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The regulatory dialectic and innovation in service-based money laundering

Roy Majed Sinno (Department of Finance, American University of Sharjah, Sharjah, United Arab Emirates)
Graham Baldock (School of Criminology and Criminal Justice, University of Portsmouth, Portsmouth, UK)
Kimberly Gleason (Department of Finance, American University of Sharjah, Sharjah, United Arab Emirates)
Zaher Zaher (Department of Finance, American University of Sharjah, Sharjah, United Arab Emirates)

Journal of Financial Crime

ISSN: 1359-0790

Article publication date: 24 September 2024

39

Abstract

Purpose

The purpose of this paper is to describe the progression from trade-based money laundering to service-based money laundering using the Regulatory Dialectic Theory with an explanation for the success of this progression arising from Agency Theory.

Design/methodology/approach

The authors provide a literature review regarding agency theory and the regulatory dialectic as the framework to examine service-based money laundering using three documented case studies. Using the caselet approach, this paper demonstrates that innovation in financial crime typologies is ongoing.

Findings

The short cases in this paper illustrate the factors related to the regulatory dialectic theory that have yielded innovation in service-based money laundering.

Research limitations/implications

This paper examines only three recent SBML innovations.

Practical implications

Service-based money laundering represents an incremental advancement in money laundering beyond trade-based money laundering, in part supported by agency conflicts between financial intermediaries and stakeholders.

Social implications

Managers and regulators should take into account that typologies will change as predicted by the regulatory dialectic and that the regulatory response can be burdensome to financial sector entities. This paper also provides recommendations for managers and regulators.

Originality/value

To the best of the authors’ knowledge, this paper is the first to uncover new innovations in SBML in a high-risk geographic region.

Keywords

Acknowledgements

Author's Contribution: All authors contributed to the conceptualization of the research idea and the writing of the paper.

Funding: The authors have no relevant financial or nonfinancial interests to disclose.

Conflicts of interest: The authors have no conflicts of interest to disclose.

Citation

Sinno, R.M., Baldock, G., Gleason, K. and Zaher, Z. (2024), "The regulatory dialectic and innovation in service-based money laundering", Journal of Financial Crime, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFC-03-2024-0110

Publisher

:

Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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