Regulating virtual currencies – the challenges of applying fiat currency laws to digital technology services

2018 ◽  
Vol 25 (2) ◽  
pp. 562-575 ◽  
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Risk Assessment ◽  
New York ◽  
Financial Services ◽  
Banking Sector ◽  
Financial Regulation ◽  
New York State ◽  
Critical Discussion ◽  
Virtual Currency ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to consider the recent (Dec`15) introduction of the Bitlicensing rules in New York and consider from a banking perspective how this will impact on their own risk assessment processes. The paper also outlines the challenges of applying financial regulation to companies that have an area of expertise and business that is more aligned to software development, rather than financial service provision. Design/methodology/approach This paper is a viewpoint paper, which offers a critical discussion on the FATF guidelines on virtual currencies. The paper compares developments that are currently occurring within the virtual currency sector in particularly the new Bitlicensing process in New York State and discusses the implications to the banking sector on risk assessment processes for virtual currency transactions. Findings This paper will benefit the banking and regulation industries as well as economic and banking academics and anyone with an interest in virtual and digital currency technology. Originality/value This paper is unique in that it examines the issue of virtual currency regulation from a banking perspective. It explains the virtual currency technology as a means to be enhancing banking risk assessment, for clients seeking to incorporate virtual currency transactions into their business. This paper impacts on the banking and regulatory sectors because it critically examines the current practice of over regulation and the impact that this has on alternative financial systems, such as digital and virtual currencies. The paper offers a theoretical framework as well as citing current practical reports of how regulation has already started to affect the financial services landscape. The impact of getting this wrong can lead to increased criminal activity, and this paper highlights how susceptible the financial sector is to this.

Recent key Bitcoin and virtual currency regulatory and law enforcement developments

2015 ◽  
Vol 16 (1) ◽  
pp. 13-18 ◽  
Author(s):  
Evan L. Greebel ◽  
Kathleen Moriarty ◽  
Claudia Callaway ◽  
Gregory Xethalis
Keyword(s):  
New York ◽  
Law Enforcement ◽  
Financial Services ◽  
New York State ◽  
Securities And Exchange Commission ◽  
Regulatory Regime ◽  
York State Department ◽  
Virtual Currency ◽  
Content Type ◽  
Commodity Futures Trading Commission

Purpose – To explain and draw conclusions from six recent bitcoin and virtual currency regulatory and law enforcement developments. Design/methodology/approach – Discusses and draws conclusions from six recent, important developments: two administrative rulings from the Financial Crimes Enforcement Network (FinCEN), recent remarks by New York State Department of Financial Services Superintendent Benjamin Lawsky, remarks by Mark Wetjen of the Commodity Futures Trading Commission (CFTC), a recent Securities and Exchange Commission (SEC) informational sweep of crowdsales of crypto-equity, and the US Department of Justice proceedings against Trendon Shavers. Findings – Rather than trying to stifle or control virtual currencies, US governmental entities recognize the long-term value of virtual currencies and are trying to create a regulatory regime to foster growth and development, and an atmosphere where institutional and retail investors are protected. Originality/value – Provides an overview of the key United States regulatory issues facing companies engaged in Bitcoin-related businesses.

New York BitLicense regulations virtually certain to significantly impact transactions in virtual currencies

2015 ◽  
Vol 16 (4) ◽  
pp. 59-65 ◽  
Author(s):  
Gary DeWaal ◽  
Guy Dempsey
Keyword(s):  
New York ◽  
Cyber Security ◽  
Financial Services ◽  
Design Methodology ◽  
New York State ◽  
Background Information ◽  
York State Department ◽  
Virtual Currency ◽  
Content Type ◽  
Minimum Standards

Purpose – To analyze the New York State Department of Financial Services (NYDFS) final BitLicense regulations with respect to Bitcoin and other virtual currencies. Design/methodology/approach – This article discusses the specific requirements outlined in the NYDFS’s regulations. The article goes on to provide background information on Bitcoin and virtual currencies and examines previous regulatory approaches prior to these regulations. Findings – This article examines how the new regulations require all persons engaging in a virtual currency business to apply and obtain a BitLicense, and to maintain certain minimum standards and programs to help ensure customer protection, cyber-security and anti-money laundering compliance. Financial intermediaries that already are regulated by NYDFS under the New York Banking Law are not required to obtain a BitLicense if they are approved by NYDFS under their existing regulation to conduct virtual currency business activity. Originality/value – This article contains insight and analysis into recent NYDFS regulations on a new currency type from attorneys experienced in financial services and regulatory matters.

FIFA – highlighting the links between global banking and international money laundering

2018 ◽  
Vol 21 (4) ◽  
pp. 498-512 ◽  
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Banking Sector ◽  
Due Diligence ◽  
Content Type ◽  
Services Sector ◽  
Financial Services Sector ◽  
Global Banking ◽  
Beneficial Ownership ◽  
The Impact

PurposeThis paper uses the recent (August 2015) FIFA arrests to provide an example of how illicit financial flows are occurring through the formal banking and financial services sector. The purpose of this paper is to explore which elements of anti-money laundering (AML) compliance need to be addressed to strengthen the banking response and reduce the impact of IFFs within the banking sector.Design/methodology/approachThe paper is based on the indictment document currently prepared for the FIFA arrests and the District Court case of Chuck Blazer the FIFA Whistleblower. It uses the banking examples identified in the indictment as typologies of money laundering and wire fraud. Corresponding industry reports on AML compliance are included to determine where the major weaknesses and gaps are across the financial service.FindingsThe main findings from the analysis are that banks still have weak areas within AML compliance. Even recognised red flag areas such as off shore havens, large wire transfers and front companies are still being used. The largest gaps still appear to be due diligence and beneficial ownership information.Research limitations/implicationsThe research topic is very new and emerging topic; therefore, analysis papers and other academic writing on this topic are limited.Practical implicationsThe research paper has identified a number of implications for the banking sector, addressing AML deficiencies, especially the need to consider the source of funds and the need for further enhanced due diligence systems for politically exposed and influential people and the importance of beneficial ownership information.Social implicationsThis paper has implications for the international development and the global banking sector. It will also influence approaches to AML regulation, risk assessment and audit within the broader financial services sector.Originality/valueThe originality of this paper is the link between the emerging issues associated with allegations of bribery and corruption within FIFA and the illicit financial flow implications across the banking sector.

London

2018 ◽  
Author(s):  
Richard Roberts
Keyword(s):  
New York ◽  
Financial Services ◽  
Financial Regulation ◽  
Global Financial Crisis ◽  
Services Sector ◽  
The Us ◽  
The Global Financial Crisis ◽  
The Uk ◽  
The Impact ◽  
The Eu

At the onset of the Global Financial Crisis in 2007 London was one of the two foremost global financial centres, along with New York. London experienced a 12 per cent fall in wholesale financial services jobs in 2008–9, but a recovery got underway in 2010 and London’s wholesale financial services sector staged a wavering advance. But now there were new challenges, in particular the avalanche of financial regulation coming from the UK, the EU, the US and the G20. Fintech engendered new uncertainties. The impact of Brexit was uncertain, but mostly expected to be negative, at least in the short-term. Furthermore, there was growing competition from Asian and other financial centres. Nevertheless, London remained pre-eminent as one of the two largest global concentrations of wholesale financial services activity and at the top of the Global Financial Centres Index.

scholarly journals Globalization and bank efficiency nexus: empirical evidence from the Malaysian banking sector

2017 ◽  
Vol 24 (5) ◽  
pp. 1269-1290 ◽  
Author(s):  
Fadzlan Sufian ◽  
Fakarudin Kamarudin ◽  
Annuar Md. Nassir
Keyword(s):  
Empirical Evidence ◽  
Financial Services ◽  
Banking Sector ◽  
Economic Globalization ◽  
Bank Efficiency ◽  
Content Type ◽  
Macroeconomic Conditions ◽  
Cultural Proximity ◽  
Political Globalization ◽  
The Impact

Purpose The purpose of this paper is to provide a new empirical evidence on the impact of economic globalization on the efficiency of the banking sector. The paper also investigates to what extent the internal (i.e. bank specific characteristics) and external (i.e. macroeconomic conditions) factors influence the efficiency of banks while controlling for the impact of the different dimensions of globalization. Design/methodology/approach The analysis is confined into two stages. In the first stage, the authors employ the bias-corrected data envelopment analysis method to compute the efficiency of individual banks during the period 1999-2012. The authors then use bootstrap regressions to examine the impact of economic globalization on bank efficiency, while controlling for the potential impacts of contextual variables. Findings The empirical findings indicate that the impacts of personal contacts, information flows, and cultural proximity seem to work in favor of Malaysian banks’ efficiency. A plausible reason could be due to the fact that capital account liberalization is usually accompanied by liberalization of the financial services sector, resulting in a greater competition and subsequently eroding monopolistic profits. The empirical findings also bring forth the importance of and political globalization in determining the efficiency of banks operating in the Malaysian banking sector. Originality/value The present study aims to provide for the first time empirical evidence on the performance of the banking sector and to establish new empirical evidence on the impact of globalization. The empirical evidence on the impact of globalization on the banking sector is completely missing from the literature.

Virtual currency schemes – the future of financial services

foresight ◽  
2015 ◽  
Vol 17 (4) ◽  
pp. 365-377 ◽  
Author(s):  
Alicja Mikołajewicz-Woźniak ◽  
Anna Scheibe
Keyword(s):  
Financial Services ◽  
Service Sector ◽  
Environmental Changes ◽  
Virtual Currency ◽  
Content Type ◽  
Market Growth ◽  
Starting Point ◽  
The Future ◽  
The Impact

Purpose – The purpose of the paper is to determine the future role of virtual currencies. This paper indicates their pros and cons as alternatives to “real” money and explains their appearance as the reflection of the present trends. It also presents the possible scenarios of their development. Design/methodology/approach – The paper is based on the former foresight research results and literature review. It highlights the main trends in contemporary economy and their impact on financial services. The Bitcoin case is the starting point for the virtual currencies’ market analysis and construction of possible market changes scenarios. Findings – Virtual currency schemes are the reflection of present trends. They are just ahead of our times but may become a common means of payment, changing the way of providing financial services, eliminating intermediaries and marginalizing the role of financial institutions. Research limitations/implications – The multiplicity of virtual currencies and ceaseless introduction of innovations impede the presentation of the complete market picture. The lack of reliable statistical data makes the estimation of the market growth difficult. Practical implications – This paper indicates influence of technology development, virtualization and networking on payment systems’ functioning. Social implications – This paper shows the impact of environmental changes on consumers’ acceptance of virtual currencies. Originality/value – The virtual currency as a payment system is quite new and still a marginalized phenomenon. Nevertheless, the pace of virtual currency market growth after its recent introduction and appearance of Bitcoin successors seems to be the signs of future changes in financial service sector.

scholarly journals Spatial and Temporal Factors Associated with an Increased Prevalence of Listeria monocytogenes in Spinach Fields in New York State

2015 ◽  
Vol 81 (17) ◽  
pp. 6059-6069 ◽  
Author(s):  
Daniel Weller ◽  
Martin Wiedmann ◽  
Laura K. Strawn
Keyword(s):  
New York ◽  
Foodborne Pathogens ◽  
Management Practices ◽  
New York State ◽  
Content Type ◽  
Detection Frequency ◽  
Temporal Factors ◽  
Allele Type ◽  
Rain Events ◽  
The Impact

ABSTRACTWhile rain and irrigation events have been associated with an increased prevalence of foodborne pathogens in produce production environments, quantitative data are needed to determine the effects of various spatial and temporal factors on the risk of produce contamination following these events. This study was performed to quantify these effects and to determine the impact of rain and irrigation events on the detection frequency and diversity ofListeriaspecies (includingL. monocytogenes) andL. monocytogenesin produce fields. Two spinach fields, with high and low predicted risks ofL. monocytogenesisolation, were sampled 24, 48, 72, and 144 to 192 h following irrigation and rain events. Predicted risk was a function of the field's proximity to water and roads. Factors were evaluated for their association withListeriaspecies andL. monocytogenesisolation by using generalized linear mixed models (GLMMs). In total, 1,492 (1,092 soil, 334 leaf, 14 fecal, and 52 water) samples were collected. According to the GLMM, the likelihood ofListeriaspecies andL. monocytogenesisolation from soil samples was highest during the 24 h immediately following an event (odds ratios [ORs] of 7.7 and 25, respectively). Additionally,Listeriaspecies andL. monocytogenesisolates associated with irrigation events showed significantly lowersigBallele type diversity than did isolates associated with precipitation events (P= <0.001), suggesting that irrigation water may be a point source ofL. monocytogenescontamination. Small changes in management practices (e.g., not irrigating fields before harvest) may therefore reduce the risk ofL. monocytogenescontamination of fresh produce.

Illicit financial flows: HSBC case study

2018 ◽  
Vol 21 (2) ◽  
pp. 231-246 ◽  
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Banking Sector ◽  
Financial Flows ◽  
Content Type ◽  
Services Sector ◽  
Financial Services Sector ◽  
Beneficial Ownership ◽  
Illicit Financial Flows ◽  
The Impact

Purpose This paper provides examples of how illicit financial flows (IFFs) are occurring through the formal banking and financial services sector. The purpose of this paper is to explore which elements of anti-money laundering (AML) compliance need to be addressed to strengthen the banking response and reduce the impact of IFFs within the banking sector. Design/methodology/approach The paper uses a number of sources of secondary data including the Swiss leaks data for HSBC and also the Permanent Sub Committee Report on HBUS in the USA, the OECD report on money laundering compliance and Financial Action Task Force (FATF) guidelines on beneficial ownership. It links this information to the relevant IFF reports produced through Global Financial Integrity to highlight the connection between banking AML compliance and IFF transfers through the banking sector. Findings The main findings from the analysis are that banks have a greater legal responsibility towards detecting and reporting suspicious transactions than they would have previously considered. This includes identifying the source and purpose of fund transfers and establishing the beneficial ownership of recipients. Research limitations/implications The research topic is new; therefore, analysis papers and other academic writing on this topic are limited. Practical implications The research paper has identified a number of implications to the banking sector on addressing AML deficiencies, especially the need to improve standards of beneficial ownership verification and customer due diligence (CDD) checks for politically exposed persons. Social implications This paper has implications for the international development and the global banking sector. It will also influence approaches to AML regulation, risk assessment and audit within the broader financial services sector. Originality/value The originality of this paper is the link between the HSBC cases and IFFs and the implications this will have for future AML compliance processes across the banking sector.

Risk of money laundering in the US: HSBC case study

2016 ◽  
Vol 19 (3) ◽  
pp. 225-237 ◽  
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Risk Assessment ◽  
Money Laundering ◽  
Corporate Culture ◽  
Financial Services ◽  
Banking Sector ◽  
Internal Audit ◽  
Governance Structure ◽  
Content Type ◽  
Global Banking

Purpose This paper uses a case study approach using the Permanent Sub Committee on Investigations (PSI) report on HBUS to determine where gaps in anti-money laundering (AML) regulation and compliance are within the banking sector. Design/methodology/approach The PSI highlighted five areas of serious weakness and fundamental flaws in the HBUS AML risk assessment. This paper examines the governance response that led to these weaknesses and applies a rationale decision-making theoretical framework to explain it. Findings The report found that corporate culture and attitude at the governance level were key factors in the difficulties that HBUS faced. Research limitations/implications This paper focuses on one case, albeit one of the largest banks in the global banking sector. Although generalisations are limited, the report does highlight areas to consider with all banks. Practical implications The implications that are identified are aimed at banks and auditing firms that have to work alongside governance structure within banks. The role of internal audit is raised and has future implications for how risk assessment is undertaken and how AML compliance frameworks are devised and reported on. Social implications A stronger social corporate responsibility attitude is suggested that considers the wider social impacts of supporting criminal transactions, even inadvertently, by inappropriate and under-resourced AML risk-assessment frameworks. Originality/value The detailed analysis of one case that considers the governance response to AML regulation is new in this paper, and the detailed recommendations for improving and developing stronger AML risk-assessment frameworks apply to the banking, financial services and auditing professions.

Explaining customers’ financial service choice with loyalty and cross-buying behaviour

2017 ◽  
Vol 31 (6) ◽  
pp. 539-555 ◽  
Author(s):  
Antonia Estrella-Ramón
Keyword(s):  
Financial Services ◽  
Banking Sector ◽  
Strategy Formulation ◽  
Customer Choice ◽  
Content Type ◽  
Logistic Regression Models ◽  
Service Category ◽  
Behavioural Factors ◽  
Buying Behaviour ◽  
The Impact

Purpose This paper aims to examine the impact of the customer’s previous transaction behaviour (represented by loyalty and general cross-buying) on his/her choice of specific services offered by the same financial services provider. Design/methodology/approach This study uses a set of logistic regression models by incorporating panel data from a large bank. The database consists of 2,187 randomly selected customers, and it includes features related to individual loyalty and cross-buying behaviours, as well as demographic indicators, i.e. individual measures related to each customer and each service. Findings From the results obtained, a large variation in customer choice behaviour with regard to the studied banking services was observed. These results reveal which customer transactional behaviours drive cross-category financial services purchases. Originality/value In academic literature, little progress has been made in the study of individual and behavioural factors that affect customer choices by service category, especially within the banking sector. By understanding customer choices, the company will be able to meet customer needs in a more appropriate way, thereby increasing its competitiveness. Hence, the results from this study have both managerial and research implications, improving the strategy formulation of financial services companies.

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