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Article
Publication date: 9 July 2021

Marc-Alain Galeazzi, Barbara Mendelson and Malka Levitin

The purpose of this article is to inform stakeholders about the Anti-Money Laundering Act of 2020 (AMLA), explain its impact on the U.S. anti-money laundering (AML…

Abstract

Purpose

The purpose of this article is to inform stakeholders about the Anti-Money Laundering Act of 2020 (AMLA), explain its impact on the U.S. anti-money laundering (AML) regime, and highlight critical updates for financial institutions.

Design/methodology/approach

The article provides an overview of the AMLA, and specifically addresses three key components: (1) the development of uniform beneficial ownership requirements and the creation of a beneficial ownership registry at the Financial Crimes Enforcement Network (FinCEN); (2) the expansion of FinCEN’s powers and the Bank Secrecy Act/AML program requirements; and (3) new subpoena powers with potential extraterritorial effect granted to the U.S. Secretary of the Treasury and the U.S. Attorney General for documents located at foreign banks that have a correspondent banking account in the U.S. The article also notes the purpose and goals of the AMLA.

Findings

The AMLA is the first major overhaul of the U.S. AML regime since the 2001 USA PATRIOT Act, and is designed to strengthen national security, protect the financial system, and simplify compliance obligations. The beneficial ownership reporting requirements represent an effort to combat illicit financial activity conducted by shell companies formed and registered in the U.S.

Originality/value

The article provides financial institutions with a brief overview of a lengthy new law that will impact their AML compliance obligations. Financial institutions should be on alert for forthcoming regulations.

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Article
Publication date: 2 July 2018

Ted C. Moorman

The purpose of this paper is to identify the place of kleptocracy and foreign corruption within the broader framework of financial crime. This facilitates understanding…

Abstract

Purpose

The purpose of this paper is to identify the place of kleptocracy and foreign corruption within the broader framework of financial crime. This facilitates understanding the importance of kleptocracy and foreign corruption as social problems. Two other aims are to better understand the most problematic components of a kleptocratic network and the most effective combatants of that network. A subsequent goal is to offer solutions from a broad range of interventions, including policy, technology, education, research and collaborative efforts.

Design/methodology/approach

Theoretical economic concepts are used to analyze the importance of kleptocracy and foreign corruption. A small in-depth survey of 15 experts is conducted to identify the most problematic components of kleptocratic networks and the most effective combatants of those networks. The proposed solutions are based on a combination of argumentation, econometric developments, application of trends in related fields and material from in-depth surveys.

Findings

This paper identifies kleptocracy and foreign corruption as one of the most, if not the most, devastating financial crime according to its impact on the total marginal utility of wealth. Experts identify foreign kleptocrats or corrupt foreign government officials as the most problematic entities in kleptocratic networks and the most effective combatant is identified as the US Department of Justice. By adding up fines and asset forfeiture related to corruption, penalties are found to be a small fraction of the problem in terms of monetary magnitude.

Research limitations/implications

The paper does not attempt to make causal claims because of the nature of the paper’s purpose and methodology.

Practical implications

The paper offers suggestions and methods for academic researchers who may wish to pursue a research agenda that is empirical and forensic with the aim of combatting kleptocracy and foreign corruption. The paper describes how information on kleptocracy and foreign corruption can be implemented into business and economics curriculum.

Social implications

Kleptocracy and foreign corruption are important problems, and creative solutions are desperately needed.

Originality/value

The paper shows how understanding and combatting kleptocracy and foreign corruption can be considered an interdisciplinary activity, touching on fields including technology, economics, business, ethics, education, law, policy, statistics and research methods.

Details

Journal of Financial Crime, vol. 25 no. 3
Type: Research Article
ISSN: 1359-0790

Keywords

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Article
Publication date: 4 July 2016

Jonathan A. Lopez, Courtney J. Linn, Edward Eisert and Lauren Muldoon

To provide a summary and analysis of the Proposed Rulemaking published by the Financial Crimes Enforcement Network (FinCEN) on September 1, 2015, which proposes to subject…

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201

Abstract

Purpose

To provide a summary and analysis of the Proposed Rulemaking published by the Financial Crimes Enforcement Network (FinCEN) on September 1, 2015, which proposes to subject investment advisers to certain requirements of the Bank Secrecy Act of 1970.

Design/methodology/approach

The article discusses the proposed expansion of Bank Secrecy Act regulations to include investment advisers, including the history behind the rulemaking, proposed definition of “investment adviser” under the Act, the comments received in response to the proposed rulemaking, and the potential implications of the rule, should it be finalized.

Findings

This article concludes that FinCEN, in cooperation with the Securities and Exchange Commission (SEC) and other agencies, is nearing completion of the proposed rule. Investment advisers that fall under the proposed definition of those subject to Bank Secrecy Act should prepare to implement anti-money laundering compliance programs.

Originality/value

This article contains valuable information about proposed regulations impacting investment advisers registered or required to be registered with the Securities and Exchange Commission.

Details

Journal of Investment Compliance, vol. 17 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 2 July 2018

Mohammed Ahmad Naheem

This paper (written in August 2015) aims to discuss the regulatory approach to detecting and preventing trade-based money laundering (TBML) by using the example of…

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15691

Abstract

Purpose

This paper (written in August 2015) aims to discuss the regulatory approach to detecting and preventing trade-based money laundering (TBML) by using the example of Financial Crimes Enforcement Network (FinCEN) and its use of geographic targeting orders.

Design/methodology/approach

The paper uses both theoretical and empirical reports on TBML to explore whether increased regulation will ultimately achieve the ends it claims to offer.

Findings

The main findings from the analysis are that increased regulation has been found to have a negative impact on improving TBML detection. There is evidence that it causes an over-defensive response from banks that leads to a decrease in useful information to financial intelligence units.

Research limitations/implications

The research topic is very new and an emerging topic; therefore, analysis papers and other academic writing on this topic are limited.

Practical implications

This paper has implications for both the regulatory and the banking/financial service sectors.

Originality/value

The originality of this paper is the deeper analysis of a specific TBML case, and the focus is on both the theoretical and empirical implications of the approach being used.

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Article
Publication date: 4 September 2017

Carlton Greene, Thomas Hanusik, Cari Stinebower and Sarah Bartle

To analyze FinCEN’s settlement with Thomas Haider and examine regulatory agencies’ emphasis on individual accountability and the implications of this emphasis for…

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175

Abstract

Purpose

To analyze FinCEN’s settlement with Thomas Haider and examine regulatory agencies’ emphasis on individual accountability and the implications of this emphasis for anti-money laundering (AML) compliance personnel, and to provide practical guidance for personnel who have involvement with or oversight of corporate AML programs.

Design/methodology/approach

This article analyzes the Thomas Haider settlement and its importance for individuals involved in AML compliance functions. This analysis includes an examination of several recent corporate and individual enforcement actions to contextualize the Thomas Haider settlement and its usefulness in the prediction of trends in the financial regulatory space.

Findings

This article concludes that FinCEN’s May 2017 settlement with Thomas Haider, which resolved the first occurrence of FinCEN’s filing suit to enforce a civil penalty against an individual, illustrates the importance of effective AML programs and highlights the potential consequences for individuals who fail to ensure effective programs. The article also makes specific practical suggestions for AML compliance personnel, and finds that such personnel should be particularly conscientious in light of regulatory agencies’ focus on individual accountability in resolving corporate enforcement actions.

Originality/value

This article contains valuable information about recent regulatory enforcement activity and practical guidance for AML compliance personnel from experienced lawyers with specialties in financial services and white collar regulatory enforcement.

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Article
Publication date: 7 November 2016

Ignacio Sandoval, Charles Horn and Melissa Hall

To provide an overview of the legal entity customer due diligence rule recently adopted by the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department…

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155

Abstract

Purpose

To provide an overview of the legal entity customer due diligence rule recently adopted by the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury.

Design/methodology/approach

This paper provides an overview of the requirements of the legal entity customer due diligence rule as well as some observations regarding the scope of the rule, its interplay with other regulatory requirements, and some of the rule’s ambiguities.

Findings

While the preamble to the new rule suggests that FinCEN was attempting to accommodate industry concerns, the literal terms of the rule may have the opposite effect.

Practical implications

Although financial institutions will have until May 2018 to come into compliance with the rule’s requirements, they should begin developing the infrastructure to support compliance with the rule as soon as possible.

Originality/value

Practical insights into issues that financial institutions may encounter when implementing the rule’s requirements from experienced financial services lawyers.

Details

Journal of Investment Compliance, vol. 17 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 1 April 2001

James P. Springer

This paper provides a detailed analysis of the various means available to US authorities for obtaining foreign evidence and other types of international assistance in…

Abstract

This paper provides a detailed analysis of the various means available to US authorities for obtaining foreign evidence and other types of international assistance in money laundering cases. The means analysed here include mutual legal assistance treaties (MLATs) and similar processes; multilateral treaties; tax information exchange agreements (TIEAs) and tax treaties (for a narrow range of money laundering offences); court‐sponsored procedures for taking foreign depositions, including letters rogatory; the use of unilateral compulsory measures, such as subpoenas, for obtaining foreign evidence, and the use of FinCEN and Interpol resources. The initiatives of the G7, the Financial Action Task Force and the OECD regarding international cooperation in money laundering matters are also briefly treated.

Details

Journal of Financial Crime, vol. 9 no. 2
Type: Research Article
ISSN: 1359-0790

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Book part
Publication date: 26 August 2019

Syed Fadhil Hanafi and Syed A Rahman

Regulation of digital currency is still at its infancy as authorities around the world grapple with its mechanics, and study its impact and the best method to regulate it…

Abstract

Regulation of digital currency is still at its infancy as authorities around the world grapple with its mechanics, and study its impact and the best method to regulate it. Significant increase in the use of digital cryptocurrency based on Blockchain technology post-Bitcoin phenomenon had challenged the conventional idea of central bank monopoly in currency issuance. This had also raised concern that digital currency being used as an instrumentality of crime given its anonymity feature that allows for the flow of funds without tracing and the fact that it is built on trustless system that provides security of transaction. This concern, plus other consideration including the prospect of issuing central bank digital currency, had driven some authorities around the world to adopt countermeasures either via an outright ban or a regulatory regime that suits the nature of digital currency, which is purely virtual and anonymous. However, in coming out with an appropriate legal regime, authorities faced multiple difficulties especially when the pace of legal development does not sync congruently with the rapid progress of technology. In addition, given the growing prominence of Islamic finance around the world, questions also arise pertaining to the legality of digital cryptocurrency from the Islamic perspective. Through a qualitative study of relevant literatures as well as legislations in different countries, this chapter discusses the various categories of digital currency, its position from the Islamic perspective, regulatory regimes of digital cryptocurrency in selected jurisdictions and challenges faced by authorities around the world in regulating this new medium of exchange.

Details

Emerging Issues in Islamic Finance Law and Practice in Malaysia
Type: Book
ISBN: 978-1-78973-546-8

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Article
Publication date: 1 March 1998

Daniel P. Murphy

Crimes are committed for personal reasons or for profit. In any crime for a profit scenario the state has an interest in removing the profit from the criminal. Drug…

Abstract

Crimes are committed for personal reasons or for profit. In any crime for a profit scenario the state has an interest in removing the profit from the criminal. Drug offences, other than simple possession, are the paradigm. People use drugs for a variety of reasons but, at least in the illicit drug trade, individuals sell drugs in order to make money. Traditionally, this was a cash‐based enterprise and, frequently, a misplaced investigative opportunity. A state can attack the criminal profit in order to attack the enterprise. When an illicit criminal activity is undertaken for cash prosecutors and investigators must look at this as an opportunity.

Details

Journal of Financial Crime, vol. 6 no. 1
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 1 April 2004

Paul S Pilecki and Michael A. Mancusi

Riggs Bank N.A. of Washington, DC entered into a consent order with the Office of the Comptroller of the Currency in July 2003, received a cease and desist order from the…

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105

Abstract

Riggs Bank N.A. of Washington, DC entered into a consent order with the Office of the Comptroller of the Currency in July 2003, received a cease and desist order from the Federal Reserve Board later that year, and was assessed a $25 million penalty by the Financial Crimes Enforcement Network (FinCEN) in May 2004, all for Bank Secrecy Act violations. In general, Riggs was deficient (i) in designing a program tailored to the risks of its business that would ensure appropriate reporting, (ii) in implementing the procedures it did have, and (iii) in responding to classic “red flags” of suspicious conduct. As a result, Riggs failed to file a number of timely and complete suspicious activity reports (SARs) and late and complete currency transaction reports (CTRs) for high‐risk accounts. In discussing the violations that occurred, FinCEN articulated internal control, customer due diligence, compliance monitoring, and independent testing standards that Riggs did not meet, and that other institutions should regard as rules of general applicability.

Details

Journal of Investment Compliance, vol. 5 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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