Role of FATF on financial systems of countries: successes and challenges

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nankpan Moses Nanyun ◽  
Alireza Nasiri
Keyword(s):  
Money Laundering ◽  
Task Force ◽  
Evaluation Process ◽  
Peer Pressure ◽  
Policy Framework ◽  
Financial Systems ◽  
Content Type ◽  
Secondary Sources ◽  
Adoption And Implementation ◽  
Successes And Challenges

Purpose This paper aims to examine the extent of successes and challenges of adoption and implementation of Financial Action Task Force (FATF) codes in member states by highlighting the influence of the FATF anti-money laundering policy framework on money laundering (ML) and the way forward in heightening the fight against the fast-evolving nature of ML and terrorist financing activities. Design/methodology/approach This paper, based on a purely qualitative desktop study, is drawn on historical information from FATF’s recommendations, its periodic reports, publications and other secondary sources such as books, journal articles on financial systems and scholarly literature. Findings The challenges found include difficulty in domestic coordination, capacity constraints of countries, inadequate operational resources and assessment complexities in the implementation of FATF standards. Nonetheless, FATF has chalked some successes such as the harmonization of legislation and enforcement efforts through the provision of coordination points. Other successes include flexibility in response to new threats, adoption of the mutual evaluation process, which advanced peer pressure on defaulting members, enhancement of the international financial space and the enhancement of the legitimization of FATF’s processes. Originality/value This paper provides a description of the successes and challenges of the FATF’s 40 + 9 recommendations since its establishment. The outcome would alert countries and players within the international financial space to invest more in capacity building and the entrenchment of the recommendations into their domestic laws.

Measures to combat money laundering and terrorist financing in Palestine

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Murrar Firas
Keyword(s):  
Money Laundering ◽  
Task Force ◽  
Evaluation Process ◽  
Vital Role ◽  
Assessment Process ◽  
National Committee ◽  
Content Type ◽  
Terrorist Financing ◽  
Mutual Evaluation ◽  
Combat Money Laundering

Purpose The purpose of this paper is to analyse the evolution of anti-money laundering/combating the financing of terrorism (AML/CFT) procedures in Palestine since 2004 in accordance with the standards issued by the Financial Action Task Force (FATF). Design/methodology/approach This study is qualitative in nature and involves studying the most important improvements made by Palestinian authorities in the state’s legislative and institutional frameworks to enhance the AML/CFT regime. Findings Palestine has established the necessary legal basis to combat money laundering and terrorist financing crimes. At the institutional level, the Financial Follow-up Unit was granted all the required powers of Financial Intelligence Units. The National Committee for Combating Money Laundering and Financing Terrorism has also played a vital role in issuing policies and plans to respond to the outcomes of the National Risk Assessment process. In contrast, a number of challenges still exist mainly with respect to the political factors and their expected consequences on the process of preparing for and conducting the mutual evaluation process for Palestine. Originality/value This study focusses on the AML/CFT efforts in Palestine owing to the nature and specificity of the Palestinian situation, as Palestine’s AML/CFT procedures have not been subject to any previous mutual evaluation process by the MENAFATF. Such efforts have rarely addressed the Palestinian case, making this study important to researchers and those interested in this field.

Recent changes to the AML/CFT law in Malaysia

2017 ◽  
Vol 20 (1) ◽  
pp. 5-14
Author(s):  
Zaiton Hamin
Keyword(s):  
Money Laundering ◽  
Task Force ◽  
Primary Source ◽  
Secondary Data ◽  
International Standards ◽  
Content Type ◽  
Secondary Sources ◽  
Online Databases ◽  
Terrorism Financing ◽  
The Uk

Purpose The aim of this paper is to examine some of the recent changes to the old anti-money laundering and anti-terrorism financing law, which is now known as the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. The paper will highlight the newly consolidated money laundering offences and the newly created offences including structuring of transactions or “smurfing”. Also, the transgression of cross-border movement of cash and negotiable instruments and tipping off about a money laundering disclosure will be assessed. Design/methodology/approach The paper uses a doctrinal legal research and secondary data, with the new AML/CFT legislation as the primary source. For comparative analysis, legislations in the UK, Australia and New Zealand are also examined. Secondary sources include case law, articles in academic journals, books and online databases. Findings The review of the AML/CFT law is timely and indicates the Malaysian government’s efforts to adhere to international standards set by the financial action task force. However, it is imperative that the Malaysian government addresses the remaining instrumental and normative deficiencies in the AML/CFT law to ensure that the recent legal changes are sufficiently comprehensive to prevent and regulate money laundering and terrorist financing within Malaysia. Originality/value This paper is a useful source of information for legal practitioners, academicians, law enforcement, policymakers, legislators, researchers and students.

Conceptualizing terrorist financing in the age of uncertainty

2016 ◽  
Vol 19 (4) ◽  
pp. 397-406
Author(s):  
Zaiton Hamin ◽  
Rohana Othman ◽  
Normah Omar ◽  
Hayyum Suleikha Selamat
Keyword(s):  
Money Laundering ◽  
Task Force ◽  
Secondary Data ◽  
Penal Code ◽  
Primary Sources ◽  
Content Type ◽  
Secondary Sources ◽  
Online Databases ◽  
International Policies ◽  
Terrorism Financing

Purpose The purpose of this paper is to conceptualize the concept of terrorism, terrorism financing, the relationship between money laundering and terrorism financing and the governance of terrorism financing. Design/methodology/approach This paper adopts a doctrinal, content analysis and secondary data, of which the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 and the Penal Code are the primary sources. The secondary sources for this paper include articles in academic journals, books and online databases. Findings Several methods are involved in the commission of terrorism financing such as raising, moving and using of funds. The activities relating to terrorism financing under the Penal Code are broader than such activities. Despite the adherence by Malaysia to international policies established by the Financial Action Task Force, terrorism financing has remained a threat that must be addressed by the relevant authorities. Practical implications This paper could be a useful source of information for the practitioners, academicians, policymakers and students studying this particular area of crime. Originality/value This paper contributes to a discourse on terrorism financing in the Malaysian context.

A critical approach to trade-based money laundering

2014 ◽  
Vol 17 (2) ◽  
pp. 230-242 ◽  
Author(s):  
Melvin R.J. Soudijn
Keyword(s):  
Money Laundering ◽  
Task Force ◽  
Critical Approach ◽  
Content Type ◽  
Traded Goods ◽  
True Value ◽  
Police Investigations ◽  
Financial Action Task

Purpose – The purpose of this paper is to broaden the discussion on trade-based money laundering (TBML). The literature is too narrowly focused on the misrepresentation of the value, quantity or quality of the traded goods. This focus leads to the analysis of price anomalies as a signal of over- or under-invoicing. However, TBML can also occur without manipulation of these factors. Design/methodology/approach – A review of the literature and case study of police investigations. Findings – Financial action task force (FATF) definitions are seriously flawed. The question of whether detecting TBML on the basis of statistical trade data is effective should be much more open to debate. Police investigations show that goods are shipped at their true value within the context of TBML. Research limitations/implications – Using outliers to identify and act on cases of TBML has often been propagated, but scarcely been used to actually show TBML. Real findings are needed. Practical implications – Goods intended for TBML can also be paid for in cash. These cash payments are often out of character with the normal clientele. This should alert companies and compliance sections of banks alike. Originality/value – The critique on the FATF definition opens the field for a more fitting definition. The description of actual TBML cases makes it possible to better understand this method of money laundering.

Tax evasion and money laundering: a complete framework

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Deen Kemsley ◽  
Sean A. Kemsley ◽  
Frank T. Morgan
Keyword(s):  
Money Laundering ◽  
Tax Evasion ◽  
Task Force ◽  
Regulatory Agencies ◽  
Content Type ◽  
Single Process ◽  
Financial Action Task ◽  
Tax Savings ◽  
Practical Implications ◽  
Complete Framework

Purpose This paper aims to define the fundamental nexus between income tax evasion and money laundering. The G7 Financial Action Task Force (FATF) designates tax evasion as a predicate offense for money laundering. We determine whether this designation is complete from a conceptual standpoint, or whether there is a stronger connection between tax evasion and money laundering. Design/methodology/approach This paper applies the FATF definition for money laundering – as well as generally accepted definitions for tax evasion and for a standard predicate offense – to identify the necessary conditions for each crime. This paper then uses these conditions to test opposing hypotheses regarding the nexus between tax evasion and money laundering. Findings This paper demonstrates that tax evasion does not meet the conditions for a standard predicate offense, and treating it as if it were a standard predicate could be problematic in practice. Instead, it is concluded that the FATF’s predicate label for tax evasion, together with tax evasion methods and objectives, imply that all tax evasion constitutes money laundering. In a single process, tax evasion generates both criminal tax savings and launders those criminal proceeds by concealing or disguising their unlawful origin. Practical implications The FATF could strengthen its framework by explicitly defining all tax evasion as money laundering. This would enable regulatory agencies to draw upon the full combined resources dedicated to either offense. Originality/value The analysis demonstrates that tax evasion completely incorporates money laundering as currently defined by the FATF.

Money laundering influence on financial institutions and ways to retaliate

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Darshan Kumar ◽  
Mark Eshwar Lokanan
Keyword(s):  
Money Laundering ◽  
Financial Institutions ◽  
Insurance Companies ◽  
Board Members ◽  
Content Type ◽  
Upper Management ◽  
Secondary Sources ◽  
Study Approach ◽  
Bank Money

Purpose This paper aims to advance the professional knowledge, experience and expertise of anti-money laundering (AML) professionals by focusing on how money laundering (ML) impacts a variety of financial institutions (FIs) and in what ways the FIs can retaliate to detect, prevent and mitigate the risk of ML. Design/methodology/approach This paper use data from secondary sources. Many FI cases have been included such as a bank money service business (MSB) and insurance companies. Findings There should be a culture of compliance in organizations. Upper management, such as a designated committee or board members, should set the tone of compliance. Money launderers take advantage of every possible opportunity to convert illicit proceeds into clean proceeds with any institution or profession. Originality/value This paper used a case study approach to study the nuances of money laundering activities in various jurisdictions.

Anti-money laundering law and policy as a double edged sword

2020 ◽  
Vol 23 (4) ◽  
pp. 899-912
Author(s):  
Norman Mugarura
Keyword(s):  
Money Laundering ◽  
Financial Institution ◽  
Business Environment ◽  
Security Issue ◽  
Patriot Act ◽  
Online Data ◽  
Content Type ◽  
Developed Economies ◽  
Secondary Sources ◽  
Financing Of Terrorism

Purpose Regulators have a duty to enforce anti-money laundering (AML) and countering financing of terrorism regulation. However, in doing so, they should not to be overzealous especially in carrying out investigations into suspicious money laundering transactions. This does not mean that oversight agencies should not carry out the required investigations with due diligence. This study aims to propose that banks cannot be allowed to operate in a lawless environment; however, there is a need ensure that businesses are able to operate with minimal regulatory interference. Design/methodology/approach Data was collected from primary and secondary sources such as Uganda’s Anti-Money laundering Act 2013 (amended 2017), Patriot Act 2001, Proceeds of Crime Act 2000 International legal instruments, case law, books, websites, journal papers, policy documents and scholarly debates and evaluated to foster the objectives of the paper accordingly. The paper has also been enriched by empirical experiences of countries in Europe, Africa and within countries on money-laundering regulation and its intricacies. There was a wealth of online data sources and in print, which were reviewed and internalised to foster the objectives for writing the book. Findings Regulation of businesses against money laundering and financing of terrorism imposes a heavy cost burden on poorer countries and should be funded by developed economies for some countries to easily operate desired International AML standards. It also needs to be noted that banks cannot be allowed to operate in a lawless business environment, which makes money laundering an international and national security issue. Originality/value The thesis of this paper was drawn from the author’s presentation to security agencies in Kampala in August 2019. In his presentation, the author opined that investigations into money-laundering offences should be triggered when a financial institution forms suspicions of potential money-laundering offences to have been committed. Some of the questions he sought to answer during the presentation was whether sharing information on “accountable persons or the regulated sector” in Uganda’s AML 2013 with newspapers before investigations are concluded does not amount to tipping off presumed money-laundering culprits? How should investigations be conducted?

Challenges in customer due diligence for banks in the UAE

2020 ◽  
Vol 23 (2) ◽  
pp. 527-539
Author(s):  
Dina ElYacoubi
Keyword(s):  
Money Laundering ◽  
Task Force ◽  
Business Environment ◽  
Law Firms ◽  
Due Diligence ◽  
Remedial Action ◽  
Content Type ◽  
Narcotics Control ◽  
Financing Of Terrorism ◽  
Customer Due Diligence

Purpose The purpose of this paper is to unpack the customer due diligence (CDD) vulnerabilities and to examine and analyze the UAE specific dynamics that make the country exposed to these threats. This research also intends to put on the table suitable solutions and remedial action steps that the UAE government, regulators and financial institutions (FIs) can adopt. Design/methodology/approach This study is qualitative in nature. Findings Despite the impressive regulatory framework and the satisfactory practices by FIs, there still remains some UAE specific challenges that make it difficult to undertake CDD for certain customers. The challenges that were identified include difficulties in Arabic names, complications in identifying the beneficial owners, impediments in establishing the source of wealth/funds, concerns with politically exposed persons, the increasing cost of compliance that resulted in a pattern of de-risking within FIs. Research limitations/implications The international bodies whose mandate is to formulate the necessary anti-money laundering and combating the financing of terrorism policies and regulations for global implementation together with Association of Certified Anti-Money Laundering Specialists (ACAMS) have published sufficient studies on CDD-related issues in the UAE. Yet on the other hand, very limited literature was found by independent scholars. This paper will, therefore, largely reference publications by Financial Action Task Force, the International Narcotics Control Strategy Report and ACAMS. It will also include works by respected law firms that have operations in the UAE, local publications, government documents, academic papers by the International Monetary Fund and the World Bank, legal journals and others. Originality/value Illicit actors exploit the UAE’s relatively open business environment, a multitude of global banks and exchange houses and global transportation links to undertake illicit financial activity […] the UAE does not have any major anti-money laundering (AML) deficiencies. However, the monitoring of FIs for AML purposes, particularly in the area of CDD, could be improved. This paper unpacks the CDD vulnerabilities and analyzes the UAE specific dynamics that make the country exposed to these threats. This research also puts on the table suitable remedial action steps that the UAE government, regulators and FIs can adopt.

Is there a commendable regime for combatting money laundering in international business transactions?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Andrew Emerson Clarke
Keyword(s):  
International Business ◽  
Money Laundering ◽  
Global Economy ◽  
Task Force ◽  
Academic Research ◽  
State Level ◽  
Content Type ◽  
The Usa ◽  
Enforcement Mechanisms ◽  
The Uk

Purpose Money laundering and grand business corruption continue to plague the global economy, accounting for 2%-5% of the global gross domestic product. Illicit funds, produced through grand corruption, are laundered using complex layering schemes that cloak them in legitimacy by concealing their origins. Lamentably, weak anti-money laundering (AML) frameworks promote economic instability, unjust commercial advantages and organized crimes. This study aims to highlight the need for comprehensive anti-corruption and AML frameworks by critiquing the exploitable gaps in the global AML regime created by heterogeneous state-level AML regimes to date. Design/methodology/approach This study welcomes the United Nations Convention against Corruption (UNCAC) and the financial action task force (FATF) recommendations but underscores the limitations of their effectiveness by investigating state-level enforcement mechanisms to determine these instruments’ true impact or lack thereof. The mutual evaluation reports (MERs) and state-level AML regimes in the UK, the USA and Canada are analyzed to illustrate the distinct implementation of international soft law in domestic legislation. Findings This study finds that UNCAC and the FATF recommendations are pivotal steps towards the establishment of a global AML regime for international business, albeit, one that remains imperfect because of the inconsistency of state-level AML frameworks. Consequently, international cooperation is needed to navigate and improve the discrepancies in varied AML legislation. Originality/value The author provides an in-depth and balanced analysis of current state-level AML developments and relies upon the recent 2016-2018 MERs to indicate the successes and flaws of various AML legislation. Therefore, this critique may guide stakeholders to construct robust AML frameworks and contributes to academic research in AML.

Artificial harmony

2014 ◽  
Vol 17 (4) ◽  
pp. 428-439 ◽  
Author(s):  
Clifford Williams
Keyword(s):  
Money Laundering ◽  
Information Exchange ◽  
Global Economy ◽  
Task Force ◽  
National Interests ◽  
Content Type ◽  
Network Building ◽  
Primary Means ◽  
Transfer Procedures ◽  
Financial Intelligence

Purpose – The purpose of this paper is to explain that the commonly used method allowing for inter-agency cooperation between national financial intelligence units, the memorandum of understanding, is inadequate and ineffective in creating a cooperative global financial intelligence unit capable of combating money laundering typologies on an international scale. Design/methodology/approach – Methods of international financial intelligence unit (FIU) cooperation have chiefly occurred in two ways: first, through the efforts of the Egmont Group; and second, through the inclusion of provisions concerning FIUs contained in international legal documents. The first is an impossibility. Findings – This paper proposes that the result of implementation of the 2012 Financial Action Task Force Recommendations will be an informal network of FIUs where the Egmont group acts as a centralized operator for information exchange, effectively creating an informal global FIU (“GFIU”), but that this system, or a cooperative global financial intelligence unit system based on FIU-to-FIU exchanges will not allow for effective multilateral, international cooperation. Research limitations/implications – This is because national interests and unfamiliarity with capabilities provided in the Egmont Group’s cooperative platform have and will continue to result in under-utilization of cooperative efforts, and because the traditional mechanism employed for FIU-to-FIU exchanges, the memorandum of understanding (“MOU”), makes uniform or standardized information request and transfer procedures that are required for multilateral or multi-agency efforts to combat money laundering across international boundaries an impossibility. Practical implications – The Egmont Group’s cooperational structure should be the primary means by which to achieve a GFIU. Social implications – The global combat on money laundering will be more effective, thereby more fully protecting the global economy. Originality/value – A comparison between the Egmont Group’s network building mechanism and the existing use of MoU to create global cooperation against money laundering has not been analyzed.

Sign in / Sign up

Export Citation Format

Share Document