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Article
Publication date: 27 September 2019

Mike Nonaka, Jenny Konko and Cody Gaffney

To summarize FinCEN’s new interpretive guidance on how its regulations apply to business models involving convertible virtual currencies (“CVCs”).

Abstract

Purpose

To summarize FinCEN’s new interpretive guidance on how its regulations apply to business models involving convertible virtual currencies (“CVCs”).

Design/methodology/approach

Highlights the most significant aspects of FinCEN’s CVC guidance, including several of the CVC business models discussed in the guidance.

Findings

FinCEN’s latest guidance does not create any new legal requirements but clarifies how existing regulations apply to business models involving CVCs.

Practical implications

Practitioners advising on CVC issues should be familiar with FinCEN’s latest guidance and how FinCEN regulations may impact their clients.

Originality/value

Highlights the most important takeaways from FinCEN’s guidance based on our firm’s experience in the CVC space. Lawyers representing clients on CVC issues will find this article valuable.

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Article
Publication date: 6 April 2012

Betty Santangelo, Donald J. Mosher, William I. Friedman and Matthew P. Truax

The purpose of the paper is to explain FinCEN's money services business rule (MSB Rule) revising the regulations that apply to MSBs.

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140

Abstract

Purpose

The purpose of the paper is to explain FinCEN's money services business rule (MSB Rule) revising the regulations that apply to MSBs.

Design/methodology/approach

The paper details the principal revisions in the new MSB Rule, including an amended definition of an MSB, an activity threshold, and applicability of the rule to foreign‐located MSBs, money transmitters, dealers in foreign exchange, check cashiers, and issuers of travelers' checks as defined in the rule.

Findings

The final rule clarifies which activities subject a person to the Bank Secrecy Act's rules pertaining to MSBs and subjects certain foreign‐located MSBs with a US presence to US rules.

Originality/value

The paper provides practical guidance from experienced financial services lawyers.

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Article
Publication date: 1 March 2001

Jackie Johnson

As anti‐money laundering legislation is refined, expanded and adopted more readily by an increasing number of countries, criminal elements are finding the need to seek the…

Abstract

As anti‐money laundering legislation is refined, expanded and adopted more readily by an increasing number of countries, criminal elements are finding the need to seek the assistance of intermediaries, other than those currently captured by this legislation, to launder the proceeds of their illegal activities. The sophisticated launderer has both the time and money to explore new opportunities for laundering funds and the necessary means to purchase the experts to organise, arrange or coordinate any scheme necessary to bypass a country's anti‐money laundering legislation.

Details

Journal of Money Laundering Control, vol. 5 no. 1
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 4 January 2008

Antonello Biagioli

The aim of this paper is to stimulate a reflection on some issues concerning the measurement of the magnitude of money laundering.

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1253

Abstract

Purpose

The aim of this paper is to stimulate a reflection on some issues concerning the measurement of the magnitude of money laundering.

Design/methodology/approach

A survey of various research works devoted to the measurement of the volume of laundered funds is presented. Focussing mainly on quantitative approaches based on statistical methodologies, the paper provides hints on the modelling techniques used to estimate money laundering. Specific attention is paid to the relationship between criminal proceeds, laundered funds and asset seizure, unifying in the same stream of thought the whole process that goes from the perpetration of an offence to the repression of crimes through AML and CTF measures.

Findings

The paper takes the move from empirical considerations and findings, and develops wider reflections on the effectiveness of AML and CTF actions. Following a cost/benefit approach, the paper focuses on the possibility and meaning of testing and rating both the weight of laundered funds within the legal economy and the successfulness of AML/CTF measures in terms of frozen and seized assets. The relationship between the seriousness and intensity of a crime and the burden imposed on the society (in terms of compliance and limitations to freedom) is also questioned.

Research limitations/implications

The paper tends to concentrate on the factors that may influence the estimation of laundered funds when quantitative measurement techniques are used. Reference is made to some sectors of economic and financial activity that might be more prone to criminal infiltration and considerations of qualitative character are also part of the author's speculations. Yet, purposely, the potential contributions from other disciplines (such as, criminology and economics) are only mentioned and not fully explored.

Practical implications

The paper openly revives practical questions concerning the estimation of phenomena of financial crime and highlights clearly how the quantification of money laundering may be relevant in terms of the potential impact of the flow of illegal funds on the legal economy, the assessment of risk in the financial sector and the definition of effective and proportionate countermeasures.

Originality/value

The paper addresses questions that have long attracted international attention and interest regarding the costs and benefits of the system of control of and fight against phenomena of money laundering and terrorism financing; as well as the need of revamping empirical research along new, more efficient, shared methodologies. The author underlines explicitly how quantitative estimations may influence the perception of the relevance of such phenomena, as well as the adoption of prevention and repression measures. An original argument is developed regarding either a risk of underestimating financial crime, with a consequent reduction of the effort devoted to its fight and prevention, or the risk of overestimating the phenomenon, which in turn might impose unnecessary burdens on the society.

Details

Journal of Money Laundering Control, vol. 11 no. 1
Type: Research Article
ISSN: 1368-5201

Keywords

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Article
Publication date: 15 May 2007

Bashar H. Malkawi and Hikmet O. Malkawi

The purpose of this paper is to examine the anti‐terrorist finance provisions in the Penal Law as well as the vulnerabilities in place that hamper more effective regime.

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647

Abstract

Purpose

The purpose of this paper is to examine the anti‐terrorist finance provisions in the Penal Law as well as the vulnerabilities in place that hamper more effective regime.

Design/methodology/approach

The paper identifies the pre‐September 11 legal structure in Jordan regarding terrorist finance. Since, then the amended Penal Law, promulgated on October 8, 2001, has emerged as the principal tool in addressing terrorist finance activities. The paper is divided into five sections covering pre‐existing statutory provisions on terrorist finance, Jordan's counterterrorist financing regime including money laundering law and directives, the anti‐terrorist finance provisions in the Penal with its constituent elements, Jordan's accession to the United Nations Convention for the Suppression of the Financing of Terrorism, and finally the paper provides a set of conclusions.

Findings

There are still many loopholes to close in Jordan's anti‐terrorist finance initiatives. There is a need for greater enforcement of existing provisions with an eye to expanding the scope of article 147(2) of the Penal Law to include Islamic banks, hawala, charities, and zakat. A clear definition of the term “terrorist activity” should be supplied in article 147(2) and penalties for terrorist finance offense should be tightened.

Research limitations/implications

Lack of publications or research on the subject of terrorist finance in Jordan in Arabic.

Practical implications

This paper will be very helpful for any individual interested in the legal regime of anti‐terrorist financing as it exists in Jordan.

Originality/value

This paper meets a need for an understanding of the Jordanian legal regime as applied to anti‐terrorist financing and offers insights to lawyers and academics.

Details

Journal of Money Laundering Control, vol. 10 no. 2
Type: Research Article
ISSN: 1368-5201

Keywords

Content available
Article
Publication date: 2 January 2018

Nikos Passas

Response to suggestion that EU-wide cash payment limits would assist in the control of terrorism finance and money laundering.

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4835

Abstract

Purpose

Response to suggestion that EU-wide cash payment limits would assist in the control of terrorism finance and money laundering.

Design/methodology/approach

Desk review and interviews

Findings

The inception impact assessment (IIA) is ill-conceived, not grounded on firm empirical evidence and harmful to both crime control and the legitimate interests and rights of the EU citizens. The action under discussion is presented as a measure against terrorism finance, serious crime and tax evasion. The problem is that these criminal acts correspond to very different methods, volumes, perpetrators, causes and control challenges. Cash payment limitations (CPLs) are nowhere near a panacea that can address all of them and cannot make any of them go away magically. Even when each of these crime challenges are considered on their own, the empirical linkage of CPLs to effective controls is not there. The evidence from EU countries with CPLs in place shows higher levels of informal economy, corruption, tax evasion and terrorism risks than those without. There is substantial evidence of non-cash, very serious and organized crime, while the amounts needed and used by terrorists in Europe are usually very small in cash transactions, way below the thresholds under consideration. In fact, determined offenders will shift to other methods and become more sophisticated, posing new problems to controllers. Displacement and incentives for better-organized crime may well be the main products of such measures.

Originality/value

It counters the argument that the cash payment limits can help reduce serious crime, while pointing to several adverse consequences on legitimate interests and human rights.

Details

Journal of Financial Crime, vol. 25 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

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Book part
Publication date: 22 November 2016

Inna Romānova and Marina Kudinska

Global economy, growing importance of innovations as well as wide use of technologies have changed the banking business worldwide. Financial technologies (FinTech) have…

Abstract

Global economy, growing importance of innovations as well as wide use of technologies have changed the banking business worldwide. Financial technologies (FinTech) have become an integral part of banking, and nowadays banks have started to compete beyond financial services facing increasing competition from nonfinancial institutions providing, for example, payment services. Start-up service providers, search engines, and social networks have expanded their services “interfering” in the fields traditionally covered by banks. The rapid rise of FinTech has changed the business landscape in banking asking for more innovative solutions. These recent tendencies require the banks to increase investment in FinTech, rethink service distribution channels, especially the business-to-consumers models, increase further standardization of back-office functions, etc. Some members of the financial services industry see the boom in FinTech as a threat to traditional banking industry. Others believe that FinTech has become a challenge that can be turned into an opportunity as it provides more flexibility, better functionality in some areas, and aggregation of services. The aim of the paper is to analyze the recent trends in banking, identifying opportunities and risks of FinTech for banks. A timely integration of FinTech into business allows banks to get an advantage in growing competition. This paper provides an extensive analysis of recent trends in FinTech and banking, examining experience of leading European and US banks, as well as surveys conducted among members of the financial services industry in different countries. The authors have studied the development of the financial innovation and technology market, assessed the existing practices applied in the field of FinTech, identified the main risks related to development of FinTech and financial innovations the banks are exposed to on the micro- and macrolevel. The paper provides recommendations for regulators and banks to ensure reduction of risks associated with development of FinTech. Analysis of FinTech market has shown growing competition, including from nonfinancial institutions. The paper provides practical recommendations to commercial banks for strengthening the position in financial innovations and controlling the risks associated with introduction of financial innovations.

Details

Contemporary Issues in Finance: Current Challenges from Across Europe
Type: Book
ISBN: 978-1-78635-907-0

Keywords

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Article
Publication date: 1 January 1998

Anita Ramasastry

The geographic targeting order (GTO) is a legal mechanism whereby the US federal government can require financial institutions within a certain geographic range to supply…

Abstract

The geographic targeting order (GTO) is a legal mechanism whereby the US federal government can require financial institutions within a certain geographic range to supply information concerning currency transactions. This tool came into existence in 1988 and has only recently proved to be a potent weapon in the fight against international money laundering. Very recently, the US Department of Treasury (‘Treasury’) and the federal government were able to score a major victory when they utilised a GTO to thwart the flow of drug proceeds to Colombia through New York money transmitters.

Details

Journal of Money Laundering Control, vol. 1 no. 3
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 8 May 2018

Anthony R.G. Nolan, Edward T. Dartley, Mary Burke Baker, John ReVeal and Judith E. Rinearson

To describe several key legal and regulatory considerations for initial coin offering (ICO) issuers and investors seeking to navigate some of the regulatory waters in the…

Abstract

Purpose

To describe several key legal and regulatory considerations for initial coin offering (ICO) issuers and investors seeking to navigate some of the regulatory waters in the rapidly developing space of Bitcoin, Ether, and other cryptocurrencies.

Design/methodology/approach

Explains securities law, commodities law, tax and anti-money laundering considerations. Introduces the SAFT (Simple Agreement for Future Tokens) and provides a future outlook.

Findings

The dramatic rise in value of Bitcoin, Ether, and other cryptocurrencies in 2017 generated great interest in initial coin offerings as a new form of financing on the part of both investors and companies seeking to raise funds. At the same time, ICOs raise a myriad of complex legal issues in a rapidly evolving regulatory environment in the United States and around the world. Recent regulatory actions make it more likely that most ICOs will be considered to be securities offerings.

Originality/value

Practical guidance from experienced finance, investment management, consumer financial service, tax, and payment systems lawyers.

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Article
Publication date: 31 December 2002

Trifin J. Roule and Jeremy Kinsell

Begins with the undoubted benefits of suspicious activity reports (SARs) in identifying and indicting terrorist financing schemes and detecting money laundering trends…

Abstract

Begins with the undoubted benefits of suspicious activity reports (SARs) in identifying and indicting terrorist financing schemes and detecting money laundering trends like abuse of telephones card sales and money order transmitters; but comparative analysis of anti‐money laundering efforts in over 20 jurisdictions shows that use of SARs is routinely hindered by legislative and bureaucratic deficiencies. Outlines legislative impediments, of which the most common is the lack of safe harbour protection for financial personnel who report suspicious transactions; another is the absence of a Financial Intelligence Unit (FIU) in a country to oversee the collection and investigations of SARs, and a third is failure to share SAR information with foreign regulators. Moves on to bureaucratic impediments, including failure to train and staff FIUs properly; FIUs also often lack necessary computer systems for effective information exchange, while many jurisdictions put time or other limits on FIU investigation of the huge numbers of SARs generated by banks and other institutions.

Details

Journal of Money Laundering Control, vol. 6 no. 2
Type: Research Article
ISSN: 1368-5201

Keywords

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