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Article
Publication date: 2 July 2019

Reeda Al Sabri Halawi

The purpose of this study is to analyze the Lebanese anti-money laundering (AML) paradigm in light of banking secrecy law. The phenomenon of money laundering that was…

Abstract

Purpose

The purpose of this study is to analyze the Lebanese anti-money laundering (AML) paradigm in light of banking secrecy law. The phenomenon of money laundering that was first associated with the crime of drug trafficking developed a lot since the early 1900s to become a major threat to the world’s economy today. The fight against this ever-growing crime, with multiple sources and origins, has been the centre of attention of the biggest countries in the world. Thus, the need for international AML standards was required, by which countries must abide, to ensure an effective fight against this crime. The issue of banking secrecy regulations was important to study along with the AML framework as the principles of the first totally contradict those of the latter.

Design/methodology/approach

The scope of this study first entails a qualitative technique. It will start with analysing existing legal provisions on money laundering and studying the AML framework internationally and in accordance with the Lebanese banking system. For that, websites such as GoogleScholar and HeinOnline were used to collect many scholars articles. Additionally, Laws, Regulations and Directives have been examined for the purpose of establishing the legal basis for the fight against money laundering. Moreover, an interview was conducted in 2018 with the Lebanese Financial Prosecutor, which served as data related to the operations of the Special Investigation Commission (SIC) in Lebanon, which is the Lebanese Financial Intelligence Unit. Second, quantitative research has been done. Reports of the Association of Banks in Lebanon, Financial Action Task Force Report and Annual Reports of the SIC of Lebanon have been used to gather information related to the AML/combating the financing of terrorism framework, such as customer due to diligence provisions and know-your-customer requirements and to collect statistics of suspicious reports.

Findings

The question of “How to balance the confidentiality of the Lebanese banking sector with the interest of the international community in the fight against money laundering?” was interesting to study, as it turned out that the existence of such professional secrecy does not affect the effective implementation of the AML guidelines by banks and other financial institutions. This can only happen when there is a special judicial organ to which banking secrecy is not opposable at any time, and which is the sole organ entrusted with lifting off this professional secrecy and allowing the disclosure of information to the competent authorities. Thus, the Lebanese banking system can ensure total compliance with the AML framework while still adopting banking secrecy regulations.

Originality/value

The choice of Lebanon was compelling because of the special level of protection its banking secrecy law offers.

Details

Journal of Money Laundering Control, vol. 22 no. 3
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 6 May 2014

Aspalella A. Rahman

The purpose of this paper is to analyze banking secrecy laws against the background of the Malaysian anti-money laundering laws. It has been argued that the anti-money…

2756

Abstract

Purpose

The purpose of this paper is to analyze banking secrecy laws against the background of the Malaysian anti-money laundering laws. It has been argued that the anti-money laundering law makes greater inroads into the banking secrecy rule when compared to the common law or other statutes. Banks can disclose customer’s information on even grounds of suspicion of money laundering. Banking secrecy is a customer privilege, whereas combating money laundering is critical for public safety and security. Indeed, achieving a proper balance is a desirable goal. But how do we go about achieving such a balance is a question encountered by many law enforcement authorities. This paper looks into these issues.

Design/methodology/approach

This paper mainly relies on statutes as its primary sources of information. As such, the relevant Malaysian laws that provide the banking secrecy rule will be identified and analyzed. It will be necessary to examine the banking secrecy rule in the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA) and other relevant statutes in detail, as these are the most important legislation for the purpose of this paper.

Findings

On closer inspection, it is submitted that AMLATFA provides sufficient safeguards to ensure that the disclosure of customer’s information is carried out in a manner that is not prejudicial to the interest of legitimate customers. This is a positive approach that could protect the innocent customers from being mistreated by the law. Ultimately, it can be said that the growing threat of global money laundering and terrorism makes the overriding of banking secrecy justified because without a flow of information from the banks, the effective prevention of the menace is not possible.

Originality/value

This paper analyzes the inroads into the banking secrecy rule under the Malaysian anti-money laundering laws. It would provide some guidelines into this particular area for academics, banks, their legal advisers, practitioners and policy makers, not only in Malaysia but also elsewhere.

Details

Journal of Money Laundering Control, vol. 17 no. 2
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 1 April 2006

Wassim N. Shahin

This paper aims to analyze the monetary consequences of the new restrictions imposed in February 2000 by the Financial Action Task Force (FATF) on money laundering. FATF…

Abstract

Purpose

This paper aims to analyze the monetary consequences of the new restrictions imposed in February 2000 by the Financial Action Task Force (FATF) on money laundering. FATF established 25 criteria based on its 40 recommendations (currently 49) to combat money laundering and the financing of terrorism. A total of 23 countries were placed on a list of Non‐Cooperative Countries and Territories (NCCTs) for not meeting most of the criteria. Several of the criteria relate to additional tightening or regulation of banking and financial secrecy in these countries. In order to be de‐listed from NCCTs, countries have started regulating their banking and financial sectors by placing restrictions on the degree of secrecy, passing tighter secrecy laws and closing loopholes in existing laws. The new regulatory measures may have money, banking and other economic implications.

Design/methodology/approach

Presents a theoretical model of a banking firm offering secret bank accounts to examine the impact of changing secrecy laws on deposits, interest rates, money and credit aggregates.

Findings

Three different sets of results are plausible depending on the reactions of banks with regard to their deposit rate. The likelihood of banks changing this rate is examined using a profit function analysis.

Originality/value

It provides a theoretical framework for an agenda of future empirical research as researchers should emphasize the impact of tightening secrecy standards on bank deposit rates. The degree of the change in this rate may determine the magnitude and sometimes the direction of the changes in monetary variables.

Details

Journal of Money Laundering Control, vol. 9 no. 2
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 2 January 2018

Chat Le Nguyen

This paper aims to discuss the implication of money laundering preventive measures for financial privacy, with the focus on banking secrecy.

1330

Abstract

Purpose

This paper aims to discuss the implication of money laundering preventive measures for financial privacy, with the focus on banking secrecy.

Design/methodology/approach

This paper, first, sets out the principal measures imposed on financial service providers to prevent money laundering. The interaction between the preventive measures and the desire for financial privacy is then discussed.

Findings

The adequate implementation of the preventive measures is highly important for financial institutions to be secure from money laundering. Nonetheless, the enforcement of these measures is becoming much more intrusive into financial privacy. In practice, financial privacy should be weighted fairly against the objectives of preventive measures.

Originality/value

This paper would be a good guidance on how to deal with tension and potential conflicts of interests between law enforcement authorities and financial service providers and between the protection of financial privacy and the objectives of the money laundering preventive measures.

Details

Journal of Money Laundering Control, vol. 21 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 1 February 1999

Bonita Erbstein

The year 1986 did not bode well for investment banker Dennis Levine. In a civil injunctive action the US Securities and Exchange Commission (SEC or the Commission) alleged…

Abstract

The year 1986 did not bode well for investment banker Dennis Levine. In a civil injunctive action the US Securities and Exchange Commission (SEC or the Commission) alleged that Levine, through an insider dealing scheme, violated several anti‐fraud provisions of the Securities Exchange Act of 1934. Without admitting or denying that he obtained over $12m in illicit profits from secretly trading in the securities of 54 companies, Levine settled the SEC action and was ordered to disgorge over $10m to the court.

Details

Journal of Money Laundering Control, vol. 2 no. 4
Type: Research Article
ISSN: 1368-5201

Article
Publication date: 1 January 1997

George J. Moscarino and Michael R. Shumaker

This decree by the Nazi Government in 1933 is probably the single most important event leading to the advent of bank secrecy laws as we know them today. This criminal…

Abstract

This decree by the Nazi Government in 1933 is probably the single most important event leading to the advent of bank secrecy laws as we know them today. This criminal provision was enacted to halt the German Jews' movement of assets out of Germany and into Swiss banks — a movement that was occasioned by the Government's attempt to seize the Jews' assets. Swiss banks were chosen because of their geographic proximity, but more so because of Switzerland's then unofficial policy of confidentiality over banking deposits and transactions.

Details

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

Article
Publication date: 29 October 2021

Zuliera Zariz Azman Aziz and Seri Ayu Masuri Md Daud

This study aims to examine the associations between customers’ awareness of money laundering and terrorism financing, trust in banking secrecy measures and discomforts in…

Abstract

Purpose

This study aims to examine the associations between customers’ awareness of money laundering and terrorism financing, trust in banking secrecy measures and discomforts in fulfilling the bank’s anti-money laundering (AML) procedure and their acceptance of existing practices of banks regarding AML and counter-terrorism financing.

Design/methodology/approach

This study adapts a set of survey instruments developed and validated by prior studies to collect the required data. A convenient sample of 160 Malaysian bank customers aged 18 and above were surveyed to collect the data.

Findings

This study finds a significant relationship between the respondents’ awareness of money laundering and terrorism financing, trust in banking secrecy measures and their acceptance of the bank’s AML and counter-terrorism financing practices. However, no significant relationship is documented between the level of discomforts experienced by customers in satisfying the banks’ AML requirements and their acceptance of the banks’ AML practices. These results hold even after controlling for alternative explanations of the customers’ acceptance of banking practices examined in the extant literature: age, gender, location, literacy level and occupation.

Research limitations/implications

This study extends the literature on customers’ acceptance of banking practices more broadly by providing empirical evidence on the role of customers’ awareness on issues underlying the banking practices and their trust in the bank’s secrecy measures.

Practical implications

This study also provides some practical contributions by shedding some light on the factors that could help banks increase the acceptance of AML practices among their customers. Thus, the findings of this paper help banks focus their effort on these factors and hence increase acceptance rate more effectively.

Originality/value

Drawing on the elements of the theory of reasoned actions and technology acceptance model and the extant research on trust-privacy and comfortability in a banking setting, this study proposes an integrated approach that is theoretically and empirically grounded.

Details

Journal of Money Laundering Control, vol. 25 no. 4
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 1 July 2004

Spero C. Peppas

Switzerland has long been known as a world leader in the financial services arena. However, in recent years the Swiss banking industry has come under considerable attack…

2015

Abstract

Switzerland has long been known as a world leader in the financial services arena. However, in recent years the Swiss banking industry has come under considerable attack, in particular with regard to money laundering, Holocaust accounts and European Union tax evasion issues. This article examines Swiss banking confidentiality, reports perceptions of a sample of US Americans with regard to banking secrecy, and compares and contrasts perceptions with reality. The results of this study indicate that the general public holds negative perceptions of Swiss banking practices. This article should serve to correct misperceptions of Swiss banking held by the public at large and should be of particular interest to those involved in Swiss banking and the marketing of financial services.

Details

Management Research News, vol. 27 no. 7
Type: Research Article
ISSN: 0140-9174

Keywords

Article
Publication date: 2 January 2018

Aidan Carlin and Mark Eshwar Lokanan

This paper aims to highlight the relationship between money laundering and the patterns of behaviour evident throughout the larger structural environment of the Swiss…

Abstract

Purpose

This paper aims to highlight the relationship between money laundering and the patterns of behaviour evident throughout the larger structural environment of the Swiss banking sector. In particular, the paper used HSBC as a prototype case of structural ritualisation to show that the normalisation of corrupt, unethical behaviour in the banking environment has shaped and influenced the behaviour and actions of the embedded group actors.

Design/methodology/approach

The paper used a content analysis methodological approach of media sources to collect data. The content analysis was categorised into six core ritualised symbolic practices (RSP) categories – corruption, reputation, blame, ignorance, regret and criticism.

Findings

The findings reveal that the highly ranked RSPs involving corruption, reputation, blame, regret, ignorance and criticism influence the embedded group’s patterns of behaviour, and they formed part of the cognitive script that dictated their behaviour and actions in the Swiss banking sector.

Practical implications

The paper added to the calls by Swiss policymakers for amendments to Swiss bank secrecy laws to reflect the changing landscape of international banking and finance.

Originality/value

This is the first paper of its kind to study ritualised illegal practices related to money laundering in the Swiss banking sector.

Details

Journal of Money Laundering Control, vol. 21 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 1 October 2004

He Ping

Addresses the conflict between banking secrecy and the fight against money laundering. Looks back at the origins of banking secrecy in the Swiss havens for German Jews…

1697

Abstract

Addresses the conflict between banking secrecy and the fight against money laundering. Looks back at the origins of banking secrecy in the Swiss havens for German Jews’ money in the 1930s, and at the various reasons given justifying secrecy. Shows how banking secrecy has been lifted in response to the perceived need to prevent its being used as a money laundering device. Moves on to review banking secrecy in China, where it is enshrined in law but is not absolute: there are 11 institutions that have the right to enquire into an individual’s savings deposits, and recent legislation has been passed against money laundering.

Details

Journal of Money Laundering Control, vol. 7 no. 4
Type: Research Article
ISSN: 1368-5201

Keywords

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