Cryptocurrencies and financial crime: solutions from Liechtenstein

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fabian Maximilian Johannes Teichmann ◽  
Marie-Christin Falker
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Design Methodology ◽  
Financial Crime ◽  
Public Officials ◽  
Content Type ◽  
International Standard ◽  
Terrorist Financing ◽  
International Regulations ◽  
Current Compliance

Purpose The purpose of this paper is to illustrate how cryptocurrencies are being used as a vehicle for financial crime (such as money laundering, terrorist financing and corruption) and propose a more effective international standard for regulation that uses the Liechtenstein blockchain act as a benchmark. Design/methodology/approach This paper investigates how cryptocurrencies facilitate financial crime through a qualitative study consisting of interviews with 10 presumed providers of illegal financial services and 18 international compliance experts. Findings This study shows that cryptocurrencies are a highly suitable vehicle for money laundering, terrorist financing and corruption and that current compliance efforts in the cryptocurrency sector are ineffective. Research limitations/implications The presented findings illustrate that for a more effective combat of financial crime via cryptocurrency, an international standard for blockchain and cryptocurrency regulation must be created. This paper suggests that Liechtenstein’s innovative and comprehensive blockchain act could be used as a basis for said standard. Practitioners should also consider cooperating transnationally when prosecuting financial crime via cryptocurrency. Originality/value The fact that cryptocurrencies facilitate financial crime is widely known. However, this study combines the perspectives of both compliance experts and presumed criminals to gain a comprehensive understanding of the techniques that money launderers, terrorist financiers and corrupt public officials use. This paper examines the potential for the innovative Liechtenstein blockchain act, which has, thus, far not received empirical attention, to set the benchmark for international regulations.

Beyond placement, layering and integration – the perception of trade-based money laundering risk in UK financial services

2019 ◽  
Vol 22 (4) ◽  
pp. 614-625 ◽  
Author(s):  
Mario Menz
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Design Methodology ◽  
Banking Sector ◽  
Trade Finance ◽  
Content Type ◽  
Proceeds Of Crime ◽  
The Uk ◽  
Practical Implications ◽  
Insight Into

Purpose The purpose of this study was to investigate the perception of trade-based money laundering in Letters of Credit (“L/C”) transactions among trade finance practitioners in the UK banking sector and to compare it to the perception of the same risk by the Financial Conduct Authority (“FCA”), the regulator of the UK’s banking sector. Design/methodology A survey was used to carry out research among financial services professionals engaged in trade finance in the UK. Findings This paper contributes to the existing literature in a number of ways. First, it investigates the perception of trade-based money laundering risk from the perspective of financial services professionals, which has not previously been done. Second, it argues that the perception of trade-based money laundering in financial services is overly focussed on placement, layering and integration, and that the full extent of the offence under the Proceeds of Crime Act 2002 is less well known. It further found that financial services firms need to improve their understanding of the nature of trade-based money laundering under UK law. Practical implications This study argues that the financial services sector’s perception of trade-based money laundering risk in trade finance is underdeveloped and makes suggestions on how to improve it. Originality/value It provided unique insight into the perception of trade-based money laundering risk among financial services professionals.

scholarly journals Anti-money laundering and counter-terrorist financing threats posed by mobile money

2019 ◽  
Vol 22 (1) ◽  
pp. 158-172 ◽  
Author(s):  
James Whisker ◽  
Mark Eshwar Lokanan
Keyword(s):  
Law Enforcement ◽  
Money Laundering ◽  
Design Methodology ◽  
Global Awareness ◽  
Content Type ◽  
Mobile Money ◽  
Terrorist Financing ◽  
Factors Associated ◽  
Three Stages ◽  
Practical Implications

Purpose The purpose of this paper is to explore the various characteristics of mobile money transactions and the threats they present to anti-money laundering (AML) and counter terrorist financing regimes. Design/methodology/approach A thorough literature review was conducted on mobile money transactions and the associated money-laundering and terrorist financing threats. Four key themes were identified in relations to the three stages of money laundering and effective law enforcement. Findings The findings indicate that as money laundering and terrorist financing transactions continue to gravitate towards the weaknesses in the financial system, mobile money provides yet another avenue for criminals to exploit. Risk factors associated with anonymity, elusiveness, rapidity and lack of oversights were all integral considerations in building an effective AML regime. The use of cash is considered a higher threat than mobile money prior to implementation of systems and controls. Practical implications This rapidly changing environment of how individuals manage their money during transactions is set to further explode globally, which poses new problems for regulators and governments alike. Unless there is a unified concentration to heighten global awareness, the imposing threat of mobile money is set to increase at a rapid rate if appropriate actions are not taken. Originality/value The findings from this study can be used to gain greater insights on mobile money transactions and raise further awareness of the ever-increasing threat to global financial integrity.

RegTech solutions and AML compliance: what future for financial crime?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Esman Kurum
Keyword(s):  
Money Laundering ◽  
Financial Institutions ◽  
Design Methodology ◽  
Financial Crime ◽  
Strong Positive Correlation ◽  
Content Type ◽  
Compliance Programs ◽  
Time Required ◽  
International Experts

Purpose This study aims to discuss the growing use of RegTech solutions by financial institutions to comply more efficiently with regulation in terms of anti-money laundering compliance and more specifically its influence on the evolution of financial crime in the next ten years. Design/methodology/approach Based on two online Delphi surveys sent to a panel of international experts composed of eight specially recruited professionals and specialists of anti-financial crime compliance and RegTech, five main predictions have been developed. Findings It was found that artificial intelligence would become the most impactful technology for financial institutions to fight financial crime, and that there will be a strong positive correlation between ever-more elaborated compliance programs and the level of sophistication of methods used for money laundering. Furthermore, the panel designated regulators’ recommendations as likely to be less influential than RegTech solutions, and the time required to integrate RegTech solutions for AML compliance as the main future challenge. Originality/value These predictions are meant to provide financial institutions and regulators with useful outlooks. While the reviewed literature focused on the role of regulations on the evolution of money laundering, this study puts stress on RegTech solutions and their impact on both compliance and financial crime.

Follow the money to achieve success: achievable or aspirational

2017 ◽  
Vol 24 (3) ◽  
pp. 425-436 ◽  
Author(s):  
Nicholas Alan McTaggart
Keyword(s):  
Law Enforcement ◽  
Literature Review ◽  
Money Laundering ◽  
Financial Institutions ◽  
Design Methodology ◽  
Organised Crime ◽  
Economic Crime ◽  
Content Type ◽  
Terrorist Financing ◽  
The Subject

Purpose The purpose of this paper is to highlight the extent to which organised crime and the environment have altered in relation to money laundering and terrorist financing and to explore whether strategies to “follow the money” have been successful. Design/methodology/approach This paper is based on personal analysis and involvement as a practitioner in law enforcement and includes a broad literature review on the subject of terrorist financing and money laundering. Findings Money laundering, terrorist financing and economic crime activity are being disguised in the “noise” of business by specialists that have become very adept at their craft. Financial institutions and lawmakers have invested heavily in countering money laundering and terrorist financing. However, its real effectiveness is somewhat doubtful. Originality/value This paper serves to stimulate further discussion and research on how all actors can increase collaboration and co-operation to increase the effectiveness of disruption strategies associated with these classes of crime.

Financial crime, corruption and tax evasion: a cross-country investigation

2018 ◽  
Vol 21 (4) ◽  
pp. 545-554 ◽  
Author(s):  
Ines Amara ◽  
Hichem Khlif
Keyword(s):  
Money Laundering ◽  
Tax Evasion ◽  
Design Methodology ◽  
Positive Relationship ◽  
Policy Implications ◽  
Financial Crime ◽  
Content Type ◽  
Financial Crimes ◽  
Cross Country ◽  
The Relationship

Purpose This paper aims to examine the relationship between the financial crime and tax evasion and tests whether corruption moderates such a relationship. Design/methodology/approach Tax evasion measure is based on Schneider et al. (2010). Financial crime is collected from Basel anti-money laundering (AML) report. Findings Using a sample of 120 countries, the authors find that the level of financial crime is positively associated with tax evasion. When testing for the moderating effect of corruption, they document that the positive relationship between financial crime and tax evasion is more pronounced for high corrupt environments. Originality/value The findings have policy implications for governments aiming to combat tax evasion and financial crimes.

Combating the financing of proliferation: challenges and new tools

2020 ◽  
Vol 27 (4) ◽  
pp. 1107-1121 ◽  
Author(s):  
Ian John Stewart ◽  
Andrea Viski ◽  
Jonathan Brewer
Keyword(s):  
Private Sector ◽  
Money Laundering ◽  
Task Force ◽  
National Level ◽  
Weapons Of Mass Destruction ◽  
Original Research ◽  
Financial Crime ◽  
Task Force Report ◽  
Content Type ◽  
Terrorist Financing

Purpose This paper aims to examine why most governments appear to attach less importance to countering proliferation finance than they do to countering money laundering or terrorist financing. Design/methodology/approach The paper examines this question from a number of perspectives including a definitional perspective, a national regulatory perspective and a private sector implementation perspective. Findings It is shown that there are presently significant gaps in counter proliferation finance implementation at the national level, with follow-on implications for private sector compliance. Research limitations/implications A key finding is that most governments do not address the issue of proliferation finance as distinct from other forms of financial crime such as terrorist financing or money laundering. Practical implications Practical opportunities for improved financial sector implementation of counter proliferation finance controls are identified, but it is argued that it is states that must do more to meet their obligations for improvements to be realised. Social implications The risk of not doing so is that the financial system will continue to be misused to finance the proliferation of weapons of mass destruction. Originality/value The study seeks to fill a gap in existing academic literature on the question of why proliferation finance receives less attention than other forms of financial crime. The study builds on original research undertaken by the authors including the typologies of proliferation finance, which were later incorporated into an updated Financial Action Task Force report on this topic, as well as events organised by the authors to explore the topic of proliferation finance implementation with governments and the private sector.

Unearthing money laundering at Brazilian oil giant Petrobras

2019 ◽  
Vol 22 (2) ◽  
pp. 400-406
Author(s):  
Lucas Maragno ◽  
José Alonso Borba
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Financial Crime ◽  
Content Type ◽  
Key Points ◽  
Financial Crimes ◽  
State Agents ◽  
Brazilian History ◽  
Practical Implications ◽  
Allowed State

Purpose This paper aims to provide an overview of key points pertaining to financial crimes taking place during the single largest fraud scandal in Brazilian history. The authors provide details on how the historic fraud was carried out at Petrobras, as well as an overview of recent anti-money laundering regulation in Brazil. Design/methodology/approach The paper is based on an analysis of the scandal and on legal ramifications enacted by the prevailing Public Ministry taking place through the “Lava Jato” operation. Findings Fraud perpetrators continue to find new ways to move laundered money into campaign finance. The authors provide details on how the scheme was perpetrated at the placement, layering and integration stages. Research limitations/implications This study comprehends the first stage of the Federal Police’s operation, comprising 14 allegations of financial crimes. Practical implications A disconnect between regulations in effect and the reality of money laundering in Brazil over several years has failed to impede numerous cases of fraud. However, changes in legislation have allowed state agents to discover cases of fraud, with more and more wrongdoings being investigated. Originality/value The Petrobras fraud, individual experiences of organized financial crime and a widespread lack of understanding of how to detect and prevent fraud on this scale.

Fighting financial crime: failure is not an option

2020 ◽  
Vol 27 (1) ◽  
pp. 1-23
Author(s):  
Shazeeda Ali
Keyword(s):  
Financial Services ◽  
Justice System ◽  
Design Methodology ◽  
Positive Impact ◽  
Comparative Approach ◽  
Financial Crime ◽  
Content Type ◽  
Asset Recovery ◽  
Comprehensive Examination ◽  
The Uk

Purpose The purpose of this study is to provide an overview of some of the deficiencies in the criminal justice system in Jamaica, particularly relating to financial crime. The author also examines possible alternatives in the approach that may be taken in tackling financial crime. Design/methodology/approach The methodology used was a review of data on financial crime in Jamaica as well as recent significant cases. An analysis of key pieces of legislation was also undertaken. In some instances, a comparative approach was invoked, with special reference to the UK and US laws. Findings Some essential findings include the positive impact that may be gained from restorative justice principles, the effective enforcement of asset recovery provisions and stricter regulation of the financial services industry. Originality/value There is no similar comprehensive examination of these issues concerning Jamaica.

Moving in the right direction to fight financial crime: prevention and detection

2018 ◽  
Vol 25 (2) ◽  
pp. 362-368
Author(s):  
Fitriya Fauzi ◽  
Kenneth Szulczyk ◽  
Abdul Basyith
Keyword(s):  
Literature Review ◽  
Money Laundering ◽  
Financial Institutions ◽  
Design Methodology ◽  
Asia Pacific ◽  
Financial Crime ◽  
Content Type ◽  
Financial Crimes ◽  
The Right ◽  
Financial Intelligence

Purpose The purpose of this paper is to identify current measures taken for financial crime’s prevention and detection in the context of Indonesia. Design/methodology/approach This study is based on data from articles in Indonesian newspapers relating to the current financial crimes, current measures of preventing financial crimes in Indonesia and based on the literature review. Findings There are some attempts to combat financial crimes in Indonesia, both internally and externally. The attempts that have been made for the internal scope are the enactment of anti-money laundering law, the new monitoring system of financial institutions and the formation of a superintendent institution. The attempts that have been made for the external scope are the agreement between Indonesia’ financial intelligence unit Pusat Pelaporan dan Analisis Transaksi Keuangan (PPATK), and other countries’s financial intelligence unit, the affiliation member of the Asia/Pacific Group on Money Laundering (APG) to combat financial crimes through strengthening its anti-money laundering and terror financing capabilities. Originality/value This paper presents an overview of current prevention and detection measures in the context of Indonesia, and it is hoped that this paper will contribute to the current discussion of eliminating financial crimes.

HSBC Swiss bank accounts-AML compliance and money laundering implications

2015 ◽  
Vol 23 (3) ◽  
pp. 285-297 ◽  
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Money Laundering ◽  
Academic Writing ◽  
Tax Evasion ◽  
Financial Services ◽  
Banking Sector ◽  
Future Research ◽  
Financial Crime ◽  
Content Type ◽  
The Future ◽  
Bank Accounts

Purpose – This paper aims to provide an analysis of the HSBC Swiss bank accounts scandal, from the perspective of anti-money laundering (AML) compliance, and considers the future AML implications for the banking sector and HSBC. It reviews the use of a whistleblower to highlight AML irregularities rather than official reporting through the current AML compliance system. Design/methodology/approach – The paper uses secondary data to offer a viewpoint on the HSBC issues from a money laundering and financial crime perspective. The paper extracts key statements from staff at HSBC and regulators and examines how AML risk assessment was undertaken at this time and what changes need to occur in the future. It considers the implications of the current theoretical context for AML from an agency theory perspective. Findings – The main findings are that AML compliance needs to be embedded into a proactive corporate social responsibility approach rather than relying solely on regulation to improve detection and reporting of money laundering activity. Research limitations/implications – The research topic is new, and therefore, analysis papers and other academic writing on this topic are limited. Future research could consider the outcomes of the Swiss bank’s attempts to prosecute the whistleblower and whether this would have implications for future internal reporting and whistleblowing approaches to support AML compliance. Practical implications – The implications from the research are the recommendations to the banking sector on addressing AML deficiencies especially within the context of an evolving level of criminal sophistication towards money laundering. Social implications – The paper supports the argument for integrating social corporate responsibility and AML compliance to produce a whole bank response to financial crime. This is in contrast to the current systems, which seem to be prevalent within the financial services, of profit and business being seen as separate rather than integral to regulation and control. Originality/value – The originality of this paper is the current example of the HSBC Swiss case and the focus specifically on AML compliance rather than tax evasion, which has been the media angle on the issue.

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