Search results

This study aims to evaluate the advantages and disadvantages of auditor mandatory suspicious activity reporting versus the exercise of professional judgement in the anti-money laundering regimes of the UK and the USA.

The research draws upon the following sources. Firstly, statistics provided by the UK National Crime Agency, 2019 (NCA) regarding suspicious activity report (SAR) filing rates. Secondly, anti-money laundering legislation in the USA and UK. Thirdly, statements made in the political domain in the USA, particularly those which raised constitutional concerns during the progress of the Patriot Act 2001. Finally, statements and recommendations by a UK Parliamentary Commission enquiring into the effectiveness of the suspicious activity reporting regime.

The UK reporting regime does not accommodate professional judgement, resulting in the filing of SARs with limited intelligence value. This contrasts with discretionary reporting in the USA: voluntary reporting guides and influences auditor behaviour rather than mandating it. Defensive filing by UK auditors (defence to anti-money launderings [DAMLs]) has increased in recent years but the number of SARs filed has declined.

The study evaluates auditor behavioural responses to legislative regimes which mandate or alternatively accommodate discretion in the reporting suspicion of money laundering. Consideration of constitutional and judicial activism in this context is a novel contribution to the literature. For its theoretical framework the study uses Foucault’s concept of discipline of the self to evaluate auditor behaviour under both regimes.

Free banking theory, as developed in Adam Smith’s 1776 treatise, “The Wealth of Nations” is a useful tool in determining the extent to which the “invisible hand of the market” should prevail in regulatory policy. The purpose of this study is to provide a timely review of the literature, evaluating the theory’s relevance to regulation of financial technology generally and cryptocurrencies (cryptos) specifically.

The methodology is qualitative, applying free banking theory as developed in the literature to technology-defined environments. Recent legislative developments in the regulation of cryptocurrencies in the UK, European Union and the USA, are drawn upon.

Participants in volatile cryptocurrency markets should bear the consequences of inadvisable investments in accordance with free banking theory. The decentralised nature of cryptocurrencies and the exchanges on which these are traded militate against coordinated oversight by central banks, supporting a qualified free banking approach. Differences regarding statutory definitions of cryptos as units of exchange, tokens or investment securities and the propensity of these to transition between categories across the business cycle render attempts at concerted classification at the international level problematic. Prevention of criminality through extension of Suspicious Activity Reporting to exchanges and intermediaries should be the principal objective of policymakers, rather than definitions of evolving products that risk stifling technological innovation.

The study proposes that instead of a traditional regulatory approach to cryptos, which emphasises holders’ safety and compensation, a free banking approach combined with a focus on criminality would be a more effective and pragmatic way forward.

This paper aims to compare products traded in secular and Islamic banking environments prior to the credit crunch of 2007–2008; to locate the comparison in a Schumpeterian model of creative destruction of dynamic innovation in the capital markets; and to evaluate the implications for diversity of investor product choice.

Financial products are critiqued using qualitative criteria, including underestimation of risk implicit in mortgage-backed securities and securitisation, excessive speculative activity in credit default swaps and the magnification of leverage and volatility. Comparable Islamic products are considered for the extent to which they facilitate the same precursors of market crises.

Innovation in secular financial markets has traditionally led to asset bubbles, underestimation of risks and market exuberance. Islamic banking constrains creativity by prohibiting risk transference and disconnection of financing activity from social context and economic purpose. As such, the latter reduces Schumpeterian creative destruction but at the cost of reduced investor choice and market liquidity. Restriction of the reallocation of risk between those who do not wish to hold it and those who do dampens innovation but would have prevented the trading of products which contributed to the credit crunch.

The constraining effect of Islamic banking upon creativity and innovation is considered alongside its capacity to reduce market volatility, speculation and systemic instability. Schumpeterian theory deepens the analysis in terms of the drivers of innovation and market collapse.

This study aims to identify the sources of laundered money in Iran and the destinations to which it is transferred, independently verified by auditors. Based on such data, the study aims to develop a simple model of endogenous and exogenous factors facilitating money laundering in developing countries, which can inform domestic and international legislative and regulatory responses.

Questionnaires were sent to Iranian certified public accountants who worked for auditing firms in 2019 and who have encountered suspected money laundering during their work with clients.

The government and public officials are the primary sources of money laundering activity in Iran. The main destinations of laundered funds are investments abroad, gold, foreign currencies, real estate and purchases of luxury goods. Domestic legislation, while bearing similarities with that found in other jurisdictions such as the UK and the USA, is flawed in several ways, including an inability to determine beneficial ownership of funds and weak enforcement.

Because of international sanctions and the prevailing political situation, it is difficult to obtain data for money laundering and other financial crimes in Iran. The data obtained is of importance to international bodies in understanding the nature of money laundering in Iran, and how to negotiate in the future to address mutual concerns. Given the country’s perceived high association with money laundering, the data obtained is of value in identifying the specific characteristics of the problem.

Iran has been ranked by the Basel Committee on Banking Supervision and the Financial Action Task Force (FATF) as one of the foremost countries in the world for money laundering. However, Iranian banks claim that they comply with international standards for reporting suspicious activity, risk management and training. This paper aims to investigate this dichotomy between perception and reality.

A Wolfsberg-style questionnaire was sent to partners in Iranian accounting firms, which have audited domestic banks over the past five years to investigate the adequacy of risk management systems.

Most Iranian banks have anti-money laundering (AML) systems, which compare favourably with those of international counterparties. Banks take a risk-based approach to potential criminal behaviour. The negative perception of Iranian banks is principally attributable to the government’s unwillingness to accede to “touchstone” international conventions. In spite of having in place AML laws, which are comparable in intent with those of the UK and the United States of America (USA), weak enforcement remains a significant impediment of which the political establishment is aware.

Measures required to bring Iranian banks into compliance with international standards may be less extensive than perceptions suggest. However, failure of the government to accede to conventions stipulated by the FATF means that banks may remain ostracised by foreign counterparties for the foreseeable future.

This study provides a unique insight into the extent of AML compliance in Iranian banks as verified by external auditors.

Audit committees (ACs) have an important role to play in banks in Saudi Arabia in detecting and reporting weaknesses which may make financial crime possible. The Saudi Arabian Corporate Governance Code of 2016 comprises recommendations for ensuring the effectiveness of these committees, but cultural and behavioural factors can constitute impediments. This paper aims to explore these factors and makes recommendations.

The methodology is qualitative, using data derived from responses to a questionnaire administered to 180 current and former members of internal and external audit teams of Saudi Arabian banks.

ACs in Saudi financial institutions enjoy a high degree of functional independence of boards. Boards tend to regard ACs as part of the organisation: in contrast, AC members perceive their first duty as being owed to stakeholders. Disagreements between boards and ACs regarding disclosure of findings of systemic weaknesses which facilitate money laundering (ML) are made publicly available; this engenders transparency and avoidance of collusion. Professional qualifications and experience of AC members have improved substantially in recent years, equipping them to better discharge statutory duties regarding the detection and reporting of suspected ML.

The regulatory body, the Saudi Arabian Markets Authority, should be diligent in ensuring the presence of non-executive directors in sufficient numbers to counterbalance influence by boards. Disagreements between boards and ACs regarding internal systemic changes to prevent ML and other financial crimes should be formally recorded in minutes and made public as a matter of record.

Questionnaire responses by past and present members of ACs are unique and contribute to the literature.

This study aims to compare judicial and auditor expectations of audit in the detection and reporting of money laundering in Iran. It also aims to assess the implications of expectations gap for the reliability of data provided to the Financial Action Task Force (FATF) in its blacklisting policy.

Questionnaires were administered to auditors to determine perceptions of their anti-money laundering (AML) reporting obligations. These were also completed by Iranian judges who hear money laundering prosecutions and who agreed to participate in the research. The group was created through the “snowballing” technique.

There is significant divergence between judges and auditors regarding the latter’s AML reporting obligations. Self-perception among auditors regarding investigative duties is insufficiently aligned with expectations of the FATF, particularly where there is use of corporate structures, charities and trusts in which identity of true owners, of payers and payees of funds cannot be accurately verified. This gap presents a significant terrorist financing risk.

The expectations gap makes training in forensic accounting, as well as compliance with international reporting expectations, a matter of urgency for the Iranian auditing profession. The judiciary needs to be more aware of international expectations.

Data regarding judicial expectations of auditors’ AML reporting obligations is difficult to obtain and of a highly sensitive nature. This research has obtained such data which has relevance to the FATF blacklisting policy, and to international organisations tasked with disrupting terrorist financing networks.

This paper aims to explore the nature of the emerging discourse of private climate change reporting, which takes place in one‐on‐one meetings between institutional investors and their investee companies.

Semi‐structured interviews were conducted with representatives from 20 UK investment institutions to derive data which was then coded and analysed, in order to derive a picture of the emerging discourse of private climate change reporting, using an interpretive methodological approach, in addition to explorative analysis using NVivo software.

The authors find that private climate change reporting is dominated by a discourse of risk and risk management. This emerging risk discourse derives from institutional investors' belief that climate change represents a material risk, that it is the most salient sustainability issue, and that their clients require them to manage climate change‐related risk within their portfolio investment. It is found that institutional investors are using the private reporting process to compensate for the acknowledged inadequacies of public climate change reporting. Contrary to evidence indicating corporate capture of public sustainability reporting, these findings suggest that the emerging private climate change reporting discourse is being captured by the institutional investment community. There is also evidence of an emerging discourse of opportunity in private climate change reporting as the institutional investors are increasingly aware of a range of ways in which climate change presents material opportunities for their investee companies to exploit. Lastly, the authors find an absence of any ethical discourse, such that private climate change reporting reinforces rather than challenges the “business case” status quo.

Although there is a wealth of sustainability reporting research, there is no academic research on private climate change reporting. This paper attempts to fill this gap by providing rich interview evidence regarding the nature of the emerging private climate change reporting discourse.

The aim of this paper is to confront the Balanced Scorecard (BSC) with Simons’ levers of control model and to discuss its role in the various phases of the strategic process. The authors examine the role of the BSC as a tool of interactive and diagnostic control by making a distinction between its design phase and its phase of use.

An action research approach, based on two cases, was used to investigate the role of the balanced scorecard in strategic processes.

The results show that the BSC generates a process of collective elucidation favouring the forming of emergent strategies and a process of control of the change favouring the collective representations on the strategy. The BSC thus seems to be a relevant tool for interactive control during its implementation stage. On the other hand, the authors’ observations also show the failure of the BSC as a system of diagnostic control and of interactive control during its using stage. Ultimately, it is shown that the model of Simons provides the BSC with a relevant theoretical framework to clarify the practice of strategic control.

The study highlights the interest of field studies, and more particularly, processuals and longitudinal approaches, in management accounting research.

The study of two cases underlines the strategic contribution of the BSC by highlighting its role in building a strategy.

The field study allows us to observe how the design of a management control tool such as the BSC occurs during the strategy‐forming phase.

A collection of essays by a social economist seeking to balance economics as a science of means with the values deemed necessary to man′s finding the good life and society enduring as a civilized instrumentality. Looks for authority to great men of the past and to today′s moral philosopher: man is an ethical animal. The 13 essays are: 1. Evolutionary Economics: The End of It All? which challenges the view that Darwinism destroyed belief in a universe of purpose and design; 2. Schmoller′s Political Economy: Its Psychic, Moral and Legal Foundations, which centres on the belief that time‐honoured ethical values prevail in an economy formed by ties of common sentiment, ideas, customs and laws; 3. Adam Smith by Gustav von Schmoller – Schmoller rejects Smith′s natural law and sees him as simply spreading the message of Calvinism; 4. Pierre‐Joseph Proudhon, Socialist – Karl Marx, Communist: A Comparison; 5. Marxism and the Instauration of Man, which raises the question for Marx: is the flowering of the new man in Communist society the ultimate end to the dialectical movement of history?; 6. Ethical Progress and Economic Growth in Western Civilization; 7. Ethical Principles in American Society: An Appraisal; 8. The Ugent Need for a Consensus on Moral Values, which focuses on the real dangers inherent in there being no consensus on moral values; 9. Human Resources and the Good Society – man is not to be treated as an economic resource; man′s moral and material wellbeing is the goal; 10. The Social Economist on the Modern Dilemma: Ethical Dwarfs and Nuclear Giants, which argues that it is imperative to distinguish good from evil and to act accordingly: existentialism, situation ethics and evolutionary ethics savour of nihilism; 11. Ethical Principles: The Economist′s Quandary, which is the difficulty of balancing the claims of disinterested science and of the urge to better the human condition; 12. The Role of Government in the Advancement of Cultural Values, which discusses censorship and the funding of art against the background of the US Helms Amendment; 13. Man at the Crossroads draws earlier themes together; the author makes the case for rejecting determinism and the “operant conditioning” of the Skinner school in favour of the moral progress of autonomous man through adherence to traditional ethical values.