Understanding regulatory trends: digital assets & anti-Money laundering

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Katherine Kirkptrick ◽  
Aaron Stevens ◽  
Jacob Gerber ◽  
Margaret Nettesheim ◽  
Sebastian Bellm
Keyword(s):  
Money Laundering ◽  
Content Type ◽  
Global Regulators ◽  
Market Participants ◽  
Regulatory Frameworks ◽  
Investment Opportunities ◽  
Digital Asset ◽  
Practical Implications ◽  
Regulatory Landscape ◽  
Digital Assets

Purpose To evaluate the global anti-money laundering regulation of digital assets and cryptocurrencies. Design/methodology/approach This article provides an analysis of macro trends in digital asset money laundering regulation and explores the regulatory frameworks in some of the leading international crypto markets. Findings As the popularity and public adoption of digital assets have grown, global regulators have turned their attention to the risks of anti-money laundering. Monitoring the evolving international regulatory landscape is essential for organizations looking to successfully take advantage of digital asset-related investment opportunities. Practical implications Market participants should understand all applicable laws and procedures before they decide to enter the digital asset market. These considerations can become even more complex as businesses interact with multiple international regulators. Originality/value This article is designed to help investors understand the global anti-money laundering regulatory landscape regarding digital assets, particularly for those institutions interested in diversifying with crypto-related investment opportunities.

SEC framework and no-action letter provide guidance on analyzing whether a digital asset is a security

2019 ◽  
Vol 20 (4) ◽  
pp. 68-71
Author(s):  
Kenneth J. Berman ◽  
Morgan J. Hayes ◽  
Matthew E. Kaplan ◽  
Byungkwon Lim ◽  
Gary E. Murphy ◽  
...  
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Investment Funds ◽  
Content Type ◽  
Market Participants ◽  
Securities Investment Funds ◽  
The Us ◽  
Digital Asset ◽  
Digital Assets

Purpose To analyze and draw conclusions from the “Framework for ‘Investment Contract’ Analysis of Digital Assets” (the “Framework”), released by the US Securities and Exchange Commission (the “SEC”) on April 3, 2019, and the SEC’s corresponding no-action letter to TurnKey Jet, Inc. (“TKJ”), which is the SEC’s first no-action letter publicly agreeing with the view that the digital asset described therein is not a security. Design/Methodology/Approach Explains how the Framework assists market participants in analyzing whether a digital asset is a security, by applying the Howey factors for identifying an investment contract. Discusses the SEC’s TKJ Letter, highlighting the factors the SEC emphasized in its analysis of the Framework. Findings While largely reiterating prior guidance, the Framework provides a helpful overview of the SEC’s views on when a digital asset is a security and how to properly analyze the prongs of Howey with respect to digital assets. The Framework also leaves certain important questions unanswered, including, for example, whether digital assets distributed by means of a so-called “Airdrop” are securities under the Framework, and the extent to which the Framework is meant to interact with digital assets that were issued or otherwise operate on platforms that are primarily overseas. Originality/Value Expert guidance from lawyers with broad experience in financial services, securities, investment funds, derivatives, and digital assets regulation and compliance.

Money laundering through raw diamonds

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fabian Maximilian Johannes Teichmann ◽  
Marie-Christin Falker
Keyword(s):  
Law Enforcement ◽  
Money Laundering ◽  
Qualitative Content Analysis ◽  
Law Enforcement Agencies ◽  
Content Type ◽  
Compliance Officers ◽  
German Speaking ◽  
Three Stages ◽  
Practical Implications ◽  
Combat Money Laundering

Purpose This paper aims to illustrate how illegally obtained funds are laundered through raw diamonds in Austria, Germany, Liechtenstein and Switzerland. Design/methodology/approach To identify specific money laundering techniques involving raw diamonds, this study used a qualitative content analysis of data collected from 60 semi-standardized interviews with both criminals and prevention experts and a quantitative survey of 200 compliance officers. Findings Raw diamonds are extraordinarily suitable for money laundering in European German-speaking countries. In particular, they may be used in all three stages of the laundering process, namely, placement, layering and integration. Research limitations/implications Because the qualitative findings are based on semi-standardized interviews, their insights are limited to the perspectives of the 60 interviewees. Practical implications Identifying gaps in existing anti-money laundering mechanisms should provide compliance officers, law enforcement agencies and legislators with valuable insights into how criminals operate. Originality/value While prior studies focus on the methods used by organizations to combat money laundering and how to improve anti-money laundering measures, this paper investigates how money launderers operate to avoid detection, thereby illustrating authentic experiences. Its findings provide valuable insights into the minds of money launderers and combines criminal perspective with that of prevention experts.

FINRA’s disciplinary actions in 2017: increased restitution ordered with minimal changes in number of cases

2018 ◽  
Vol 19 (2) ◽  
pp. 19-23
Author(s):  
Brian Rubin ◽  
Adam Pollet
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Disciplinary Actions ◽  
Financial Industry ◽  
Electronic Communications ◽  
Content Type ◽  
The Past ◽  
Expert Analysis ◽  
Research Analysts ◽  
Practical Implications

Purpose The purpose of this paper is to analyze the Financial Industry Regulatory Authority’s (FINRA) 2017 disciplinary actions, the issues that resulted in the most significant fines and restitution and the emerging enforcement trends from 2017 and beyond. Design/methodology/approach The approach of this paper discusses the disciplinary actions in 2017 and prior years, details the top 2017 enforcement issues measured by total fines assessed, including anti-money laundering, trade reporting, electronic communications, books and records, research analysts and research reports, and explains current enforcement trends, including restitution, suitability cases and technological issues. Findings In 2017, restitution more than doubled from the prior year, resulting in the fourth highest total sanctions (fines combined with restitution and disgorgement) assessed by FINRA over the past 10 years. Practical implications Firms and their representatives should heed the trends in both the substantial restitution FINRA is ordering and the related enforcement issues in the cases FINRA has brought. Originality/value This paper provides expert analysis and guidance from experienced securities enforcement lawyers.

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.

Estimating the destination of Mexican-based laundered funds: an application of the modified Walker-Unger model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Juan Roman ◽  
Ana Machuca ◽  
Thomas Schaefer
Keyword(s):  
Money Laundering ◽  
Gross National Product ◽  
Physical Distance ◽  
Economic Effects ◽  
Content Type ◽  
Banking Secrecy ◽  
Financial Activity ◽  
Time Period ◽  
Money Launderer ◽  
Practical Implications

Purpose This study aims to apply the modified Walker-Unger model to show the degree of attractiveness of a country for Mexican-based money launderers to send their illicit funds for the 2000–2015 time period. Design/methodology/approach The modified Walker-Unger model is used to conduct the analysis, as it combines several independent variables related to an illicit financial activity. These allow the researcher to investigate the attractiveness of a market to money launderers and the possible economic effects of money laundering. In total, 13 categories of indicators were used, namely, gross national product per capita; banking secrecy; government attitude; society for worldwide interbank financial telecommunication membership; financial deposits; conflict; corruption; Egmont group membership; language; trade; culture, colonial background; and physical distance. Findings Model results suggest the preferred destinations for Mexican-based money launderers from 2000 to 2015 were Bermuda (i.e. from 2000–2004), Canada (i.e. in 2005 and 2006) and Monaco (i.e. from 2007–2015). Research limitations/implications Timing and availability of reliable data after 2015. Practical implications Aids in continuing to empirically validate the Walker-Unger model. There is little literature on models that quantify money laundering activity. Social implications May aid policymakers in targeting anti-money laundering policy to more relevant countries. Originality/value The first empirical investigation that looks to quantify money launderer activity in Mexico. Contributes to the limited literature of quantitative investigations on money laundering.

Does holding offshore jurisdictions to higher AML standards really assist in preventing money laundering?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Andrew James Perkins
Keyword(s):  
Money Laundering ◽  
Secondary Data ◽  
Cayman Islands ◽  
Content Type ◽  
Task Forces ◽  
Financial Crimes ◽  
Financial Action Task ◽  
Practical Implications ◽  
Combat Money Laundering

Purpose This paper aims to contend that when tackling financial crimes such as money laundering and terrorist financing, international regulators are seeking to hold offshore jurisdictions such as the Cayman Islands to higher standards and that this detracts from the pursuit of detecting and prosecuting money launders. Design/methodology/approach This paper will deal with the following perceived issues: firstly, to offshore jurisdictions as a concept; secondly, to outline the efforts made by the Cayman Islands to combat money laundering and to rate these changes against Financial Action Task Forces’ (FATAF’s) technical criteria; thirdly, to demonstrate that the Cayman Islands is among some of the world’s top jurisdictions for compliance with FATAF’s standards; and finally, to examine whether greylisting was necessary and to comment upon whether efforts by international regulators to hold offshore jurisdictions to higher standards detracts from the actual prosecution of money laundering within the jurisdiction. Findings Greylisting the Cayman Islands in these authors’ view was something that should have never happened; the Cayman Islands is being held to standards far beyond what is expected in an onshore jurisdiction. There is a need for harmonisation in respect of international anti money laundering rules and regulations to shift the tone to prosecution and investigation of offences rather than on rating jurisdictions technical compliance with procedural rules where states have a workable anti-money laundering (AML) regime. Research limitations/implications The implications of this research are to show that offshore jurisdictions are being held by FATAF and other international regulators to higher AML standards than their onshore counterparties. Practical implications The author hopes that this paper will begin the debate as to whether FATAF needs to give reasons as to why offshore jurisdictions are held to higher standards and whether it needs to begin to contemplate higher onshore standards. Originality/value This is an original piece of research evaluating the effect of FATAF's reporting on offshore jurisdictions with a case study involving primary and secondary data in relation to the Cayman Islands.

Investment opportunities for student housing in Europe

2018 ◽  
Vol 36 (6) ◽  
pp. 578-584 ◽  
Author(s):  
Nick French ◽  
Geetha Bhat ◽  
Gurpreet Matharu ◽  
Filipe Ortigão Guimarães ◽  
David Solomon
Keyword(s):  
Student Housing ◽  
European Countries ◽  
Content Type ◽  
Market Requirements ◽  
Investment Opportunities ◽  
Property Markets ◽  
Practical Implications ◽  
Insight Into

Purpose The purpose of this paper is to provide an insight into how the demographic of international and home students in the major university cities in three European countries (France, Spain and Germany) offers investors an opportunity to provide students housing. This paper looks at how a mobile and demanding student clientele now demands, well priced, good quality and purpose built accommodation during their studies at University. This offers a good property investment opportunity. Design/methodology/approach This practice briefing is an overview of the demand factors that are creating opportunities in France, Spain and Germany. Findings This paper analyses the link between the under provision of purpose built student housing and an opportunity to develop a long-term cash flow producing investment asset. Practical implications The role of the property developers and investors is to successfully identify trends and demands and provide the assets that meet the market requirements. This paper looks at the meeting point in three major European countries for this latent and, currently, poorly served demand. Originality/value This provides guidance on how investment opportunities develop in non-traditional property markets.

CFTC overhauls customer protection requirements

2014 ◽  
Vol 15 (1) ◽  
pp. 25-32 ◽  
Author(s):  
Robert M. Brown
Keyword(s):  
Design Methodology ◽  
Commodity Futures ◽  
Regulatory Regime ◽  
Futures Trading ◽  
Content Type ◽  
Regulatory Response ◽  
Market Participants ◽  
Policies And Procedures ◽  
Practical Implications

Purpose – The purpose of the paper is to summarize the Commodity Futures Trading Commission's (CFTC) recent overhaul of its customer protection rules, which regulate how futures commission merchants (FCMs) and derivatives clearing organizations (DCOs) handle customer funds. Design/methodology/approach – The paper summarizes the most significant aspects of the CFTC's October 30, 2013 customer protection rulemaking, explains FCM and DCO obligations under the new regulatory regime, and sets forth a compliance timeline. Findings – The CFTC's recent overhaul of its customer protection rules impose significant new requirements on FCMs and DCOs in their handling of customer funds. Practical implications – All FCMs and DCOs that handle customer funds should review these new rules and begin putting into place policies and procedures to ensure their compliance as each new requirement comes into effect. Originality/value – The CFTC's overhaul of its customer protection regime is new and significant. FCMs and DCOs need to understand their new obligations under the rules. As these new rules are the CFTC's regulatory response to the events that led to the insolvencies of MF Global and Peregrine Financial Group, these developments also should be of interest to futures and swaps market participants generally.

How positive service experiences contribute to service captivity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Constantino Stavros ◽  
Kate Westberg ◽  
Roslyn Russell ◽  
Marcus Banks
Keyword(s):  
Financial Services ◽  
Financial Vulnerability ◽  
Socially Responsible ◽  
Content Type ◽  
Welfare Policies ◽  
Regulatory Frameworks ◽  
Alternative Financial Services ◽  
Service Experiences ◽  
Service Relationship ◽  
Practical Implications

Purpose Service captivity is described as the experience of constrained choice whereby a consumer has no power and feels unable to exit a service relationship. This study aims to explore how positive service experiences can contribute to service captivity in the alternative financial services (AFS) sector for consumers experiencing financial vulnerability. Design/methodology/approach A total of 31 interviews were undertaken with Australian consumers of payday loans and/or consumer leases. Findings The authors reveal a typology of consumers based on their financial vulnerability and their experience with AFS providers. Then they present three themes relating to how the marketing practices of these providers create a positive service experience, and, in doing so, can contribute to service captivity for consumers experiencing financial vulnerability. Research limitations/implications The benefits derived from positive service experiences, including accessible solutions, self-esteem, and a sense of control over their financial situation, contribute to the service captivity of some consumers, rendering alternative avenues less attractive. Practical implications AFS providers must ensure a socially responsible approach to their marketing practices to minimize potentially harmful outcomes for consumers. However, a systems-level approach is needed to tackle the wider issue of financial precarity. Policymakers need to address the marketplace gaps, regulatory frameworks and social welfare policies that contribute to both vulnerability and captivity. Originality/value This research extends the understanding of service captivity by demonstrating how positive service experiences can perpetuate this situation. Further, specific solutions are proposed at each level of the service system to address service captivity in the AFS sector.

Money laundering in a CBDC world: a game of cats and mice

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Daniel Dupuis ◽  
Kimberly Gleason ◽  
Zhijie Wang
Keyword(s):  
Money Laundering ◽  
Financial Institutions ◽  
Economic Activity ◽  
Design Methodology ◽  
Central Banks ◽  
Content Type ◽  
Digital Currency ◽  
Individual Privacy ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this study is to describe the present taxonomy of money, summarize potential central bank digital currency (CBDC) regimes that central banks worldwide could adopt and explore the implications of the introduction of each of these CDBC regimes for money laundering through the lens of the regulatory dialectic theory. Design/methodology/approach The methodology used in the analysis of significant recent events regarding the progress of central banks in establishing a CBDC and the implications for money laundering under a CBDC regime. This paper also reviews the literature regarding the Regulatory Dialectic to highlight potential innovative responses of money launderers to circumvent the controls generated through the implementation of a CBDC. Findings This study examines the impact of Kane’s regulatory dialectic paradigm on the feasibility of money laundering under a CBDC regime and identifies potential avenues that would be available for those seeking to launder money, based on the form a CBDC would take. Research limitations/implications This paper is unable as of yet to empirically evaluate anti-money laundering (AML) tactics under a CBDC regime as it has not yet been fully implemented. Practical implications Many central banks worldwide are evaluating the structure of and introduction of a CBDC. There are a number of forms that a CBDC could take, each of which has implications for individual privacy and for entities involved in AML efforts within financial institutions and the regulatory community. The paper has implications for AML experts who are considering how AML procedures would change under a CBDC regime. Social implications The regulatory dialectic predicts that regulatory response reactive, rather than proactive when it comes to socially undesirable phenomena. As central banks and governments seek to divert economic activity away from the laundering of the proceeds of illicit activity, there are tradeoffs in terms of a loss of privacy. The regulatory dialectic predicts a corresponding innovative response of those who wish to undermine the controls generated through the establishment of a CBDC. Originality/value To the authors’ knowledge, this is the first paper to explore the impact of a potential CBDC on money laundering and the potential innovative circumventions within the paradigm of the Regulatory Dialectic.

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