TBML suspicious activity reports – a financial intelligence unit perspective

Author:Mohammed Ahmad Naheem
Position:Mayfair Compliance, Frankfurt, Germany
Pages:721-733
SUMMARY

Purpose The purpose of this paper is to share research data from the Financial Intelligence sector on trade-based money laundering (TBML), as a way to better inform banking risk assessment and the submission of suspicious activity reports (SARs). Design/methodology/approach The research data formed part of a bigger project on TBML banking risk assessment for improving the detection of TBML activity. This paper analysed the data from an online survey carried out among the financial... (see full summary)

 
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TBML suspicious activity
reports anancial intelligence
unit perspective
Mohammed Ahmad Naheem
Mayfair Compliance, Frankfurt, Germany
Abstract
Purpose The purpose of this paper is to share research data from the Financial Intelligence sector on
trade-based money laundering (TBML), as a way to better inform banking risk assessment and the
submissionof suspicious activity reports (SARs).
Design/methodology/approach The research data formed part of a bigger project on TBML banking
risk assessment for improving the detectionof TBML activity. This paper analysed the data from an online
survey carried out among the nancial intelligence staff from nancial intelligence units (FIUs) and some
external nancialintelligence agencies. The aim was to determine which areasof banking SARs needed to be
improvedor enhanced to support FIU investigations.
Findings The research found that FIUs do use the data supplied to them, in particular the SARs. The
research also found that more data would be appreciated from banks especially in relation to benecial
ownership information and politically exposed persons data. The ndings highlighted that contact
between banks and FIUs was limited and restricted to a couple of key individuals, whereas the increased
requirement for intelligence and more data would suggest that this relationship needs to be expanded and
strengthened.
Research limitations/implications The main limitationwas the restricted scope of the survey (only
focussed on TBML) and was broad in depth, and perhaps a local FIU survey would be useful to look at
specic countryrecommendations. Similar research also needsto be conducted on other forms of ML activity.
The research identied the need for more information on benecial ownership information; however, other
work needsto be done on how exactly banks can access this data.
Practical implications The main outcome from the research was the need for SARs to contain more
detailed information on benecial ownership and politically exposed persons data. This needs to be
incorporated into a specic risk assessment tool for TBML that considers not only the client but also
relevant business partners and silent partners/shell companies used by the client. This research is part
of a bigger research project that has developed a risk matrix tool for TBML andcan be linked into this
work.
Please note that this paper was composed and submitted for review to this journal in September
2016 a time at which the author was working on his second doctorate level research project
titled Trade Based Money Laundering: Exploring the Implications for International Banks.All
the content within this paper was current at the time of submission (September 2016). The
banking and regulation industries have evolved since then, with new material from academic
research also emerging. These points need to be taken into consideration when reading this
paper.
The author acknowledges being the recipient of a research grant awarded by Princess Ālae as
part of Seven Foundations2020 Banking Vision building banks of the future,andhethanks
her for the continued support and motivation both to himself and other students who benet
through her generosity (www.sevenfoundation.ch).
The author also thanks Professor Muhammad Jumàh (a leading economist of this era based in
Damascus) who has continued to provide valuable input both through his teaching of the science
of economics and for his continued guidance.
TBML
suspicious
activity
reports
721
Journalof Financial Crime
Vol.25 No. 3, 2018
pp. 721-733
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-10-2016-0064
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm

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