The purpose of this paper is to provide a comprehensive theoretical framework that can be applied to the application of anti-money laundering (AML) regulation within the banking sector.
The paper is linked to a PhD study to be published in Winter 2015/Spring 2016 that looks at trade-based money laundering and risk assessment using an agent–principal relationship to explain the underlying relationships affected by regulation in a ML context.
The paper finds that imposing regulation and assuming that the banking sector is simply an arm of law enforcement is not an effective approach and could actually contribute toward developing ML schemes that are too complex to be easily detected.
The paper has implications for the banking, regulatory and law enforcement areas involved in ML and its detection.
The paper offers originality in providing a comprehensive multi-agency framework that is cognisant of all factors affected by AML regulation. It extends beyond existing work that has offered agency insights into various sectors of AML and ML partners.
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. The author also thanks Professor Muhammad Jum’ah (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. Please note that this paper was composed and submitted for review to this journal in November 2015 – All the content was current at that point in time. The banking, compliance and regulation industries alongside governmental policy making have evolved greatly since November 2015, with new material from academic research emerging. These points need to be taken into consideration when reading this paper.
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