tax evasion as more serious than other groups. Those demographics included gender, age, academic major, education level and marital status.

  • Tracing, freezing and confiscating the proceeds of crime in Cyprus

    Purpose
 As a dynamic business and financial centre, the Republic of Cyprus is called upon to protect its economy and society from money laundering and criminal infiltration. To address these risks, the Republic of Cyprus has developed a comprehensive legal framework in compliance with the relevant international and EU standards. The purpose of this paper is to critically examine the legislative tools for tracing, freezing and confiscating the proceeds of crime in the Republic of Cyprus with special reference to their strengths, weaknesses and compatibility with the relevant international and EU norms.
 Design/methodology/approach
 This paper draws on legal scholarship, jurisprudence, reports and other open source data to analyse important legislative developments in Cyprus in the fields of tracing, freezing and confiscating the proceeds of crime.
 Findings
 The legislative developments that will be examined are Law 188(I)/2007, and its recent amendments which effectively target the proceeds of crime in Cyprus. Despite some weaknesses, the legislative provisions in Cyprus are compatible with international and EU norms on tracing, freezing and confiscation, while they promote international and EU cooperation in these domains.
 Originality/value
 Since the amendments of Law 188(I)/2007 came into force, this has been, to the best of the authors’ knowledge, the first comprehensive study examining the strengths and weaknesses of the legislative framework on asset tracing, freezing and confiscation, as well as its compatibility with international and EU standards.

  • Foreign direct investments and round tripping between Cyprus and Russia

    Purpose
 This paper aims to look at the linkage of foreign direct investments (FDIs) and round-tripping in the Cyprus-Russia corridor.
 Design/methodology/approach
 The paper is divided into two chapters. The first chapter looks at the relationship between FDIs and round-tripping in Cyprus and Russia. The second chapter discusses and combines statistical data from different sources about illiciting financial flows from Russia and the linkage of FDIs and round-tripping with Cyprus.
 Findings
 Evidence suggests that, despite the obviously numerous and varied legislative provisions and initiatives, the movement of vast amounts of capital to or through the Cypriot financial system is a phenomenon, which has absolutely not been removed. The illegal outflow of money seems to grow rapidly over the years instead of decreasing. What actually happens is that after a dramatic decline in the years 2013-2015, the FDIs of the Russians to and from Cyprus in 2016 returned to pre-crisis levels of 2013, and so far, it seems the inflows-outflows system returned to “normal” levels. Cyprus ranks first in inward FDI and outward FDI with almost 35 per cent of total flows from Russia. An element that demonstrates the presence of round-tripping, is the sharp and rapid parallel increase of inward FDI and outward FDI, and that the category of total deposits in Cyprus by nonresidents, including special-purpose entity, recorded significant fluctuations caused by not only the large size of deposits but also the short time remaining in the banking sector. Russia ranked second among the countries with the largest average illegal capital outflows in the years 2004-2013. Movement of capital to exploit the particularly beneficial Cyprus tax system is still a tax backdoor for Europe and worldwide (hence the neologisms like Cyp-Rus), especially after the “de-offshorization” law in Russia in practice since January 1, 2015.
 Originality/value
 Evidence presented in this paper is important for national and supernational supervisory anti-money laundering bodies and compliance authorities to understand bad practices in financial transactions between Russia and Cyprus.

  • European antiquities trade: a refuge for money laundering and terrorism financing

    Purpose
 This paper aims to demonstrate how criminals launder money in the antiquities trade in Austria, Germany, Liechtenstein and Switzerland.
 Design/methodology/approach
 A qualitative content analysis of 58 semi-structured expert interviews with both criminals and prevention experts and a quantitative survey of 184 compliance officers revealed the concrete techniques used to launder money in the European antiquities trade.
 Findings
 The antiquities market facilitates the placement, layering and integration of the transfer of assets to terrorist organizations. Most importantly, it is among the few profitable methods of laundering money.
 Research limitations/implications
 As the findings of the qualitative study are based on semi-standardized interviews, they are limited to the 58 interviewees’ perspectives.
 Practical implications
 The identification of concrete methods of money laundering and terrorism financing aims to provide compliance officers, law enforcement agencies and legislators with valuable insight into criminal activity.
 Originality/value
 While the existing literature focuses on organizations fighting money laundering and the financing of terrorism, this study instead describes how criminals avoid detection by taking into account prevention and criminal perspectives.

  • The viability of international anti-criminal finance frameworks. The effect of mass refugee migration and the growth of the informal financial sector

    Purpose
 The purpose of this paper is to draw attention to the effect of the growing informal financial sector (IFS) on the effectiveness of anti-criminal finance laws. Specifically, the growth of the IFS has been brought on by the unprecedented rise in refugee and migrant movement around the world. This paper will focus on how refugee smuggling in the Eastern Mediterranean and Western Balkan region - and the consequent rise of the IFS - has affected the suitability of apply anti-money laundering and financial action task force frameworks in these countries.
 Design/methodology/approach
 It assesses the effectiveness of national and international legal documents on anti-criminal finance. It also uses data sets and analyses secondary and primary sources to estimate the size and importance of the IFS.
 Findings
 The exponential and rapid growth of the IFS has undermined efforts to prevent the financing of trafficking, terrorism, corruption and money-laundering. The present legal devices to address criminal finance has been wholly inadequate and counter-productive.
 Research limitations/implications
 There are limited reliable or accurate data available on the IFS, how much money goes through it or how important it is to criminal activities such as money laundering or terrorist finance. Without field-research, this study remains exploratory.
 Practical implications
 The growth of the IFS and migratory movement is a complex dilemma that must be accounted for when seeking to truly improve anti-criminal finance laws, especially in developing and transition countries.
 Originality/value
 This paper demonstrates the importance of considering the IFS and migratory and refugee movements in creating legal instruments to combat financial crime. It also suggests a direction for future research.

  • Evaluating cryptocurrency laundering as a complex socio-technical system. A systematic literature review

    Purpose
 The purpose of this paper is to present the findings from a literature review, which aimed to identify previous studies evaluating cryptolaundering from a systems thinking perspective. The aim of this paper is to first confirm that cryptolaundering systems can indeed be defined as complex socio-technical systems and second to present the findings from a systematic review of the literature to determine the extent to which previous research has adopted a systems thinking perspective.
 Design/methodology/approach
 The study involved a SLR of studies published in the peer-reviewed literature between 2009 and 2018. Rasmussen’s risk management framework (Rasmussen, 1997) was used to evaluate the extent to which a systems thinking perspective had been adopted.
 Findings
 The cryptolaundering process is considered to be a complex socio-technical system. The review demonstrates that no previous studies have defined cryptolaundering as a complex socio-technical system or used systems thinking framework approach to evaluate how criminals, regulatory bodies or law enforcement entities understand processes and assess risk within cryptolaundering systems. It is argued that using such an approach to the cryptolaundering process would likely improve assessing criminal risk analyses of cryptolaundering and assist law enforcement and regulatory bodies with understanding risk management during the laundering of cryptocurrencies.
 Originality/value
 Future assessments of cryptolaundering using socio-technical system analytical processes may afford law enforcement and regulatory bodies the opportunity to improve intervention techniques and identify gaps in regulations and enforcement.

  • The viability of recent enforcement mechanism to combat money laundering and financial terrorism (AML/CFT) in Nigeria. An overview

    Purpose
 This paper aims to evaluate the recent steps and enforcement mechanisms employed in Nigeria to combat money laundering and terrorism financing to give a clear and deeper insight to the potential that it portends and locate its workability by combing through various policies that are adapted to reinforce the existing anti-money laundering/combating financing terrorism (AML/CFT) legal and regulatory framework in Nigeria. The paper, therefore, provides a comprehensive assessment of these measures to exhume necessary reinforcement elements required to achieve the desired result by exploring developments from other jurisdictions that have surpassed the country in the AML/CFT crusade.
 Design/methodology/approach
 This study adopted qualitative research methodology. It is structured in such a way that mixed qualitative methodology approach as a research strategy is employed. This is achieved by putting into use the combination of doctrinal and non-doctrinal research methods. Descriptive, interpretative and content analysis methods are used to analyse various AML/CFT government policies along with the existing AML/CFT laws. Judicial pronouncements, various scholarly opinions, along with the anti-money law (AML/CFT) within the Nigeria context are analysed in line with the 40 “Recommendations” of the Financial Action Task Force which depicts the acceptable legislative and regulatory precedent and an international standard to measure the adequacy or otherwise of any national or local laws on money laundering.
 Findings
 Factors that were militating against the effectiveness and positive performance of Nigeria government to combat money laundering-related matters were identified. A clear-cut amendment to the existing provisions of law that will address the issue is suggested to enhance the effectiveness and combat other similar challenges that are likely to come out of these policies, otherwise more problems would be created than could be solved.
 Originality/value
 This paper exposes deficiencies in the present mechanism adopted to combat money laundering in Nigeria and proffers necessary antidote to facilitate the effectiveness of the legislation. It provides necessary information that could facilitate amendments and new legislation(s) to curb the defects by the lawmakers and could serve as a veritable source of information to law students, legal practitioners and academia.

Featured documents