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

Desk review and interviews

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.

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.

The purpose of this paper is to raise the question of whether the combating the financing of terrorism (CFT) arsenal following the attacks of 11 September 2001 was developed and applied too fast, to the point of being unnecessarily costly, ineffective, unfair and even counterproductive.

An outline of two private sector contributions follows two illustrations of areas in which CFT policies may be resting on shaky assumptions, missing their targets and rendering the international community more vulnerable to extremist actions: the regulation of cross‐border fund transfers and commodities trade.

Many of the control functions have been de facto outsourced to the private sector without proper guidance and accountability.

The paper goes beyond a mere critique of current regulatory and control arrangements to suggest concrete ways in which the private sector can support the objectives of CFT policies more efficiently and productively.

Indicates the importance of the Informal Value Transfer System (IVTS) and hawala in particular as a means whereby immigrant workers can send remittances to their home countries, and the reasons for suspecting that these systems can be used to transfer funds which support terrorist activities. Lists the indicators of IVTS activity. Lists and discusses the possible indicators of criminal abuse: different charging, recording or collection methods for some clients, some large transactions not recorded, large sums transferred daily or from a single customer, unusual or unsound transactions, and transfers to traders or companies engaged in a very different kind of business or in illegal activities. Argues that a large daily turnover may be the most important indicator, since this can indicate that money is going out one door in order to come back through the other, which means money laundering.

Defines hawala, which in Arabic means “transfer”; what distinguishes it from other fund transfer methods is its informality, reliance on trust and networks, and lack of records. Describes how it can be used to finance terrorism and launder money, evade tax and so on. Discusses the many problems for law enforcement arising from the lack of records in hawala, or sometimes an excess of confusing records, and the mix of various businesses which tend to coexist with hawala transactions; also linguistic issues, cultural and legal or administrative differences between communities and countries, and “benami” accounts, which are false name or nominee accounts often accepted in ethnic groups that also engage in hawala. Concludes that the success of law enforcement efforts to solve cases depends on international cooperation, but that this is not always forthcoming; excessive zeal may sour working relationships, and it may not be easy even to know whether policies are working.

The aim of this paper is to contribute to one's understanding of vulnerabilities for abuse in the realm of trade and commerce, and to appreciate how inattention to this issue undermines all other financial controls.

The authors review the US rules and regulations regarding non‐vessel‐operating common carriers and Customs brokers pointing out ways in which the current regulatory framework can be violated.

It was found that the potential for the commission of serious crime through import/export activities is high and requires urgent attention, without which all AML/CFT and anti‐corruption efforts can be rendered ineffective.

More data and analysis of trade transparency and national rules as well as cases highlighting concretely how these are being infringed is indispensable for planning and implementation of trade transparency initiatives.

As trade transparency units or similar projects are likely to emerge, strategic thinking, coordination of efforts and maximization of synergies for improved governance and crime control are imperative. Failure to do so will allow serious misconduct and security risks to remain high.

AML/CFT and anti‐corruption practitioners, donor organizations and technical assistance providers ought to be familiar with the significance of weak capacities to trace and monitor trade transactions and how to connect this issue with wider governance and crime control policies/measures.

The purpose of this paper is to highlight criticism of attempts to impose regulations on hawala and other informal value transfer systems (IVTSs), in light of their importance in the lives of people in the most vulnerable sectors of global society.

Review of scholarly, public‐policy, and legal literature on hawala and other IVTSs.

Most attempts to regulate hawala and other IVTSs seem redundant of existing regimes, or, worse, unreasonably punitive when their social utility is considered.

A contribution to the debate on the supposed need to regulate hawala and other IVTSs favored by the poorest and most vulnerable sectors of global society.

A unifying theme apparent at this year's Symposium was the need for balance when lifting the veil of bank secrecy: (1) the need to protect civil liberties versus the need to fight crime; (2) the bank's need to balance its role as policeman while furthering its commercial objectives; (3) the necessity of weighing international cooperation against the awareness that individual nations jealously guard their own legislative regime; (4) the dichotomy of technology that serves both to protect and penetrate secrecy; (5) the balance required when investigating crimes.

This paper aims to help build awareness with financial institutions about the money laundering risks posed by individuals who have been unknowingly recruited as Money Mules and the measures that financial institutions can adopt to detect illicit funds which are being received into the bank accounts of low risk or medium risk customers who are unknowingly recruited as “Money Mules”.

The research took the form of a desk study, which analysed various documents and reports such as a 2019 report on Money Mules by the European Union Agency for Law Enforcement Cooperation (EUROPOL); a 2019 and 2020 report on Money Mules by the Federal Bureau of Investigation (FBI) and the Better Business Bureau (BBB); the Financial Action Task Force Guidance on the Risk Based Approach to Combating Money Laundering and Terrorist Financing (High Level Principles and Procedures) 2007; the Financial Action Task Force Recommendations 2012; the United Kingdom’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017; the United States Federal Financial Institutions Examination Council Bank Secrecy Act/Anti-Money Laundering Examination Manual 2014; Transparency International Corruption Perceptions Index 2018; The UK Proceeds of Crime Act 2002 (as amended); the Joint Money Laundering Steering Group JMLSG, Prevention of money laundering/combating terrorist financing: Guidance for the UK financial sector Part I June 2017 (Amended December 2017); the United States Codified Bank Secrecy Act Regulations (31 CFR); the Nigerian Money Laundering Prohibition Act 2011 (as amended); and the Joint Money Laundering Steering Group JMLSG, Prevention of money laundering/combating terrorist financing: Guidance for the UK financial sector Part II: Sectoral Guidance June 2017 (Amended December 2017).

This paper determined that financial institutions may be able to prevent proceeds of crime from being laundered by individuals who have been unknowingly recruited as Money Mules if they focus monitoring resources on the emotionally vulnerable customers like newcomers to the country, unemployed people who may have lost their jobs because of a pandemic like COVID-19, students and those in economic hardship; pay very close attention to the country of origin where the funds emanate from; pay very close attention to the country where the funds are being transferred to; and pay close attention to frequent large cash deposits followed by wire transfers.

While most articles focus on the money laundering risk(s) associated with Money Mules and the measures that individuals can use to ensure that their bank accounts are not used by criminals to launder illicit funds, this paper focuses on the different mechanisms that banks can use to detect illicit funds which are being received into the bank accounts of low risk or medium risk customers who are unknowingly recruited as “Money Mules”. This paper recommends a proportional approach that balances anti-money laundering measures, financial inclusion and human rights. The mechanisms/measures which have been extensively discussed in this paper will help banks to identify, assess and understand their money laundering and terrorist financing risks as it relates to Money Mules and take commensurate measures to mitigate them.

The purpose of this paper is to discuss various situations in the Islamic financial services industry that are asserted to facilitate money laundering and the counter-arguments to the assertions.

The approach adopted by this paper is a review of literature and of several practices of Islamic financial institutions in a number of countries.

There is no evidence to support the contentions that Islamic financial institutions facilitate money laundering. Further, Islamic financial institutions are not any more susceptible to money laundering than conventional financial institutions are.

This paper demonstrates that Islamic financial institutions are not conduits for money laundering.

The Common Agricultural Policy involves a substantial part of the European Community's multi‐billion pound annual expenditure. Close to the heart of many Member States with their need to respond to demands of the agricultural community, the policy has often resulted in a failure to ensure that effective and adequate means to monitor, scrutinise and police a complex and costly activity are in place. In the UK the Intervention Board has taken the opportunity to develop its own response of an integrated fraud prevention, detection and investigation strategy that is now paying dividends in the protection and policing of the expenditure of public funds.