Money laundering detection system (MLD) (a complementary system of Rastin banking)

Author:Bijan Bidabad
Position:Research Department, Bank Melli Iran, Tehran, Iran
Pages:354-366
SUMMARY

Purpose This paper aims to define a new system for detecting money-laundering activities by comparing tax payments (especially value-added tax) data to banking transactions data. Design/methodology/approach A money laundering detection (MLD) system provides the necessary bases for detecting deception and fraud. Though MLD is a complementary system of the Rastin Banking system, it ... (see full summary)

 
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Money laundering detection
system (MLD) (a complementary
system of Rastin banking)
Bijan Bidabad
Research Department, Bank Melli Iran, Tehran, Iran
Abstract
Purpose This paper aims to denea new system for detecting money-launderingactivities by comparing
tax payments(especially value-added tax) data to banking transactions data.
Design/methodology/approach A money laundering detection(MLD) system provides the necessary
bases for detecting deception and fraud. Though MLD is a complementary system of the Rastin Banking
system, itcan also be installed and executed separately.
Findings The underground economic activities can be detected and traced by comparing banking
information and transaction information in MLD system. It needs to force the direct transactors or other
related forms of transaction to perform theirmoney operations through the banks. In the next step, the tax
information of transactors(in a chain of transactions) can be compared with them, and the incompatibilityof
the two setsof data will explore money-launderingoperations.
Research limitations/implications This system is novel and needs to be more elaborateto remove
furtherpractical problems and specic cases.
Practical implications MLD system provides necessary protection for those who perform legal
economicactivities by detecting nancial criminals.
Social implications Money laundering harms individual and public rights as well as economies.
Financial crimes, tax evasion,smuggling, conspiracy, embezzlement and various other offencesare included
in the general denition of money laundering, so detecting them will lead to important economic
improvementsin the society as well as international community.
Originality/value MLD system provides structural and electronicbases for computerized tax data and
banking datacomparison.
Keywords Money laundering, Value added tax, Rastin banking, Transaction, Banking information,
Tax information
Paper type Research paper
Introduction
As societies have developed, so also have law-evasion techniques. Therefore, to help
necessitate the public to obey the law, new updated technological procedures should be
applied and be extended to the sovereignty of law. The Rastin Banking system was
designed based on the Sharia laws to eliminate riba and to institutionalize justice, fairness
and Islamic ethics into banking and nancialactivities. The virtues of Rastin Banking are so
extended in the elds of banking, nancial, economic, ethical, social and international
activities that it canbe used as a base for improving economic structure of the country[1].
Value-added tax (VAT) system can be used for money laundering detection (MLD)
effectively. If fully conducted, VAT can almost cover and superviseall signicant nancial
transactions in the economy and prevent tax evasion.VAT is an auto-detective tax system
and regards tax-payersas being tax-information-collectorsas well, regarding the fact
that tax-payers are boundto submit received purchase-invoices (from the sellers involved)to
JMLC
20,4
354
Journalof Money Laundering
Control
Vol.20 No. 4, 2017
pp. 354-366
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-04-2016-0016
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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