Pressure on Iran’s banks raises chances of collapse

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.

Does holding offshore jurisdictions to higher AML standards really assist in preventing 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.

Fraud schemes during COVID-19: a comparison from FATF countries

Purpose This study aims to define fraud crimes, its most prevalent categories and examines the most common of these schemes during the COVID-19 pandemic by drawing on the experiences of several countries and the Financial Action Task Force’s (FATF) updated paper issued during the pandemic. Design/methodology/approach This study uses a comparative analysis methodology in conjunction with a descriptive analytical approach to compare four FATF member countries in light of the fraud activities that occurred on their territory during the pandemic and their respective law enforcement measures. It makes use of secondary data sources, namely, the theoretical literature on the subject and FATF’s updated paper on money laundering and terrorism financing during COVID-19. Findings This study found that fraudsters exploited the difficult circumstances during the pandemic in the majority of countries worldwide and identified various fraud schemes based on the incidents reviewed, such as the abuse of economic stimulus in Italy, counterfeiting medical goods in Brazil and investment fraud schemes in California, USA. In Spain, the fraud schemes tended to be cyber related. Such variations were also observed by the law enforcement agencies in the above-mentioned countries. Originality/value Numerous studies on fraud schemes are available to researchers. However, few such studies have been conducted during the COVID-19 pandemic. Therefore, this study makes a unique contribution to the literature.

Could banning virtual assets be a breach of the doctrine of legitimate expectation?

Purpose This paper aims to examine the validity of a state’s prohibition on virtual assets in the context of its global commitment to battle against money laundering. Design/methodology/approach This was empirical legal research exploring how a general lack of expertise to apply a risk-based approach in anti-money laundering strategies might have implications for invoking the Financial Action Task Force (FATF) exclusion provisions in virtual asset regulation. Findings Invoking the exclusion provisions for banning virtual assets without meeting the prerequisites may put the financial system at risk and make a jurisdiction’s legal obligations appear breached. Research limitations/implications Anti-money laundering (AML) policymakers will take precautions and avoid misuse of the liberties they enjoy under FATF exclusion clauses/provisions. Practical implications The results of this study will help ensure more informed decision-making on the legal status and regulation of virtual assets. Originality/value The study helps ascertain the limits of privileges accorded to states under FATF exclusion provisions in applying global standards against money laundering.

Strengthening AML/CFT controls of digital payment token service providers in Singapore

Purpose To raise awareness of money laundering and terrorism financing (ML/TF) controls and regulations in Singapore for digital payment token (DPT) service providers. Design/methodology/approach This article summarizes the key points in the guidance infographic published by the Monetary Authority of Singapore on strengthening the AML/CFT controls of DPT service providers (Infographic). In line with the Infographic, these points pertain to: (1) recent developments in the Financial Action Task Force (FATF) Standards; (2) ML/TF risks in the DPT sector; and (3) an overview of MAS’ measures to address such risks, which include (i) licensing and supervision; (ii) AML/CFT notice and guidelines; and (iii) surveillance. Findings To combat illicit activities in Singapore’s DPT sector, the MAS has introduced AML/CFT measures that are aligned with the FATF Standards. DPT service providers should be cognizant of these regulations in developing their own internal measures. Originality/value Practical guidance from experienced lawyers in the Technology Transactions and Financial Services Regulatory & Enforcement practices.

FATF mission may find Paraguay corruption worsening

Significance The controversial decision coincided with the start of a major international evaluation of Paraguay’s compliance with international guidelines on combatting illicit financial flows. SEPRELAD head Carlos Arregui has admitted that it is by no means certain that Paraguay will pass the Financial Action Task Force (FATF) exam. Impacts Failure to pass would mean a negative ‘country image’, involving a higher risk premium on government foreign borrowing costs. A negative result would lead to reduced foreign investment inflows, something that the private sector is keen to avoid. The Biden administration will step up pressure for greater Paraguayan vigour in combatting corruption.

Anti-money laundering and counter-terrorism financing disclosure by money exchange providers in the GCC countries

Purpose The purpose of this paper is to measure anti-money laundering (AML) and counter-terrorism financing (CTF) disclosures by money exchanger providers in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The authors conduct a content analysis on firms’ websites to compare their AML/CTF disclosure against the recommendations of the Financial Action Task Force (FATF). The authors use a one-sample t-test to examine the degree of these disclosures. Findings Overall, money exchange providers in GCC countries do not demonstrate a high degree of AML/CTF disclosure (20.27%). Country-wise disclosure levels are: Qatar 31%, UAE 19%, Kuwait 17.1%, Oman 26.27%, Bahrain 23.27% and KSA 6.1%. Research limitations/implications The study contributes immensely to understanding the disclosure behavior of this sector. It also helps in assessing their compliance with FATF recommendations. Practical implications The results show poor AML/CTF disclosure and compliance by money exchange providers, which should lead to increased regulations by policymakers and more disclosure by practitioners. Social implications Money laundering (ML) and terrorism financing (TF) can adversely affect societies. This study should help regulators to identify vulnerable areas in ML and TF activities, compare disclosures by companies in their countries with those of other countries and identify areas for improvement. Originality/value The study is a novel attempt. No study has been undertaken before to investigate AML and CTF disclosure by money exchange providers either globally, regionally or in any country.

The anti-money laundering framework for precious stones and metals dealers in Singapore

Purpose Precious stones and metals have commonly been used throughout the world as a conduit for terrorism and money laundering activities. Such illicit use of these assets has called for its much-needed attention from a regulatory perspective. This is particularly relevant in a financial haven such as Singapore. Accordingly, the purpose of this paper is to explore how several of the most common trading and investment activities involving precious stones and metals in Singapore are regulated. Design/methodology/approach The research explores activities include the trading of – the storing or custodising of – and the current available savings plans involving the use of precious stones and metals. It is based mainly on information collected from various legal sources such as books, domestic legislation and international papers issued by the Financial Action Task Force and the Asia Pacific Group on Money Laundering. Findings With the author’s findings, the analysis may prove useful for businesses seeking to navigate the regulatory landscape for precious stones and metals in Singapore, for investors seeking to understand the protection offered to them under the regulatory framework and for other jurisdictions seeking to evaluate and refine their existing framework for regulating precious stones and metals. Originality/value To the author’s knowledge, this is the first substantive academic study which analyses the regulatory landscape for the use of precious stones and metals under the Singapore Law.

International commercial arbitrator addressing money laundering sua sponte

Purpose The purpose of this paper is to evaluate the existing legal basis, and its practical application, of an arbitrator’s competence to raise on her own initiative money laundering issues. Design/methodology/approach The research focusses on presenting the essence of the problem through evaluation of the legal basis for the arbitrators to raise money laundering concerns on their own initiative and the examples of so being done in international commercial arbitration. Findings This paper concludes that arbitrators do not presently have a solid legal basis that authorises them to act sua sponte against money laundering. Originality/value The originality and value of this paper lies in its emphasis on theoretical and practical issues related to money laundering in international commercial arbitration. It argues in favour of an explicit recommendation to be incorporated in the 2012 Recommendations of the Financial Action Task Force (FATF) that international commercial arbitrators address money laundering on their own initiative.

International cooperation in the investigation of economic crimes related to cryptocurrency circulation

The cross-border nature of transactions with virtual currencies and the use of anonymity technologies exacerbates the difficulties in investigating economic crimes. The purpose of the article was to study the effects of international cooperation in the investigation of economic crimes related to the circulation of cryptocurrency. The research methodology is based on the method of content analysis of reports, recommendations and standards of the FATF (Financial Action Task Force) for 2012-2020, as a leading international organization for the prevention and development of policies for the regulation of economic crimes related to the circulation of cryptocurrencies. The results demonstrate the following effects of international cooperation in the investigation of economic crimes related to cryptocurrency: 1) the need to use a risk-oriented approach of the international community at the global level, coordination of government efforts to prevent economic crimes; 2) formation of a network of organizations that provides an effective balance between existing threats and opportunities for cryptocurrency circulation; 3) the development of free, decentralized management networks at the global level, which is an innovative and effective way to combat criminal activity, compared to traditional centralized forms of coercion in an era of rapid and unpredictable technological change. The considered experience of the absence of regulatory acts of cryptocurrency circulation and taxation of virtual assets on the principle of traditional assets indicates the absence of concern about illegal activities and possible economic crimes in this area. At the same time, decentralized and quasi-autonomous virtual assets could potentially threaten years of global anti-money laundering efforts. There is a “race” in the international community for leadership in combating economic crime. However, such efforts to establish legitimate jurisdictions that meet the requirements of the AML (Anti-Money Laundering) provide few measures in practice to counter and limit the opportunities for money laundering in other jurisdictions.