Data protection rules applicable to Financial Intelligence Units: still no clarity in sight

Financial information can play a key role in tackling money laundering, terrorist financing and combatting serious crime more generally. Preventing and fighting money laundering and the financing of terrorism were top priorities of the European Union’s (EU) Security Strategy for 2020-2025, which might explain the fast developments regarding legislative measures to further regulate anti-money laundering (AML) and counter terrorism financing (CTF). In May 2020, the European Commission put forward an Action Plan to establish a Union policy on combatting money laundering and shortly afterwards, proposed a new AML Package.Financial Intelligence Units (FIUs) play a crucial role in analysing and exchanging information concerning unusual and suspicious transactions, serving as intermediaries between the private sector and law enforcement authorities (LEAs). Such information includes personal data, which is protected under the EU data protection acquis. The latter is constituted of two main laws, the General Data Protection Regulation (GDPR), which applies to general processing and the so-called Law Enforcement Directive (LED) that is applicable when competent law enforcement authorities process personal data for law enforcement purposes.This Article argues that the current legal framework on AML and CTF legislation is unclear on the data protection regime that applies to the processing of personal data by FIUs and that the proposed AML Package does little or nothing to clarify this dilemma. In order to contribute to the discussion on the applicable data protection framework for FIUs, the assessment puts forward arguments for and against the application of the LED to such processing, taking into account the relevant legal texts on AML and data protection.

A Lavagem de Dinheiro e o Financiamento do Terrorismo no Mercado de Seguros, Capitalização e Previdência Privada Aberta

This article focus on the emergence of the criminalization of money laundering and the financing of terrorism, as well as the conventions and bodies that promote the prevention of these crimes. It also approaches how the current transnational crime – and evolution of how they are commited – as well as the need for fast and constant legislative adaptation and the creation of specialized bodies to combat these crimes. It further discusses the recent interest of criminals in the insurance, capitalization and open private pension market, and thus, it analyzes SUSEP;s Circular nº 612/2020. The methodology used was historical research, addressing the evolution of conventions and legislation on the subject. The objective is to answer the following questions: How did the laws evolve so that they adapt and effectively prevent crime? Which international and national bodies are responsible for this prevention? How do terrorists operate in the insurance market, and what does the program to prevent money laundering and combat the financing of terrorism have in place? It is concludes that the union of countries is essential for the fight against terrorism, as well as the evolution of legislation on the subject, in order to cover all phases of the process, including the raising of resources. We can also conclude that Circular SUSEP nº 612/2020 is in line with the policies on the prevention of money laundering and terrorism financing, as it is aligned with the risk-based approach model.

CRIMINAL RESPONSIBILITY FOR TERRORISM

Acts of terrorism often result in fatalities, but the impact of terrorism is not limited to loss of lives. Terrorism acts can disturb or suspend the peace process; they cause, lengthen, or deepen conflicts and escalate violence. In addition, terrorism has an effect on the economy of the state, given that combatting of terrorism requires significant temporal and financial resources.The threat posed by international terrorism not only constitutes one of the biggest challenges that the world and Europe in particular is currently facing, but also affects the security and economic interests of the Latvian nationals. In addition, terrorism-related crimes threaten the security of not only separate states, but that of the entire international community as well.In the view of the author, the relevance of the topic is illustrated by the fact that 23 May 2018, saw the Criminal Act of Latvia being complemented by a new (IX1) section on “Crimes Related to Terrorism”, thereby underscoring the preparedness of Latvia to adjust its legislative framework in order to avert possible threats of terrorism. The new version of the law sees terrorism, financing of terrorism, invitation to terrorism and terrorism threats, recruitment and training of persons for terrorism, travelling for terrorism purposes, and justification of terrorism classified as criminal offences.Author has chosen the topic of terrorism with the aim of exploring the definition of terrorism and its depiction in international and Latvian law, as well as analysing the criminal liability for terrorism prescribed by the Latvian law and determining the issues associated with the classification of terrorism.The paper consists of introduction, three chapters, and conclusion. In the first chapter, the definition of terrorism is considered. The second chapter is devoted to the analysis of criminal liability for terrorism under the Latvian law, and the third chapter – to the issues associated with the classification of terrorism. Finally, conclusions with respect to the threats posed by terrorism to the European Union and Latvia are drawn.

THE ROLE AND IMPORTANCE OF A COMPLIANCE OFFICER IN THE ACTIVITIES OF A FINANCIAL INSTITUTION IN ORDER TO PREVENT THE LEGALIZATION (LAUNDERING) OF CRIMINALLY ACQUIRED FUNDS AND THE FINANCING OF TERRORISM

The relevance of the topic is confirmed by the changes taking place in the financial monitoring system: the complication of procedures aimed at countering money laundering and financing of terrorism, the creation of specialized international and European requirements and the changes of requirements for compliance specialists. Financial institutions more often face the incompetence the incompetence of these employees and their negligence. The author analysed anti money laundering and counter financing of terrorism legal acts, as well as revealed the main recommendations to financial institutions for preventing money laundering and terrorism financing. Based on scientific research, the main risk factors for using financial institutions for money laundering were identified. Based on these risks factors, the author identified the role and importance of a compliance officer in order to prevent the legalization (laundering) of criminally acquired funds and the financing of terrorism.

Customer’s awareness, trust, discomfort and acceptance of anti-money laundering practices in Malaysian Banks

Purpose This study aims to examine the associations between customers’ awareness of money laundering and terrorism financing, trust in banking secrecy measures and discomforts in fulfilling the bank’s anti-money laundering (AML) procedure and their acceptance of existing practices of banks regarding AML and counter-terrorism financing. Design/methodology/approach This study adapts a set of survey instruments developed and validated by prior studies to collect the required data. A convenient sample of 160 Malaysian bank customers aged 18 and above were surveyed to collect the data. Findings This study finds a significant relationship between the respondents’ awareness of money laundering and terrorism financing, trust in banking secrecy measures and their acceptance of the bank’s AML and counter-terrorism financing practices. However, no significant relationship is documented between the level of discomforts experienced by customers in satisfying the banks’ AML requirements and their acceptance of the banks’ AML practices. These results hold even after controlling for alternative explanations of the customers’ acceptance of banking practices examined in the extant literature: age, gender, location, literacy level and occupation. Research limitations/implications This study extends the literature on customers’ acceptance of banking practices more broadly by providing empirical evidence on the role of customers’ awareness on issues underlying the banking practices and their trust in the bank’s secrecy measures. Practical implications This study also provides some practical contributions by shedding some light on the factors that could help banks increase the acceptance of AML practices among their customers. Thus, the findings of this paper help banks focus their effort on these factors and hence increase acceptance rate more effectively. Originality/value Drawing on the elements of the theory of reasoned actions and technology acceptance model and the extant research on trust-privacy and comfortability in a banking setting, this study proposes an integrated approach that is theoretically and empirically grounded.

INTERNATIONAL AGREEMENTS AS A SOURCE OF INTERNATIONAL FINANCIAL LAW

The article under studies is a legal analysis of the international contractual lawmaking in the field of finance. It lays particular emphasis on the role of international financial agreements in forming the international financial order enforcement. The article contains a classification of international agreements, which directly or indirectly aim at regulating financial relations according to the following criteria: 1) the subject of legal regulations; 2) the legal status of the parties that conclude an international agreement; 3) the number of the parties in an international agreement. In addition, the paper under discussion analyzes the contents of the statutes of certain international financial organizations, whose norms play a significant role for the legal-normative constituent of the international financial order enforcement. The research indicates that in compliance with the nature of the irfunctions and the number of the parties, international financial agreements are divided into: A) the international agreements, which set up the legal basics and a single procedure of the inter-state relations in a certain field of activities of the international financial relations (the fields of currency relations, settlement relations, countering terrorism financing, etc.) andserveas a basis for concluding other agreements in a respective area: 1) the international agreements that aim at coordinating states in the international financial relations (statutes of the international financial organizations); 2) the international agreements that have a mixed legal nature in the context of the ultimate legal entities, to which most of the provisions of the agreement are directed. Such inter-state agreements make the states fulfil their obligations by implementing the international norms into their national legislations, which concern the financial relations between legal and juridical persons. B) The international agreements, which contain individually determined financial norms (on the issues of financing, investing, etc.).

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.

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.

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.