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Article
Publication date: 17 November 2023

Durgesh Pandey

This paper aims to analyse the Financial Intelligence Units (FIUs) of Canada, Australia, The Netherlands and India, focussing on key internal and external processes, such as the…

Abstract

Purpose

This paper aims to analyse the Financial Intelligence Units (FIUs) of Canada, Australia, The Netherlands and India, focussing on key internal and external processes, such as the exchange of information, operations and compliance with Financial Action Task Force (FATF) recommendations. The paper relies on secondary sources to compare and assess the practices and strategies employed by FIUs within these jurisdictions.

Design/methodology/approach

The paper relies on secondary sources to compare and assess the practices and strategies used by FIUs within these jurisdictions.

Findings

The ability to combat money laundering and the financing of terrorism (AML/CFT) in countries is influenced by several internal and external factors, including the efficiency of their FIUs’ and compliance with FATF recommendations. The analysis of FIUs across the countries demonstrates a raft of multifaceted challenges and concerns. Yet, when it comes to compliance with FATF’s recommendations, shared concerns emerge, hinting at the complex interplay between country-specific operations and global compliance standards. The paper recommends enhancements to the FIUs’ operational efficiency and overall effectiveness in combating financial crimes.

Research limitations/implications

The paper’s findings are limited to openly available data (such as annual reports and internet sources) for the respective countries. The paper relies on the transparency of FIUs through public media, focusing on comparing and analysing the FIUs of only four specific countries, which limits the generalisations of the findings.

Practical implications

This paper is significant for policymakers and FIU authorities, as they strive to improve the effectiveness of their units and assess their performance in alignment with international standards. The comparative analysis of the FIUs of India, Australia, Canada and The Netherlands provides valuable insights and recommendations that can inform policymakers and operational strategies towards enhancing how FIUs function globally.

Originality/value

This paper offers a unique comparative analysis of the FIUs of India, Australia, Canada and The Netherlands. Its findings have practical implications for policymakers and FIU authorities towards enhancing performance against international AML/CFT standards and promoting global cooperation.

Details

Journal of Money Laundering Control, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 17 November 2023

Bello Umar

This study aims to determine how integrity influences money laundering combatting.

Abstract

Purpose

This study aims to determine how integrity influences money laundering combatting.

Design/methodology/approach

A qualitative approach using methodological triangulation was used to answer the question to describe and understand the phenomena from the participants’ perspective. Data was gathered with a semi-structured questionnaire, observation and field notes.

Findings

Analysis revealed that 93% of law enforcement investigators believe integrity is required to combat money laundering. They also observed that integrity is needed for the political environment, institutions and their personnel or officers.

Practical implications

There is a need for integrity in the economy’s public and private sectors to combat money laundering effectively. Integrity must be present in the political environment, institutions and personnel. Hence, a recommendation is to appoint chief integrity officers in all stakeholder organisations.

Originality/value

This study is among the few research that covers the area of integrity and its influence on combatting money laundering from law enforcement investigators’ perspective.

Details

Journal of Money Laundering Control, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 4 July 2023

Mete Feridun

The purpose of this article is to make a contribution to the existing knowledge by using the unique cross-jurisdiction data drawn from the FCA’s REP-CRIM submissions to explore…

Abstract

Purpose

The purpose of this article is to make a contribution to the existing knowledge by using the unique cross-jurisdiction data drawn from the FCA’s REP-CRIM submissions to explore dynamics behind firms’ perceptions on financial crime. Capturing firm’s sentiment is notoriously challenging, and any relevant regulatory data is usually not available in the public domain. A recent exception is the UK Financial Conduct Authority’s (FCA’s) financial crime data return (REP-CRIM) submissions which include the cross-country regulatory data on the UK financial institutions’ perceptions of jurisdiction risk. Despite a broad literature with respect to financial crime, there exists an important gap in the existing knowledge with respect to factors that are associated with the perceptions of firms with respect to jurisdiction risk, which this article aims to close.

Design/methodology/approach

Using cross-country regulatory data on the UK financial institutions’ perceptions of jurisdiction risk, this study empirically determines that perceptions of jurisdiction risk is significantly and positively associated with anti-money laundering and countering the financing of terrorism (AML/CFT) framework, as well as with tax burden on business and institutional and legal risk in the case of 165 jurisdictions.

Findings

The findings lend support to the proposition that unsystematic efforts and too much publicity may ascertain the high-risk image of a jurisdiction, deterring cross-border business. Policy implications that emerge from the study also add to the case for strengthening institutional and legal frameworks, as well as relieving the tax burden on doing business.

Research limitations/implications

Findings of the present study should be interpreted with caution, as the dependent variable used in the present study reflects UK firms’ perceptions of jurisdiction risk, which may depend on various factors such as different risk appetites and the countries in which firms carry out business, and not necessarily the actual level of risks based on financial crime statistics. For example, a jurisdiction which may indeed be considered high risk, would not necessarily be ranking high on the FCA’s list of UK firms’ jurisdiction risk perceptions due to few firms operating in that particular country. As a result, the list could differ from the Financial Action Task Force’s black and grey lists. Findings based on the regulatory data on the UK financial institutions’ perceptions of jurisdiction risk should be considered preliminary in nature, given that they are based on a single year cross sectional data. As global and country-level AML/CFT efforts continue to intensify and as more regulatory data becomes publicly available, it would be imperative to bring further empirical evidence to bear on the question of whether financial crime perceptions are likely to be more pronounced for jurisdictions where AML/CFT efforts are more intensified. Likewise, from a policy standpoint, it would be equally important to explore further the role that institutional and legal risk, as well as tax burden on businesses, play in shaping firms’ perceptions of jurisdiction risk.

Practical implications

Findings lend support to the proposition that unsystematic efforts and too much publicity may ascertain the high-risk image of a jurisdiction, deterring cross-border business. Therefore, rather than waiting for more data to be made available by other financial regulators, which could lead to a more conclusive evidence in the future, on balance, the findings of this study add to the case for carefully designing and systematically implementing AML/CFT measures in a less publicized manner. Findings lend support to the theoretical postulation that disorderly efforts and undue publicity regarding AML/CFT efforts serve to ascertain the high-risk image of a jurisdiction, which could deter cross-border business and could be detrimental to how firms undertake due diligence. They also suggest that disorderly implementation of AML/CFT measures may hinder access to formal financial service and jeopardize authorities’ ability to trace the movement of funds, which may also add to negative perceptions of jurisdiction risk.

Social implications

Findings are in line with the theoretical expectations that perceptions of jurisdiction risk would be expected to be higher in countries with inadequate disclosure rules, lax regulation and opacity jurisdiction. Likewise, results are aligned with the expectations that tax burden on business would be expected to be in a positive relationship with jurisdiction risk, as it would increase the likelihood of tax evasion, which incentivizes financial crime. Therefore, policy implications that emerge from the study also add to the case for strengthening institutional and legal frameworks and relieving the tax burden on doing business as part of efforts to improve the international image of jurisdictions with respect to financial crime risks.

Originality/value

Using the cross-country regulatory data on the UK financial institutions’ perceptions of jurisdiction risk, this study has empirically determined that perceptions of jurisdiction risk is significantly and positively associated with AML/CFT framework, as well as with tax burden on business and institutional and legal risk. These findings have implications from a policy standpoint.

Details

Journal of Money Laundering Control, vol. 27 no. 3
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 3 November 2023

Shama Urooj

This study aims to examine the effect of Financial Action Task Force (FATF) compliance on the degree of financial inclusion (FI) across 174 economies during the period from 2011…

Abstract

Purpose

This study aims to examine the effect of Financial Action Task Force (FATF) compliance on the degree of financial inclusion (FI) across 174 economies during the period from 2011 to 2021, including developed and developing countries.

Design/methodology/approach

This paper uses panel dynamic threshold regression to examine whether there is a threshold effect that exists in FATF compliance.

Findings

The findings show that FATF regulations enhance financial inclusiveness all over the world, but at the same time, FATF regulations regarding AML/CFT implications impose a high cost on financial institutions above the threshold of FATF compliance.

Research limitations/implications

This study’s findings indicate that nations should undertake deliberate struggle to reduce the prevalence of money laundering (ML) and terrorism financing by putting in place effective FATF regulatory frameworks to support FI.

Originality/value

This study’s findings indicate that nations should undertake deliberate struggle to reduce the prevalence of ML and terrorism financing by putting in place effective FATF regulatory frameworks to support FI. Regulators must, however, guarantee that the process is cost-effective and efficient.

Details

Journal of Money Laundering Control, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1368-5201

Keywords

Open Access
Article
Publication date: 19 May 2023

Georgios Pavlidis

This paper aims to critically examine the digital transformation of anti-money laundering (AML) and countering the financing of terrorism (CFT) in light of the Financial Action…

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Abstract

Purpose

This paper aims to critically examine the digital transformation of anti-money laundering (AML) and countering the financing of terrorism (CFT) in light of the Financial Action Task Force (FATF) San Jose principles, the Organisation for Economic Co-operation and Development (OECD) principles for artificial intelligence (AI) and the proposed European Union (EU) Artificial Intelligence Act. The authors argue that AI tools can revolutionize AML/CFT and asset recovery, but there is a need to strike a balance between optimizing AML efficiency and safeguarding fundamental rights.

Design/methodology/approach

This paper draws on reports, legislation, legal scholarships and other open-source data on the digital transformation of AML/CFT, particularly the deployment of AI in this context.

Findings

A new regulatory framework with robust safeguards is necessary to mitigate the risks associated with the use of new technologies in the AML context.

Originality/value

This study is one of the first to examine the use of AI in the AML/CFT context in light of the FATF San Jose principles, the OECD AI principles and the proposed EU AI Act.

Details

Journal of Money Laundering Control, vol. 26 no. 7
Type: Research Article
ISSN: 1368-5201

Keywords

Open Access
Article
Publication date: 19 May 2023

Georgios Pavlidis

This paper aims to critically examine the European Union’s legislative initiative to establish an Anti-Money Laundering Authority (AMLA), which will introduce union-level…

4678

Abstract

Purpose

This paper aims to critically examine the European Union’s legislative initiative to establish an Anti-Money Laundering Authority (AMLA), which will introduce union-level supervision and provide support to national supervisors in the field of anti-money laundering and countering the financing of terrorism (AML/CFT), as well as to financial intelligence units (FIUs) in European Union (EU) member states. The paper discusses why this initiative was deemed necessary, which are the key objectives, rules and principles of AMLA and which challenges and opportunities will emerge as AMLA becomes operational.

Design/methodology/approach

This paper draws on reports, legislation, legal scholarship and other open-source data on the EU legislative initiative to establish a new AMLA.

Findings

AMLA will provide a comprehensive framework for EU-level AML/CFT supervision and for cooperation among FIUs. If all organisational challenges are properly addressed, the new authority will significantly enhance the EU’s ability to tackle money laundering and terrorism financing.

Originality/value

To the best of the author’s knowledge, this study is one of the first to examine the mission, governance and supervision mechanisms of the EU’s AMLA, as well as the challenges and opportunities associated with its functioning.

Open Access
Article
Publication date: 6 December 2022

Pieter Lagerwaard

In 2019, FIU-the Netherlands celebrated its 25th anniversary. This study takes the occasion to reflect on the role of the FIU in financial surveillance and to describe its core…

1950

Abstract

Purpose

In 2019, FIU-the Netherlands celebrated its 25th anniversary. This study takes the occasion to reflect on the role of the FIU in financial surveillance and to describe its core practices of collecting, analysing and disseminating financial intelligence.

Design/methodology/approach

Because FIU practices are often secret and its transaction data classified as state secrets, the FIU’s daily operational activities remain obscure. Drawing on interviews, public reports and an online training course, this study encircles secrecy and offers a fine-grained analysis of the FIU's core activities.

Findings

The article finds that the FIU plays a pivotal role in financial surveillance because it can operate at various intersections. An FIU operates at the intersection of finance and security, in between the public and private sector and at the national and international domain. This pivotal role makes the FIU indispensable in the surveillance of payment systems and spending behavior.

Social implications

The article poses that the desirability and effectiveness of financial surveillance has to date not received sufficient consideration, while it affects (the privacy of) anyone with a bank account. The article asks: is it ethically justifiable that transaction information is declared suspect, investigated, and shared nationally and internationally, without the individual or entity concerned officially being notified and legally named a suspect?

Originality/value

This case-study is not only relevant for the study of finance/security, AML/CFT and financial surveillance, but also to policy makers and the broader public who merit an understanding of how their financial behaviour is being surveilled.

Details

Journal of Money Laundering Control, vol. 26 no. 7
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 2 October 2023

Ambareen Beebeejaun and Bhavna Mahadew

Due to their particular nature, virtual assets (VA) are vulnerable to financial crimes such as money laundering and if the appropriate legal mechanisms are not established, this…

Abstract

Purpose

Due to their particular nature, virtual assets (VA) are vulnerable to financial crimes such as money laundering and if the appropriate legal mechanisms are not established, this may result in the financial collapse of various economies. To this effect, best practices and standards have been published by some international organisations such as the Financial Action Task Force and IMF which are now domesticated in the national laws of several countries. Therefore, the purpose of this study is to analyse the anti-money laundering (AML) legislative framework in the context of VA in three countries, namely, Mauritius, Japan and South Africa.

Design/methodology/approach

To achieve the research objective, the Mauritian AML laws in the context of VA were compared with the corresponding laws of some other countries, namely, Japan and South Africa. As such, a qualitative research method was adopted. In particular, the black letter approach was used to examine the relevant laws of these countries. A comparative analysis was conducted concerning the relevance of AML laws for each country when dealing with VA with the view of suggesting recommendations for Mauritian stakeholders to adopt to enhance the existing AML legal and regulatory framework.

Findings

The comparative study conducted has revealed that there are both similarities and divergences among the AML framework of the three countries further to which this research recommends that the Mauritian laws must be amended concerning the duration of information storage on VA, the definition of VA, advertisement by VA service providers and the electronic submission of annual reports. The Mauritian regulatory bodies also need to play a more active role in their joint collaboration to monitor suspicious VA transactions to combat money laundering.

Originality/value

At present, this study will be among the first academic writings on the efficiency of AML laws in the context of VA in Mauritius and also, because existing literature is quite scarce on assessing the adequacy of AML legislation in developing countries, this research aims at filling in the gap in literature. This study is carried out with the aim of combining a large amount of empirical, theoretical and factual information that can be of use to various stakeholders and not only to academics.

Details

Journal of Money Laundering Control, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 11 April 2023

Nasir Sultan, Norazida Mohamed, Jamaliah Said and Azroz Mohd

This study aims to explore the perception of the compliance officers of the Pakistani financial sector towards the placement of Pakistan on the grey list by the Financial Action…

Abstract

Purpose

This study aims to explore the perception of the compliance officers of the Pakistani financial sector towards the placement of Pakistan on the grey list by the Financial Action Task Force (FATF).

Design/methodology/approach

To achieve this objective, the study adopted a qualitative methodology and conducted semi-structured interviews with different financial institutes and their regulators.

Findings

The study found that role of the FATF is lopsided and politically motivated towards Pakistan. Although Pakistan has loopholes like many other countries, its treatment in the FATF is irregular. Therefore, the decision of the greylisting is not purely based on technical compliance, but political preferences are the determinative aspect.

Originality/value

This study provides a holistic overview of the FATF greylisting mechanism and how Pakistan is treated. This might provide both the FATF and Pakistan to revisit their policies.

Details

Journal of Money Laundering Control, vol. 27 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 25 May 2023

Abhiyan Upadhyay

The purpose of this paper is to understand the financial opaqueness established through offshore businesses and financial secrecy through the requirements of information…

Abstract

Purpose

The purpose of this paper is to understand the financial opaqueness established through offshore businesses and financial secrecy through the requirements of information exchanges, and their deadly combination for facilitating money-laundering activities and tax evasion. It also puts into light some key recommendations for a country like Nepal that has been struggling to put adequate efforts into understanding financial opacity and secrecy.

Design/methodology/approach

This paper navigates through global issues on layering through opaque corporate structures, and mechanisms required for information exchange so as to figure out solutions and challenges to address them by developing countries like Nepal, with specific actions pertaining to Nepal.

Findings

Understanding financial opacity and secrecy is a prerequisite to tackling financial crimes. While focusing on global solutions and inherent challenges regarding such issues, concerted efforts are required to capacitate a country on contextual matters.

Originality/value

This work is an original work with an analysis of a global issue in an interconnected world with solutions catered to the local contexts of Nepal.

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