Is tackling Trade Based Money Laundering (TBML) through stricter reporting regulation the most effective response?
Abstract
Purpose
This paper (written in August 2015) aims to discuss the regulatory approach to detecting and preventing trade-based money laundering (TBML) by using the example of Financial Crimes Enforcement Network (FinCEN) and its use of geographic targeting orders.
Design/methodology/approach
The paper uses both theoretical and empirical reports on TBML to explore whether increased regulation will ultimately achieve the ends it claims to offer.
Findings
The main findings from the analysis are that increased regulation has been found to have a negative impact on improving TBML detection. There is evidence that it causes an over-defensive response from banks that leads to a decrease in useful information to financial intelligence units.
Research limitations/implications
The research topic is very new and an emerging topic; therefore, analysis papers and other academic writing on this topic are limited.
Practical implications
This paper has implications for both the regulatory and the banking/financial service sectors.
Originality/value
The originality of this paper is the deeper analysis of a specific TBML case, and the focus is on both the theoretical and empirical implications of the approach being used.
Keywords
Acknowledgements
Please note that this paper was composed and submitted for review to this journal in August 2015 – 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 (August 2015). 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 Jumáh (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), "Is tackling Trade Based Money Laundering (TBML) through stricter reporting regulation the most effective response?", Journal of Money Laundering Control, Vol. 21 No. 3, pp. 345-357. https://doi.org/10.1108/JMLC-08-2015-0034
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited