Anti-money laundering and counter-terrorist financing threats posed by mobile money

Author:James Whisker, Mark Eshwar Lokanan
Position:Northumbria University, Newcastle, UK
Pages:158-172
SUMMARY

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... (see full summary)

 
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Anti-money laundering and
counter-terrorist nancing threats
posed by mobile money
James Whisker
Northumbria University, Newcastle, UK, and
Mark Eshwar Lokanan
Royal Roads University Faculty of Management, Victoria, Canada
Abstract
Purpose The purpose of this paperis to explore the various characteristics of mobilemoney transactions
and the threatsthey present to anti-money laundering (AML) and counter terroristnancing regimes.
Design/methodology/approach A thorough literature review was conducted on mobile money
transactions and the associated money-laundering and terrorist nancing threats. Four key themes were
identiedin relations to the three stages of moneylaundering and effective law enforcement.
Findings The ndings indicatethat as money laundering and terrorist nancing transactions continueto
gravitate towards the weaknesses in the nancial system, mobile money provides yet another avenue for
criminalsto exploit. Risk factors associated with anonymity, elusiveness,rapidity and lack of oversights were
all integral considerationsin building an effective AML regime. The use of cashis considered a higher threat
than mobilemoney 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. Unlessthere is a unied concentration to heighten global awareness, the imposingthreat
of mobile moneyis set to increase at a rapid rate if appropriate actions arenot taken.
Originality/value The ndings from this study can be usedto gain greater insights on mobile money
transactionsand raise further awareness of the ever-increasingthreat to global nancial integrity.
Keywords Anti money laundering legislation, Financial service sector, Mobile money,
Money laundering activities, Terrorist nancing
Paper type Research paper
Introduction
There has been an increase use of mobile money involving retail users and nancial
institutions (Scobey-Thal, 2015). In 2015, the GSMA (an organisation that represents the
interests of mobile operators worldwide)states that there are more than 411 million mobile
money accounts around theworld. Furthermore, mobile money accounts have penetrated 85
per cent of countries, often wherea majority of the population do not have access to a formal
nancial institution GSMA, 2015.Cisco Systems Inc. (2017) estimates that by 2021, more
people will have access to mobile phones than therewill be access to running water. Given
the enormous growth in the mobile market, it is internationally recognised that this
penetration should be capitalised on in the form of nancial inclusion. However, with such
benets, come new challenges and the success of mobile money depends on the industrys
ability to adjust to a rapidlychanging nancial landscape GSMA, 2015.
A combination of exponential mobile growth and emerging nancial services creates
new opportunities for criminalsto exploit vulnerabilities in the system. Although there have
JMLC
22,1
158
Journalof Money Laundering
Control
Vol.22 No. 1, 2019
pp. 158-172
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-10-2017-0061
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm

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