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1 – 6 of 6This 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…
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.
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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…
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.
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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…
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.
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Howard Chitimira and Oyesola Animashaun
Banditry and terrorism constitute serious security risks in Nigeria. This follows the fact that Nigeria is rated as one of the leading states in the world that is plagued by…
Abstract
Purpose
Banditry and terrorism constitute serious security risks in Nigeria. This follows the fact that Nigeria is rated as one of the leading states in the world that is plagued by terrorism. Terrorists and bandits usually embark on predicate crimes such as kidnapping, smuggling, narcotics trade, and similar trades to finance their terrorist enterprises in Nigeria. The funds realized by criminals from nefarious sources such as sales of narcotics and ransom from kidnapping are usually laundered to make their criminal enterprises self-sustaining. Thus, all “dirty” money is laundered so as not to attract the attention of law enforcement agents. The funds realized through receipt of ransom from kidnapping, smuggling or funds from sponsors are laundered through channels such as bureau de change, which are difficult to monitor by the Nigerian authorities due, in part, to flaws and loopholes in the current anti-money laundering and anti-terrorist laws. This paper aims to adopt a doctrinal and qualitative desktop research methodology. In this regard, the current anti-money laundering and anti-terrorist laws are discussed to explore possible measures that could be adopted to remedy the flaws and loopholes in such laws and combat money laundering and financing of terrorism in Nigeria.
Design/methodology/approach
The article analyses the regulation and combating of money laundering and terrorist financing activities in Nigeria. In this regard, a doctrinal and qualitative research method is used to explore the flaws in the Nigerian anti-money laundering laws so as to recommend possible remedies in respect thereof.
Findings
It is hoped that policymakers and other relevant persons will use the recommendations provided in this article to enhance the curbing of money laundering and terrorist financing activities in Nigeria.
Research limitations/implications
The article is not based on empirical research.
Practical implications
This study is important and vital to all policymakers, lawyers, law students and regulatory bodies in Nigeria and other countries globally.
Social implications
The study seeks to curb money laundering and terrorist financing activities in Nigeria.
Originality/value
The study is based on original research which is focused on the regulation and combating of money laundering and terrorist financing activities in Nigeria.
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Vladlena Benson, Umut Turksen and Bogdan Adamyk
This paper aims to focus on the need for an enhanced anti-money laundering (AML) regulation for decentralised finance (DeFi) to protect the integrity of global financial systems…
Abstract
Purpose
This paper aims to focus on the need for an enhanced anti-money laundering (AML) regulation for decentralised finance (DeFi) to protect the integrity of global financial systems against illicit activities. Research highlights the requirement for a robust regulatory strategy for the fast-paced DeFi evolvement.
Design/methodology/approach
This study used doctrinal legal research by analysing legislation, which involved creating use cases to illustrate different aspects of potential illicit activities via the DeFi ecosystem. Various DeFi applications were assessed for the potential regulatory responses and outcomes.
Findings
This paper offers valuable insight into the regulatory challenges presented by DeFi. This study addresses the blind spots leveraged by criminals afforded by the DeFi’s decentralised nature. This paper offers a comprehensive examination of DeFi regulatory challenges based on use-case scenarios and provides recommendations for regulators on how to address them effectively.
Originality/value
This paper proposes measures for regulatory authorities to minimise money laundering risks through new channels such as decentralised exchanges, non-custodial wallets and cross-chain bridges. This study concludes with the future directions for DeFi regulation and AML compliance.
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Illegal wildlife trade (IWT) is a transnational organized crime that generates billions in criminal proceeds each year. Yet, it is not regarded by many countries as a serious…
Abstract
Purpose
Illegal wildlife trade (IWT) is a transnational organized crime that generates billions in criminal proceeds each year. Yet, it is not regarded by many countries as a serious crime. There is also no general consensus on its recognition as a predicate offence for money laundering. In this regard, banks are misused in different ways to facilitate financial flows linked to IWT. This paper aims to illustrate the importance of the banking sector in combating money laundering relating to IWT. It also aims to demonstrate the need for a general recognition of IWT as a predicate offence for money laundering.
Design/methodology/approach
This study investigates the implementation of money laundering controls by banks in the illegal-wildlife-trade context. As background to this investigation, it provides an overview of IWT, which is followed by an exploration of some of the general characteristics of the banking sector, before discussing the relevant Financial Action Task Force (FATF) recommendations.
Findings
This study finds that the banking sector is well-placed to combat money laundering relating to the IWT and is, by virtue of its international nature and strong focus on compliance, able to be effective in preventing the use of the proceeds of IWT as well as in identifying broader trafficking networks. Moreover, the banking sector is well-equipped to develop appropriate platforms to facilitate the swift, easy and effective sharing of financial intelligence between banks at the local, regional and especially international level.
Research limitations/implications
This study draws on publicly available information on financial flows relating to IWT. Little data and research are available on the financial flows and consequently the money laundering techniques used in cases suspected of IWT.
Originality/value
There has been little scholarly research on the relationship between money laundering and the IWT as well as the financial flows of IWT in general. This study highlights some of the money laundering techniques used in relation to IWT by drawing on the works of various international organizations, including the FATF.
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