Dirty money in the banking sector

2019 ◽  
Vol 22 (3) ◽  
pp. 527-542
Author(s):  
Reeda Al Sabri Halawi
Keyword(s):  
Money Laundering ◽  
Banking Sector ◽  
Task Force ◽  
Banking System ◽  
Annual Reports ◽  
Special Investigation ◽  
Task Force Report ◽  
Content Type ◽  
Banking Secrecy ◽  
Legal Provisions

Purpose The purpose of this study is to analyze the Lebanese anti-money laundering (AML) paradigm in light of banking secrecy law. The phenomenon of money laundering that was first associated with the crime of drug trafficking developed a lot since the early 1900s to become a major threat to the world’s economy today. The fight against this ever-growing crime, with multiple sources and origins, has been the centre of attention of the biggest countries in the world. Thus, the need for international AML standards was required, by which countries must abide, to ensure an effective fight against this crime. The issue of banking secrecy regulations was important to study along with the AML framework as the principles of the first totally contradict those of the latter. Design/methodology/approach The scope of this study first entails a qualitative technique. It will start with analysing existing legal provisions on money laundering and studying the AML framework internationally and in accordance with the Lebanese banking system. For that, websites such as GoogleScholar and HeinOnline were used to collect many scholars articles. Additionally, Laws, Regulations and Directives have been examined for the purpose of establishing the legal basis for the fight against money laundering. Moreover, an interview was conducted in 2018 with the Lebanese Financial Prosecutor, which served as data related to the operations of the Special Investigation Commission (SIC) in Lebanon, which is the Lebanese Financial Intelligence Unit. Second, quantitative research has been done. Reports of the Association of Banks in Lebanon, Financial Action Task Force Report and Annual Reports of the SIC of Lebanon have been used to gather information related to the AML/combating the financing of terrorism framework, such as customer due to diligence provisions and know-your-customer requirements and to collect statistics of suspicious reports. Findings The question of “How to balance the confidentiality of the Lebanese banking sector with the interest of the international community in the fight against money laundering?” was interesting to study, as it turned out that the existence of such professional secrecy does not affect the effective implementation of the AML guidelines by banks and other financial institutions. This can only happen when there is a special judicial organ to which banking secrecy is not opposable at any time, and which is the sole organ entrusted with lifting off this professional secrecy and allowing the disclosure of information to the competent authorities. Thus, the Lebanese banking system can ensure total compliance with the AML framework while still adopting banking secrecy regulations. Originality/value The choice of Lebanon was compelling because of the special level of protection its banking secrecy law offers.

Suspicious transaction reporting: an Indian experience

2015 ◽  
Vol 18 (1) ◽  
pp. 2-16 ◽  
Author(s):  
B. Viritha ◽  
V. Mariappan ◽  
Irfan Ul Haq
Keyword(s):  
Money Laundering ◽  
Reporting System ◽  
Task Force ◽  
Annual Reports ◽  
Content Type ◽  
Suspicious Transaction ◽  
Financing Of Terrorism ◽  
Secondary Information ◽  
Financial Intelligence ◽  
The Impact

Purpose – The purpose of this paper is to assess the effectiveness of anti-money laundering (AML) reporting system in India in terms of Suspicious Transaction Reports (STRs) and its impact on countering money laundering through the conviction and confiscation. The main emphasis of financial action task force (FATF) guidelines on AML and countering of financing of terrorism (CFT) is the obligation of financial institutions and designated non-financial businesses and professions to instantaneously report the suspicious transactions to Financial Intelligence Unit (FIU), an agency with a mandate to deal with AML. Design/methodology/approach – It is a descriptive study to explore the outcome of the AML process. The study has used the secondary information published in the annual reports of FIU-India and FATF. The study period is 2006-2007 to 2011-2012. Findings – Though there is a significant increase in the STRs filed, the impact of AML is not realized in terms of neither AML-related convictions nor confiscations, since the enactment of the Prevention of Money Laundering Act (PMLA). However, the AML/CFT regime in India has just started earnestly, and it still has to go a long way before stabilizing and achieve tangible results. Research limitations/implications – In the Indian context, only few of the effectiveness indicators of the FATF methodology 2013 could be selected due to the limited availability of data, as much of the information maintained by various stakeholders, including reporting entities, FIU-India and other investigative and enforcement agencies, is kept confidential. Thus, it is difficult to establish the effectiveness of enforcement function of AML. Evaluation of effectiveness of AML is judged on the basis of convictions and confiscations. Originality/value – There is a dearth of studies assessing the reporting system under PMLA and thus this paper attempts to throw some insights on the outcome of AML chain, especially the impact of reporting suspicious transactions.

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.

The EU will struggle to crackdown on money laundering

2019 ◽  
Keyword(s):  
Money Laundering ◽  
Direct Investment ◽  
Banking Sector ◽  
Screening Programme ◽  
Task Force ◽  
International Standards ◽  
Content Type ◽  
Financial Action Task ◽  
National Governments ◽  
The Eu

Subject EU money-laundering concerns. Significance On 5 April, Swedbank Chairman Lars Idermark resigned, following criticism of how the bank has handled allegations of money laundering. The allegations follow similar revelations relating to Danske Bank last year. In addition to raising further questions about the integrity of the Nordic banking sector, it also highlights the EU’s continued exposure to money laundering. Impacts Money-laundering scandals suggest that the international standards set by the Financial Action Task Force are inadequately upheld. Such scandals could increase suspicion among voters that national governments and the EU serve the interests of the elite. Further cases of money laundering could undermine the EU’s new foreign direct investment screening programme. Addressing the proportional divergence in the transparency and rules of national regulatory regimes is high on the EU’s agenda.

The determinants of anti-money laundering compliance among the Financial Action Task Force (FATF) member states

2018 ◽  
Vol 26 (3) ◽  
pp. 442-459 ◽  
Author(s):  
Emmanuel Senanu Mekpor ◽  
Anthony Aboagye ◽  
Jonathan Welbeck
Keyword(s):  
Money Laundering ◽  
Banking Sector ◽  
Task Force ◽  
Ordinary Least Squares ◽  
Member States ◽  
Financial Action Task Force ◽  
Content Type ◽  
Regulatory Quality ◽  
Financial Action Task ◽  
Financial Intelligence

Purpose This paper aims to compute a measure for anti-money laundering/counter-financing of terrorism (AML/CFT) compliance and investigate its determinants. Design/methodology/approach Using the Financial Action Task Force (FATF) recommendations and assigning weights to them, the study computes a measure for AML compliance. Further, the determinants of AML compliance were investigated using ordinary least squares (OLS) data of 155 countries between 2004 and 2016. Findings The findings suggest that AML compliance have slightly improved over the years. Further, the OLS regression results show that technology, regulatory quality, bank concentration, trade openness and financial intelligence center significantly determined and improved AML compliance. Practical implications From the findings, it is evident that countries that wish to improve the AML compliance should focus more on technology, regulatory quality, structure of the banking sector, size of the economy and institution of financial intelligence center so as to enhance AML compliance. Originality/value To the best of the author’s knowledge, this paper reveals a first AML/CFT compliance index that measures the cross-country level of AML/CFT compliance from the year 2004 to 2016. Subsequently, this paper adopted an OLS econometric model to identify the key determinants of AML/CFT compliance among member states of FATF.

Pressure on Iran’s banks raises chances of collapse

2022 ◽  
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Financial Institutions ◽  
Banking Sector ◽  
Task Force ◽  
Banking System ◽  
Reliable Data ◽  
Content Type ◽  
Bank Managers ◽  
Financial Action Task

Significance However, the signs of strain are becoming more marked. On December 15, the Central Bank of Iran (CBI) issued an official warning to all financial institutions, threatening legal penalties for bank managers who try to compensate for rising inflation by offering savers higher interest rates than is legally permitted. Impacts If US sanctions are not lifted, further economic deterioration will increase pressure on the banking system. Iran’s blacklisting by the Financial Action Task Force will be an ongoing burden for the banking sector. Tight credit will make it hard for consumers to get even small loans, such as those for which newlyweds used to be automatically eligible. There are no reliable data, but comprehensive restructuring of the banking system would likely cost hundreds of billions of dollars.

Poor enforcement hinders Mexico's anti-laundering laws

2015 ◽  
Keyword(s):  
Money Laundering ◽  
Banking Sector ◽  
Task Force ◽  
Unintended Consequences ◽  
Federal Law ◽  
Property Development ◽  
Content Type ◽  
Car Sales ◽  
Financial Intelligence ◽  
Financial Transactions

Subject Anti-money laundering efforts. Significance July 17 will mark two years since the 'Federal Law for the Prevention and Identification of Operations with Illicit Resources' came into force. The law regulates sectors considered susceptible to money laundering, such as property development, construction, car sales and art sales which were left out of earlier legislation on financial transactions. The provisions -- enacted by the President Enrique Pena Nieto government -- were welcomed by international regulators such as the Financial Action Task Force, which, in its February 2014 evaluation report, said that Mexico had successfully addressed most of its outstanding recommendations. Impacts High demand for illegal narcotics will continue to fuel money laundering despite improved laws. Anti-laundering legislation will have mixed effects in both financial and non-financial sectors. The finance ministry and Financial Intelligence Unit are receptive to feedback, amending regulation accordingly. The legislation's unintended consequences in the banking sector have been compounded by stringent foreign anti-laundering provisions.

Anti-money laundering regulations and its effectiveness

2014 ◽  
Vol 17 (4) ◽  
pp. 416-427 ◽  
Author(s):  
Muhammad Usman Kemal
Keyword(s):  
Money Laundering ◽  
Banking Sector ◽  
Banking System ◽  
Employee Training ◽  
Content Type ◽  
Record Keeping ◽  
System A ◽  
Key Variables ◽  
Different Dimensions ◽  
The Relationship

Purpose – The purpose of this study is to check the effectiveness of anti-money laundering (AML) regulations in Pakistan. The study investigates and analyses some key variables that may be influencing the effectiveness of anti-money regulations in Pakistan. Money laundering is most prevalent in the banking sector, as banks deals with the money’s deposition, withdrawal and transfer, therefore, it is necessary to evaluate the effectiveness of anti-money regulations on subjective judgments. It is an exploratory study in which I have tried to find the relationship and impact of three regulations, which are customer record keeping, employee training and suspicious transaction reporting on money laundering. Design/methodology/approach – A sample of hundred responses has been collected from employees working in different banks located in Rawalpindi and Lahore through questionnaire. Questionnaire has been developed on the basis of different dimensions of the research variables. Findings – It has been found that that there is an impact of employee training on money laundering in banking system. A moderate inverse relationship between employee training and money laundering and anti-money laundering regulation of customer record keeping has weak impact on money laundering in developing countries. Research limitations/implications – The research is limited to Pakistan only, and to apply the same concept in other countries, researchers need to check the financial institutions of that country as well. Originality/value – It has been suggested that to stop money laundry, special budget should be allocated for the capacity building of employees through training. Timely guidance and assistance of foreign-trained instructors or experts in combating money laundering should be taken. Implementation of anti-money laundering regulations should be transparent, consistent and timely.

The determinants of corporate disclosures of anti-money laundering initiatives by Kenyan commercial banks

2020 ◽  
Vol 23 (3) ◽  
pp. 609-635
Author(s):  
David Mathuva ◽  
Samuel Kiragu ◽  
Dulacha Barako
Keyword(s):  
Money Laundering ◽  
Fixed Effects ◽  
Audit Committee ◽  
Task Force ◽  
The Body ◽  
Annual Reports ◽  
African Region ◽  
Content Type ◽  
Emerging Trends ◽  
Global Nature

Purpose This study aims to examine the extent and drivers of anti-money laundering (AML) disclosures in the audited annual reports of regional listed banks in Kenya. Design/methodology/approach Using the Financial Action Task Force recommendations and other guidelines, the authors develop an AML disclosure index that is used to score the extent of AML disclosures by banks. A sample of 15 listed regional banks in Kenya over the period of 2007-2017 is used. Using this sample, the authors performed fixed-effects regressions to identify the significant determinants of AML disclosures. Findings The study establishes a low level of AML disclosures in the audited annual reports of sampled banks. The extent to which the AML disclosures improved across three distinct regulatory regimes over the period of 2007-2017 is reported. The authors find that the AML disclosures are largely driven by corporate governance (board size and audit committee size) and the ratio of diaspora remittances to GDP. Practical implications Owing to the global nature of money laundering activities, the study suggests that the Central Bank of Kenya needs to internationalize AML regulations and follow internationally accepted best practices in AML to respond to emerging trends in money laundering and related crimes. Originality/value To the best knowledge of the researchers, this is perhaps the first study to examine the drivers of AML disclosures by banks in a developing economy in the East and Southern African region. Given the global nature of money laundering, the study makes an important and original contribution to the body of knowledge with potential for replication in other jurisdictions. The findings will also form a basis for developing an AML reporting or disclosure framework.

Influence of human resource capital information disclosure on investors’ share investment intentions

2017 ◽  
Vol 46 (3) ◽  
pp. 551-571 ◽  
Author(s):  
Sugumar Mariappanadar ◽  
Alma Kairouz
Keyword(s):  
Performance Management ◽  
Human Resource ◽  
Information Disclosure ◽  
Banking Sector ◽  
Strategic Human Resource Management ◽  
Annual Reports ◽  
Individual Investors ◽  
Content Type ◽  
Investment Intentions ◽  
The Impact

Purpose The purpose of this paper is to apply the strategic human resource management (HRM) perspective to investigate the schematic relationship between the dimensions of human resource (HR) capital information and intentions to use such information in individual investors’ decisions relating to investing equities in the banking industry. Design/methodology/approach A two-stage empirical study was conducted in 2010 using a four-part HR capital disclosure questionnaire, which was developed and validated in stage 1 (n=145) of the study. In stage 2 (n=157), current or previous shareholders in one of the Australian banking sector corporations participated in the study. The collected data were analyzed using confirmatory factor and logistic regression analyses. Findings The findings of this explorative study highlight that the individual investors’ perception on the importance of performance management dimension of HR capital information has varied impacts on their intentions to use such information in investment decisions to buy, hold on to, or sell stocks. Practical implications This study has made an important contribution to the strategic HRM and behavioral finance literature that the human capital information facilitates the propensity to avoid regrets in selling shares too early (dispositional effect bias) to achieve utility benefits in future which is different from the findings of financial information disclosure study. Originality/value A recent critical review of HR disclosure indicated that most of the published articles on HR capital have used company annual reports for data source. However, this is the first study that attempts to understand the impact of HR capital disclosure information on investment intentions from individual investors’ schema rather than drawing data from company annual reports.

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.

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