Money laundering through exchange offices

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fabian Maximilian Johannes Teichmann ◽  
Marie-Christin Falker
Keyword(s):  
Qualitative Study ◽  
Money Laundering ◽  
Quantitative Research ◽  
Design Methodology ◽  
Prevention Measures ◽  
Content Type ◽  
Compliance Officers ◽  
Research Gap ◽  
Practical Implications ◽  
Insight Into

Purpose The purpose of this paper is to illustrate how money launderers circumvent compliance measures by using exchange offices to launder incriminated funds. Design/methodology/approach The three-step process entailed carrying out unofficial interviews with money launderers, which gave first insight into the issue, followed by expert interviews that were reviewed by means of a qualitative study. The findings of the qualitative study were processed during the subsequent quantitative research. Findings Although exchange offices are a known threat to anti-money laundering efforts, they continue to be highly applicable. As exchange offices are responsible for their own compliance measures, compliance officers employed by other institutions do not encounter money laundering through exchange offices regularly. Research limitations/implications The findings of the study are limited to the experiences of the interviewed experts, which, naturally, are highly subjective. Further, they are geographically limited, as certain areas were not represented in the study. Practical implications During the literature review, a research gap was identified. The present study attempts to partially fill the same. The illustrated findings aimed at facilitating an improvement of anti-money laundering measures. The insights into the minds of money launderers provide valuable information for legislators, compliance officers and authorities. Originality/value Presently, the majority of the literature focuses on the issue of money laundering from a compliance perspective. However, accurately understanding how money launderers circumvent the existing prevention measures requires an exploration of their approaches. To effectively inhibit money laundering, it is necessary to gain a holistic overview of the issue, which entails the observation of both perspectives.

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.

Anti-money laundering and moral intensity in suspicious activity reporting

2018 ◽  
Vol 21 (4) ◽  
pp. 520-533
Author(s):  
Brett Coombs-Goodfellow ◽  
Mark Eshwar Lokanan
Keyword(s):  
Decision Making ◽  
Money Laundering ◽  
Design Methodology ◽  
Moral Intensity ◽  
Content Type ◽  
Compliance Officers ◽  
Moral Intent ◽  
Practical Implications ◽  
Activity Report ◽  
Suspicious Activity

PurposeThis paper aims to examine the influence Jones’ Moral Intensity Model (1991) has on the decision-making process of anti-money laundering (AML) compliance officers charged with reporting suspicious money laundering transactions in Jersey.Design/methodology/approachTen interviews were conducted to elicit participants’ views on the six dimensions of moral intensity and their influence on the compliance officers’ decision to submit a suspicious activity report (SAR) of potential money laundering.FindingsThe findings indicate that the officers’ moral intensity to submit a SAR seems to be heavily influenced by issue-specific contextual factors. Contexts (legal and legislative mandates) seem to have more of an effect on the moral intent and actions of the officers rather than directly affecting the decision to submit a report of a suspicious money laundering transaction.Research limitations/implicationsThe paper lays the groundwork for further work in this area and calls on researchers to develop instruments that can enhance the measurements of the dimensions of moral intensity.Practical implicationsThe setting (AML in the financial sector) is both timely and extremely interesting to keep studying, particularly in Jersey because of its dubious sensitive particularities.Originality/valueThe study is the first to examine Jersey AML sector through the lens of moral intensity. In this sense, the paper poses interesting questions, namely, to explore the dynamic complexities experienced by compliance officers in Jersey to detect and report suspicious money laundering activities and the decision-making criteria of actually submitting a SAR.

2016 FINRA analysis: a record-breaking year for fines

2017 ◽  
Vol 18 (2) ◽  
pp. 1-8
Author(s):  
Brian Rubin ◽  
Adam Pollet
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Disciplinary Actions ◽  
Variable Annuities ◽  
Content Type ◽  
Compliance Officers ◽  
Expert Analysis ◽  
Key Issues ◽  
To Receive ◽  
Practical Implications

Purpose To analyze FINRA’s 2016 sanctions and cases, the issues that resulted in the most significant fines, emerging enforcement trends, and make predictions about key issues for FINRA for 2017 and beyond. Design/methodology/approach Discusses the sanctions and disciplinary actions in 2016 and prior years; details the top 2016 enforcement issues measured by total fines assessed, including anti-money laundering, variable annuities, trade reporting, books and records, and unregistered securities; explains current enforcement trends, including fines of $1 million or more, sanctions against compliance officers, and suitability cases; and analyzes three enforcement topics that will likely continue to receive heightened attention from FINRA in 2017 and beyond: restitution, cybersecurity, and senior investors. Findings The fines ordered by FINRA in 2016 reached an all-time high while the amount of restitution ordered and the number of disciplinary actions remained on par with prior years. Practical implications Firms and their representatives should heed the trends in both the substantial fines FINRA is ordering and the related enforcement issues in the cases FINRA has brought. Originality/value Expert analysis and guidance from experienced securities enforcement lawyers.

How effective are financial sanctions against individuals?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fabian Maximilian Johannes Teichmann
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Qualitative Content Analysis ◽  
Content Type ◽  
Political Processes ◽  
Compliance Officers ◽  
Improve Compliance ◽  
Larger Sample ◽  
Practical Implications

Purpose The purpose of this paper is to discuss the role of money laundering methods in circumventing sanctions against individuals. In particular, it shows how politically exposed persons can circumvent sanctions through money laundering mechanisms. Design/methodology/approach A total of 70 expert interviews were conducted, comprising 35 formal interviews with prevention experts and 35 informal interviews with money launderers. By subjecting their responses to qualitative content analysis, concrete ways of circumventing sanctions are identified. Findings Financial sanctions against individuals are highly ineffective, as they can be easily circumvented. To successfully influence political processes, alternative mechanisms are necessary. Research limitations/implications This study’s findings are limited to the perspectives of 70 interviewees. Hence, it is possible that a study with a larger sample conducted in different countries or at a different time could have yielded different results. Practical implications Identifying the gaps in anti-money-laundering mechanisms should provide compliance officers and legislators with valuable insights into why the current prevention schemes are ineffective and how sanctions against individuals can be circumvented. The findings, thus, highlight the scope to improve compliance mechanisms and the need for other tools to influence political processes. Originality/value The current sanctions against individuals are found to be ineffective means of influencing politics, as they can be easily circumvented. Hence, alternative mechanisms and tools are needed.

How useful are anti-money-laundering efforts in combating bribery?

2020 ◽  
Vol 23 (2) ◽  
pp. 309-314
Author(s):  
Fabian Maximilian Johannes Teichmann
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Expert Interviews ◽  
Content Type ◽  
Compliance Officers ◽  
Larger Sample ◽  
Practical Implications

Purpose The purpose of this paper is to discuss the role of anti-money-laundering mechanisms in combating bribery. In particular, it shows how parties receiving bribes can circumvent the mechanisms currently in place to launder the money they receive for their services. Design/methodology/approach Through analysis of 25 formal expert interviews with prevention experts and 25 informal expert interviews with money launderers from Europe, concrete ways of laundering bribes were found. Consequently, it is suggested that alternative mechanisms are necessary to successfully fight corruption. Findings A combination of more severe punishments and anti-bribery incentives could help to eliminate corruption. Research limitations/implications This study’s findings are limited to the perspectives of 50 interviewees. Hence, a study with a larger sample conducted in different countries or at a different time could yield different results. Practical implications By identifying gaps in existing anti-money-laundering mechanisms, this paper aims to provide compliance officers and legislators with valuable insights into why the current prevention schemes are ineffective and how corruption could be more effectively tackled. Originality/value The findings demonstrate that current anti-money-laundering mechanisms are unhelpful in fighting bribery. Hence, alternative anti-bribery mechanisms are needed.

scholarly journals Great expectations but little evidence: policing money laundering

2017 ◽  
Vol 37 (7/8) ◽  
pp. 477-490 ◽  
Author(s):  
Antoinette Verhage
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Due Process ◽  
Great Expectations ◽  
Content Type ◽  
Cross Border ◽  
Compliance Officers ◽  
The Subject ◽  
Compliance Officer ◽  
Practical Implications

Purpose The purpose of this paper is to map anti-money laundering policy and its impact on money laundering. The AML system is discussed from the perspective of the compliance officer, who is responsible for translating AML law into practice in Belgian banks. Design/methodology/approach Literature review, based largely on a PhD study (2009) that involved a survey and interviews. Additionally, 12 compliance officers were interviewed in 2015. Findings The global AML system impacts significantly on issues of privacy and due process but has not yet been evaluated. The system’s preventive effect is difficult to measure because of a lack of (cross-border) information. The way in which Risks are currently managed in diverse ways. Research limitations/implications Results from the first study in 2009 (based on interviews in 2007-2008) were potentially outdated. This recent update (2015) confirms that compliance officers are still dealing with the same issues. Practical implications The study clarifies the ways in which compliance and AML is dealt with and mapped, providing insights into an often closed setting. Social implications The battle against money laundering is very costly and intrusive, making the need for stringent evaluation more pressing. Originality/value The study is both original and valuable because compliance officers have rarely been the subject of research. The study discloses useful information about their role.

Cryptocurrencies: an unconventional challenge to the AML/CFT regulators?

2014 ◽  
Vol 21 (3) ◽  
pp. 249-263 ◽  
Author(s):  
Victor Dostov ◽  
Pavel Shust
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Financial System ◽  
Content Type ◽  
Payment Instruments ◽  
Informal Communities ◽  
Financing Of Terrorism ◽  
Practical Implications ◽  
Insight Into

Purpose – The purpose of the article is to look closely at the phenomenon of the cryptocurrencies such as and bitcoin to identify their potential vulnerabilities to money laundering and financing of terrorism. It also explores their specific characteristics relevant to ML/FT risks. Design/methodology/approach – Using digicash and bitcoin protocols as primary cases for centralized and decentralized cryptocurrencies we analyse their characteristics against cash and cashless payments. We also draw on “bundle of attributes” that may define their attractiveness for common public or criminals. Findings – Our research shows that characteristics of the cryptocurrencies are unlikely to make them popular among the consumers, as demand for anonymity seems to be overrated. Cryptocurrencies can also be classified as payment instrument rather than private currencies; therefore their embededdness in the financial system minimizes the ML/FT risks. Research limitations/implications – Some decentralized cryptocurrencies operate within informal communities. Therefore, relations within these communities are constantly evolving and need to be monitored further. Practical implications – The paper provides an insight into the mechanics and classification of cryptocurrencies as payment instruments. Place of cryptocurrencies within the broader payment ecosystem defines their potential vulnerabilities to being abused by the criminals. Originality/value – The paper fills the gap in research on cryptocurrencies as payment instruments rather than private currencies and also provides an overview of their relevance for the Anti-money laundering and combating financing of terrorism (AML/CFT) regime.

scholarly journals The effectiveness of Anti-Money Laundering policies and procedures within the Banking Sector in Bahrain

2020 ◽  
Vol 23 (4) ◽  
pp. 769-781
Author(s):  
Mark Eshwar Lokanan ◽  
Noor Nasimi
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Banking Sector ◽  
Positive Impact ◽  
Gulf Cooperation Council ◽  
Structured Interviews ◽  
Content Type ◽  
Policies And Procedures ◽  
Compliance Officers ◽  
Practical Implications

Purpose The purpose of this paper is to identify the anti-money laundering (AML) policies and procedures applied by the banks operating in Bahrain and assess the effectiveness of these policies. Design/methodology/approach Data for the study came from semi-structured interviews with compliance officers in Bahrain’s banking sector. A total of 22 interviews were conducted with Bahraini money laundering reporting officers and bankers. Findings The findings indicate that the banks in Bahrain comply with international AML procedures in combating money laundering. Despite Bahrain being ranked as having strong compliance policies and AML procedures among the Gulf Cooperation Council region, there are still issues with regulatory technology that needs to be addressed. Practical implications While there has been a positive impact of AML procedures, there are always more procedures that can be taken into consideration by banks in Bahrain to have more robust mechanisms to mitigate against the threat of money laundering. Originality/value To the best of authors’ knowledge, this paper is among the first to conduct an informed study of the effectiveness of compliance in the Bahrain’s financial sector. It can be used as a foundation paper for more mix-research on money laundering threats facing Bahrain’s banks.

Money laundering via cryptocurrencies – potential solutions from Liechtenstein

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fabian Maximilian Johannes Teichmann ◽  
Marie-Christin Falker
Keyword(s):  
Law Enforcement ◽  
Money Laundering ◽  
Design Methodology ◽  
Financial Crime ◽  
The Novel ◽  
Content Type ◽  
International Attention ◽  
Compliance Officers ◽  
Practical Implications ◽  
Potential Remedy

Purpose The purpose of this paper is to demonstrate how cryptocurrencies are used to launder money and how solutions from Liechtenstein’s novel blockchain legislation could be used to tackle the issue. Design/methodology/approach Within the scope of the literature review, the characteristics of cryptocurrencies and how these characteristics facilitate money laundering are discussed. To investigate concrete methods that money launderers use, a qualitative study with 10 presumed money launderers and 18 prevention experts was conducted. The results were subsequently tested quantitatively. Thereafter, the novel Liechtenstein blockchain act is discussed and it is detailed how the legislation could contribute to the establishment of an international standard in blockchain regulation. Findings Money launderers continue to abuse cryptocurrencies such as Bitcoin as vehicles for financial crime. The Liechtenstein Blockchain Act could serve as a benchmark for regulators around the world aiming to solve the issue. Research limitations/implications Current anti-money laundering regulations are rather ineffective when it comes to cryptocurrencies. Practical implications The findings of this paper illustrate that new and innovative means for combating money laundering are needed. In particular, this paper provides insights into cryptocurrency crime and Liechtenstein’s response for legislators, law enforcement, compliance officers and regulatory authorities. Originality/value Liechtenstein’s blockchain act, as a potential remedy to money laundering, has thus far not received international attention.

Lifting the veil on beneficial ownership

2020 ◽  
Vol 23 (4) ◽  
pp. 717-734
Author(s):  
Paul Michael Gilmour
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Developing Economies ◽  
Content Type ◽  
Intergovernmental Cooperation ◽  
Beneficial Ownership ◽  
The Veil ◽  
The Uk ◽  
Practical Implications ◽  
Insight Into

Purpose This paper aims to critically explore the challenges facing the UK in implementing registers of beneficial owners, a measure mandated by the EU’s anti-money laundering (AML) directive to enhance beneficial ownership transparency. Design/methodology/approach This study systematically reviews the literature surrounding beneficial ownership transparency to critically analyse the extent to which challenges facing the UK, impact upon its ability to successfully implement registers of beneficial owners. Findings This study demonstrates that a lack of beneficial ownership transparency facilitates money laundering by concealing corrupt wealth and frustrating authorities’ efforts to trace illicit finance. It demonstrates that implementing registers of beneficial owners may be a superficial approach to tackling the multifaceted problem of money laundering. Better intergovernmental cooperation is required to improve beneficial ownership transparency and to ensure measures to curb offshore money laundering are successful. Research limitations/implications This research focuses on one aspect of AML control from the UK’s perspective. Further work is needed to investigate the concerns from the perspective of offshore jurisdictions and how global AML rule affects developing economies. Practical implications The study informs policymakers and other professionals implementing the UK’s registers of beneficial owners to enhance future strategies and better combat offshore money laundering. Originality/value This is the only study to explore the challenges facing the UK in implementing registers of beneficial owners, thus providing novel insight into the moral, legal and practical dilemmas to imposing AML control.

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