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Article
Publication date: 3 July 2017

Salwa Zolkaflil, Normah Omar and Sharifah Nazatul Faiza Syed Mustapha Nazri

This study aims to discuss the Financial Action Task Force (FATF) Special Recommendation IX (SR IX) and the importance of complying with the recommendation, which focuses on…

Abstract

Purpose

This study aims to discuss the Financial Action Task Force (FATF) Special Recommendation IX (SR IX) and the importance of complying with the recommendation, which focuses on cross-border declaration or disclosure with the objective to detect and prevent illicit cross-border transportation of cash and bearer negotiable instruments (BNIs). This study also looks into compliance ratings of Asia Pacific Group (APG) 40 countries on the FATF SR IX.

Design/methodology/approach

This study reviews the mutual evaluation reports issued by APG on money laundering from 2006 to 2012. Based on the mutual evaluation reports, this study also looks into recommendations and comments given by respective panels. The compliance ratings together with panel’s recommendations and comments compiled in this study will be helpful to relevant authorities for future improvement.

Findings

Complying to FATF SR IX helps relevant authorities in detecting and preventing illicit from cross-border transportation of cash and BNIs. Out of 40, only two countries received compliant rating, which shows the need of improvement to ensure that the country is compliant on FATF SR IX.

Research limitations/implications

This study is limited to the panel’s reviews and recommendations on mutual evaluation report and only focuses on FATF SR IX.

Originality/value

This paper analyzes the compliance characteristics of countries based on their FATF mutual evaluation report. It highlights the comments and recommendation for future improvement to ensure that these countries will comply with FATF SR IX.

Details

Journal of Money Laundering Control, vol. 20 no. 3
Type: Research Article
ISSN: 1368-5201

Keywords

Open Access
Article
Publication date: 2 February 2023

Bernice Bissett, Philip Steenkamp and Duane Aslett

In the aftermath of the 2021 Financial Action Task Force Mutual Evaluation Report, legislators, supervisory bodies, law enforcement and the like are focusing on preventing South…

1552

Abstract

Purpose

In the aftermath of the 2021 Financial Action Task Force Mutual Evaluation Report, legislators, supervisory bodies, law enforcement and the like are focusing on preventing South Africa from being greylisted. This paper performs an analysis of the 2021 South African Financial Action Task Force (FATF) Mutual Evaluation, specifically Recommendation 8 and Immediate Outcome 10. The purpose of this paper is to address the concerns raised and assist those tasked with implementing remediation measures.

Design/methodology/approach

Secondary sources such as legislation, case law, textbooks and peer-reviewed publications are used in addressing the concerns. A major focus is placed on the evaluation itself, with an analysis of Recommendation 8 and Immediate Outcome 10.

Findings

Despite the non-compliance rating and a low level of effectiveness received regarding non-profit organisations, authorities might not place a large focus on remediating this, as more pertinent issues arise in the report. The lack of focus in this area adds to the likelihood of grey listing by FATF. However, with co-operation from the relevant stakeholders, these low ratings can be improved.

Originality/value

Since the Mutual Evaluation’s release in October 2021 there have not been any papers addressing the highlighted issues in the non-profit sector in South Africa, to the best of the authors’ knowledge. This paper will be the first of its kind and will be of use to authorities as regards mitigating the concerns raised by FATF.

Article
Publication date: 28 June 2021

Firas Murrar

This study aims to define how countries can implement a risk-based approach (RBA) for non-profit organisations (NPOs) by measuring how well certain countries have complied with…

Abstract

Purpose

This study aims to define how countries can implement a risk-based approach (RBA) for non-profit organisations (NPOs) by measuring how well certain countries have complied with the Financial Action Task Force’s (FATF) “Recommendation 8, criterion 1” (recommendation [8.1]).

Design/methodology/approach

This study combines a comparative analysis methodology with a descriptive analytical approach to compare three member countries of FATF and FATF-Style Regional Bodies (FSRBs). It uses secondary data sources, namely, FATF guidelines on the subject and FATF reports on mutual evaluation reports.

Findings

This study examines the variations in compliance with the FATF recommendation (8.1) among three countries recently assessed by the FATF: the UK, Bahrain and the Russian Federation. Although the UK has completely fulfilled these recommendations, Bahrain and Russia have largely fulfilled them. These variations in compliance are mainly attributed to the uneven level of preparedness in the countries’ commitment to the legislative requirements before the process of mutual evaluation.

Originality/value

This paper offers insight into the progress of legislation and mechanisms (technical compliance) in the three countries with respect to recommendation (8.1). This paper also discusses the evolution of implementing and adopting the RBA among NPOs. This paper concludes with suggestions to other countries in developing a plan that meets the FATF recommendations by considering key factors such as comprehensive assessment of threats to NPOs, periodic reassessment and sharing of success stories.

Details

Journal of Money Laundering Control, vol. 25 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 5 January 2022

Salwa Zolkaflil, Sharifah Nazatul Faiza Syed Mustapha Nazri and Normah Omar

This study aims to understand the member countries’ current asset recovery mechanism based on two elements, namely, confiscation policy and asset recovery management framework.

Abstract

Purpose

This study aims to understand the member countries’ current asset recovery mechanism based on two elements, namely, confiscation policy and asset recovery management framework.

Design/methodology/approach

Content analysis was performed on the Financial Action Task Force (FATF) Mutual Evaluation Report (MER) of eight countries.

Findings

The result showed that only a few countries established a centralised asset recovery centre or special task force to manage recovered assets.

Research limitations/implications

This study is limited to information mentioned in the FATF MER.

Practical implications

This study highlights the need to have a centralised asset recovery management centre as an initiative to improve the outcome of money laundering investigations. The study findings will benefit regulators to understand further the practical challenges of the asset recovery mechanism for future improvement.

Originality/value

FATF recommends that each country establish a centralised asset recovery centre and work closely with the investigating officers and prosecutors in deciding on assets confiscation. However, the implementation is contingent on their local environment and resources at the member countries’ discretion. Therefore, this study aimed to understand the member countries’ current asset recovery mechanism based on two elements, namely confiscation policy and asset recovery management framework.

Details

Journal of Money Laundering Control, vol. 26 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 7 January 2019

Sharifah Nazatul Faiza Syed Mustapha Nazri, Salwa Zolkaflil and Normah Omar

This paper aims to conduct a comparison on the effectiveness of the law enforcement agencies (LEAs) of Australia and Malaysia in investigating money laundering cases by looking…

1354

Abstract

Purpose

This paper aims to conduct a comparison on the effectiveness of the law enforcement agencies (LEAs) of Australia and Malaysia in investigating money laundering cases by looking into the legal system and operational issues faced in conducting the investigation.

Design/methodology/approach

The purpose of this paper is to review and analyze the data collected from the Financial Action Task Force (FATF) Mutual Evaluation Report, focusing on the information outlined in the third chapter. The legal system and operational issues cover the area of technical compliance and effectiveness compliance, which were introduced in the latest FATF Evaluation Methodology issued in 2013.

Findings

The results show that both countries have the power needed to investigate money laundering and terrorism financing under their respective Anti-Money Laundering Act. However, Australia is seen to have a better investigative support system to assist LEAs during the investigation process. This explains the reason for difficulties in increasing the number of prosecutions for money laundering and terrorism financing cases. Hence, improvement actions are needed in curbing this issue.

Practical implications

The result suggests that Malaysia should strengthen the cooperation, coordination and capacity among LEAs to ensure effective targeting, investigation and prosecution of money laundering. The government should also revise the money laundering investigation time frame and broaden the power of LEAs in retrieving information during the investigation process. Malaysia should also enhance the investigative support system, which will be helpful for LEAs in gathering sufficient evidence to support their money laundering charges. Unlimited power in gathering evidence is prominent to charge money launders as it helps to gather information required for prosecution.

Originality/value

Prior literature focuses on the prevention mechanism, where this paper aims to focus on detection and investigation mechanism focusing on money laundering investigation conducted by LEAs. Lack of study on money laundering investigation calls for this research to be done to understand the strengths and weaknesses to improve its effectiveness in the future.

Details

Managerial Auditing Journal, vol. 34 no. 2
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 30 June 2020

Foster Hong-Cheuk Yim and Ian Philip Lee

The purpose of this paper is to discuss the latest developments of anti-money laundering (AML) laws in terms of case law and to give meaningful response in relation to certain key…

Abstract

Purpose

The purpose of this paper is to discuss the latest developments of anti-money laundering (AML) laws in terms of case law and to give meaningful response in relation to certain key findings (KFs) and recommendations by the financial action task force contained in its mutual evaluation report dated September 2019.

Design/methodology/approach

In terms of AML case law, the authors analyse the latest judgment from the Hong Kong (HK) court of final appeal. In terms of the evaluation report, the authors outline salient points from the KFs and recommendation, commenting on their likelihood of success.

Findings

With the developments in AML case law and the KFs identified, HK is expected to maintain its high standard in AML/counter financing of terrorism (CFT) compliance.

Originality/value

A robust AML/CFT regime is the bedrock of HK’s reputable status as an international financial centre. This study seeks to illicit meaningful interactions amongst all stakeholders.

Article
Publication date: 12 February 2021

Aisha Hassan Al-Emadi

This paper aims to study the effectiveness of the implementation of the Financial Action Task Force (FATF) recommendations in the UK in an attempt to combat the laundering of…

Abstract

Purpose

This paper aims to study the effectiveness of the implementation of the Financial Action Task Force (FATF) recommendations in the UK in an attempt to combat the laundering of proceeds of corruption.

Design/methodology/approach

A desk review of secondary resources was conducted to analyze available literature to examine the research topic.

Findings

The leakage of 11.5 million documents, known as the Panama papers, has revealed that the UK functioned as a safe haven for illicit and corrupt money. In an attempt to address this, the country called for a public registry of beneficial owners to disclose the identities of the owners of the incorporated corporations and to extend them to individuals abroad holding UK property. The FATF report recognizes the UK’s far-reaching regulation. Despite the measures taken, UK still faces serious risks with regard to the laundering of criminal proceeds, which demonstrates that technical compliance with FATF rules is not enough to effectively curb money laundering.

Originality/value

This study suggests that FATF rules’ effectiveness in identifying instances of laundering the proceeds of corruption is limited because of the deeply rooted system vulnerabilities and the rapid changes in money laundering trends.

Details

Journal of Money Laundering Control, vol. 24 no. 4
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 17 July 2020

Andrew Emerson Clarke

Money laundering and grand business corruption continue to plague the global economy, accounting for 2%-5% of the global gross domestic product. Illicit funds, produced through…

Abstract

Purpose

Money laundering and grand business corruption continue to plague the global economy, accounting for 2%-5% of the global gross domestic product. Illicit funds, produced through grand corruption, are laundered using complex layering schemes that cloak them in legitimacy by concealing their origins. Lamentably, weak anti-money laundering (AML) frameworks promote economic instability, unjust commercial advantages and organized crimes. This study aims to highlight the need for comprehensive anti-corruption and AML frameworks by critiquing the exploitable gaps in the global AML regime created by heterogeneous state-level AML regimes to date.

Design/methodology/approach

This study welcomes the United Nations Convention against Corruption (UNCAC) and the financial action task force (FATF) recommendations but underscores the limitations of their effectiveness by investigating state-level enforcement mechanisms to determine these instruments’ true impact or lack thereof. The mutual evaluation reports (MERs) and state-level AML regimes in the UK, the USA and Canada are analyzed to illustrate the distinct implementation of international soft law in domestic legislation.

Findings

This study finds that UNCAC and the FATF recommendations are pivotal steps towards the establishment of a global AML regime for international business, albeit, one that remains imperfect because of the inconsistency of state-level AML frameworks. Consequently, international cooperation is needed to navigate and improve the discrepancies in varied AML legislation.

Originality/value

The author provides an in-depth and balanced analysis of current state-level AML developments and relies upon the recent 2016-2018 MERs to indicate the successes and flaws of various AML legislation. Therefore, this critique may guide stakeholders to construct robust AML frameworks and contributes to academic research in AML.

Details

Journal of Money Laundering Control, vol. 24 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 7 May 2019

Mohammed Ahmad Naheem

This paper aims to study Saudi Arabia’s approach to combat money laundering and terrorist financing through legislation, regulation and implementation. Saudi Arabia is an integral…

Abstract

Purpose

This paper aims to study Saudi Arabia’s approach to combat money laundering and terrorist financing through legislation, regulation and implementation. Saudi Arabia is an integral part of the global economy and energy market. Saudi Arabia is also an important nexus for incoming foreign investment in the region. The country has, for many years, confronted negative exposure on challenging money laundering and terrorist financing. This paper analyses Saudi Arabia’s efforts to maintain international standards of AML/CTF and distinguishes regulatory practice from the existing comments and conjecture on the country’s performance.

Design/methodology/approach

The paper uses a qualitative study of Saudi Arabia’s approach to combat money laundering and terrorist financing. The approach is spread across three stages of AML/CTF policy – namely, legislative, regulatory and implementation. Further, the paper also uses independent evaluation to understand Saudi Arabia’s performance in comparison to the international standards of good AML/CTF practice.

Findings

The paper finds Saudi Arabia in compliance with international standards of AML/CTF practice. The paper also traces strengthening of AML/CTF-related legislation and regulation in Saudi Arabia over the past two decades. The paper also finds significant evidence that suggests a biased representation of Saudi Arabia’s AML/CTF practices. The factual analysis of Saudi Arabia and its AML/CTF practice is in contradiction of the established discourse on the country’s money laundering and terrorist financing risk profile.

Practical implications

The paper presents a legislative and regulatory analysis of Saudi Arabia’s AML/CTF practice. It is important to understand the implications of injudicious conjecture on Saudi Arabia’s financial strategy to diversify the country’s economy (Mouawad, 2005). Commentators and observers must consider the evidence presented in this paper and reassess the discourse regarding Saudi Arabia’s adherence to international standards of AML/CTF.

Originality/value

Understanding Saudi Arabia’s approach to combat money laundering and terrorist financing is essential to the factors that maintain stability in the Middle East. Saudi Arabia has participated in the region with government forces to maintain stability. The paper examines the overall risk as per international standards, which can be attributed to Saudi Arabia’s AML/CTF profile.

Details

Journal of Money Laundering Control, vol. 22 no. 2
Type: Research Article
ISSN: 1368-5201

Keywords

Article
Publication date: 24 January 2020

Mohammed Ahmad Naheem

This paper aims to examine the level of anti-money laundering (AML) and combatting terrorist financing (CTF) practices incorporated within the legal framework of the Kingdom of…

Abstract

Purpose

This paper aims to examine the level of anti-money laundering (AML) and combatting terrorist financing (CTF) practices incorporated within the legal framework of the Kingdom of Bahrain. The paper also studies the application of AML/CTF legislation in regulatory practice and implementation. Bahrain is an important state within the Middle-East region and is an integral part to the Gulf Cooperation Council (GCC). The paper analyzes Bahrain’s compliance to international AML/CTF standards and presents recommendations on remaining deficiencies.

Design/methodology/approach

The paper studies the level of AML/CTF legislation enacted by the Kingdom of Bahrain by first examining the regulatory application, and then, the level of implementation. To understand the level of AML/CTF implementation, the paper uses literature on increased prosecution, penalties and reports for AML/CTF crimes in the Kingdom of Bahrain. In addition, the paper analyzes Bahrain’s compliance level to international standards of AML/CTF legislation and regulation.

Findings

The paper finds evidence of significant progress in the application of best practices of AML/CTF within the Kingdom of Bahrain. The paper also finds an increase in levels of implementation – i.e. suspicious transaction reports, investigations and prosecutions – with respect to AML/CTF violations. Additionally, the paper finds a limited number of deficiencies in Bahrain’s effort to establish strong reporting and enforcement mechanisms.

Practical implications

Bahrain is an important member of the international trade network and one of the fastest growing non-oil economies in the region. The country sought to diversify the economy, with more industry- and service-intensive sectors. The level of AML/CTF implementation represents an important risk-averse approach to financial services in the country. Evidence of the country’s strengthening approach is an important factor in determining foreign investment confidence and the country’s policy on combatting terrorism financing.

Originality/value

Commentators have previously recognized key deficiencies in Bahrain’s enactment and application of AML/CTF legislation. However, the analysis does not incorporate externalities arising from regulatory delay in domestic AML/CTF policy. The following paper studies the progress made by Bahrain since 2000-2001 and subsequent attempts at improving enforcement to maintain international compliance.

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