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Money laundering and sanctions enforcement: large rewards, leniency and witness protection for whistleblowers

Theo Nyreröd (Brunel Law School, Brunel University, Uxbridge, UK)
Stelios Andreadakis (Brunel Law School, Brunel University, Uxbridge, UK)
Giancarlo Spagnolo (Department of Economics, Stockholm University, Stockholm, Sweden, and Stockholm Institute of Transition Economics, Stockholm, Sweden)

Journal of Money Laundering Control

ISSN: 1368-5201

Article publication date: 11 July 2022

Issue publication date: 22 November 2023

370

Abstract

Purpose

With sanctions becoming an increasingly important tool in ostracising autocratic regimes from western markets, the need for effective enforcement of sanctions and anti-money laundering (AML) is increasing, and the global AML regime will be the backbone to detecting evasion of sanctions. This regime, however, has been widely criticised as ineffective. This paper aims to discuss issues with the current sanctions/AML regime and propose a reward scheme for whistleblowers to enable asset seizures that is not reliant on its effectiveness.

Design/methodology/approach

This paper reviews weaknesses in the global AML regime, provide suggestions on how to design whistleblower reward programmes, based on agency experience and empirical evidence, as well as elaborate on how to use such programmes in the AML context.

Findings

This study concludes that for reward programmes to be effective in the context of AML and sanctions enforcement, they need to include witness protection and leniency for money launderers, though not for those convicted of a criminal offence associated with the predicate crime. Moreover, rewards should be mandatory and scale with the amount of money seized or confiscated, and the cap on monetary rewards should be higher than it is under the Kleptocracy Asset Recovery Rewards Programme in the USA.

Originality/value

In contrast to how the USA went about implementing rewards in this area under the Kleptocracy Asset Recovery Rewards Programme, this study argues that these programmes should be designed differently. This study also provides novel advice to governments on different design dimensions in the AML context and a model with three crucial pillars along with other design dimensions that should be considered.

Keywords

Citation

Nyreröd, T., Andreadakis, S. and Spagnolo, G. (2023), "Money laundering and sanctions enforcement: large rewards, leniency and witness protection for whistleblowers", Journal of Money Laundering Control, Vol. 26 No. 5, pp. 912-925. https://doi.org/10.1108/JMLC-05-2022-0068

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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