TBML suspicious activity reports – a financial intelligence unit perspective
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 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 intelligence staff from financial intelligence units (FIUs) and some external financial intelligence agencies. The aim was to determine which areas of banking SARs needed to be improved or 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 beneficial ownership information and politically exposed persons data. The findings 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 limitation was 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 specific country recommendations. Similar research also needs to be conducted on other forms of ML activity. The research identified the need for more information on beneficial ownership information; however, other work needs to 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 beneficial ownership and politically exposed persons data. This needs to be incorporated into a specific 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 and can be linked into this work.
Originality/value
The paper used original data collected by the researcher from 49 FIU and financial intelligence staff across the globe. The timely presentation of the results and the nature of the sample means that this is relevant and useful data to be presented to the banking sector.
Keywords
Acknowledgements
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 Foundation’s “2020 Banking Vision – building banks of the future”, and he thanks her for the continued support and motivation both to himself and other students who benefit 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.
Citation
Naheem, M.A. (2018), "TBML suspicious activity reports – a financial intelligence unit perspective", Journal of Financial Crime, Vol. 25 No. 3, pp. 721-733. https://doi.org/10.1108/JFC-10-2016-0064
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited