Are suspicious activity reporting requirements for cryptocurrency exchanges effective?

This study analyzes the impact of a newly emerging type of anti-money laundering regulation that obligates cryptocurrency exchanges to report suspicious transactions to financial authorities. We build a theoretical model for the reporting decision structure of a private bank or cryptocurrency exchange and show that an inferior ability to detect money laundering (ML) increases the ratio of reported transactions to unreported transactions. If a representative money launderer makes an optimal portfolio choice, then this ratio increases further. Our findings suggest that cryptocurrency exchanges will exhibit more excessive reporting behavior under this regulation than private banks. We attribute this result to cryptocurrency exchanges’ inferior ML detection abilities and their proximity to the underground economy.

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

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.

Cave Pecuniam: Lawyers as Launderers

The attorney’s trust account is an enticing prospect for criminals seeking ways to launder money acquired illegally, and the attorney whose trust account is abused in this way stands to be branded and punished as a money launderer. The overall aim of the article is to identify the dangers which money launderers pose to attorneys and to highlight the need for vigilance in the face of these dangers. It analyses the anti-money laundering reporting obligations imposed on attorneys by the Financial Intelligence Centre Act and considers impact of these obligations upon the attorney-client relationship. Some of the ways in which a law practice may become implicated in the placement, layering and integration stages of the money laundering process are discussed, and cases which deal with attorneys’ involvement in money laundering schemes are presented.

Consequences of Borders

Australia’s Joseph Gutnick is a billionaire, a diamond and gold miner, a political player, a philanthropist, and a rabbi. On October 20, 2000, Gutnick awoke in Victoria to find himself accused of tax evasion and money laundering by the American business magazine Barron’s. The article, “UnHoly Gains,” suggested that Gutnick had engaged in shady dealings with Nachum Goldberg, a Melbourne money launderer jailed in 2000 for washing AU$42 million in used notes through a bogus Israeli charity. Gutnick read the story, not in the print version of Barron’s but on the online version of its sister publication, “wsj.com,” a website on a server physically located in New Jersey. Gutnick was not the only Australian to read the story. Approximately seventeen hundred Australians subscribed to wsj.com, including many Australian business and finance leaders. An enraged Gutnick vehemently denied the illicit association with Goldberg. To protect his reputation, he sued Dow Jones & Company—the parent company of both Barron’s and the Wall Street Journal—in an Australian court, taking advantage of tough Australian libel laws unleavened by the U.S. First Amendment. The legal arguments in the Gutnick case mirrored those in the Yahoo litigation in France a few years earlier. Dow Jones argued that Australian courts were legally powerless (or “without jurisdiction”) to rule on the legality of information on a computer in the United States, even if it appeared in Australia. The Australian High Court, like the court in France, disagreed. For material published on the Internet, it stated, the place where the person downloads the material “will be the place where the tort of defamation is committed.” Within two years of this decision, Dow Jones agreed to pay Gutnick AU$180,000 in damages and AU$400,000 in legal fees to settle the case. It also issued this retraction: “Barron’s has no reason to believe Mr. Gutnick was ever a customer of Mr. Goldberg, and has no reason to believe that Mr. Gutnick was a money laundering customer of, or had any criminal or other improper relationship with, Mr. Goldberg.”

KAJIAN AWAL TENTANG MONEY LAUNDERING SERTA IMPLIKASINYA DALAM PASAR KEUANGAN INTERNASIONAL

Perkembangan teknologi perbankan internasional dalam dekade terakhir ini telah memberikan jalan bagi tumbuhnya jaringan-jaringan perbankan yang semula lokal/regional menjadi suatu lembaga keuangan yang global. Kecenderungan tersebut ternyata juga memberikan kesempatan bagi para pelaku money laundering untuk turut memanfaatkan kecanggihan jaringan layanan perbankan. Uang hasil transaksi ilegal (obat bius/ narkotika, senjata gelap, suap/korupsi/ manipulasi serta fraud perbankan) telah menjadi “legal” dalam dunia bisnis di pasar keuangan internasional. Dalam posisi ini, perbankan internasional khususnya International Offshore Banking Centres (IOBC) dengan segala aspek perlindungan data serta keleluasaan pajaknya telah menjadi lembaga intermediasi yang sangat diminati oleh para money launderer. Namun pada sisi yang lain, juga merupakan lembaga yang sangat rentan terhadap proses placement, layering ataupun integration.Tulisan ini bertujuan untuk memberikan gambaran awal tentang kegiatan money laundering; batasan, teknik-teknik, sumber-sumber regulasi, serta implikasi yang timbul sehubungan dengan peranan bank sebagai lembaga intermediasi. Kajian ini diharapkan akan mampu memberikan gambaran serta perbaikan-perbaikan yang memadai dan perlu dilakukan oleh masyarakat keuangan internasional dalam upaya pencegahan maupun penindakan terhadap kegiatan money laundering, yang dari tahun ke tahun semakin canggih, terorganisasi rapi dan profesional. Ketidakberhasilan dalam menggalang kerjasama internasional dalam memerangi money laundering akan menimbulkan risiko perubahan variabel permintaan uang yang tak terduga, risiko pada kesehatan perbankan, efek kontaminasi pada transaksi keuangan yang legal, volatilitas yang sangat besar pada modal internasional dari transfer asset antar negara yang tidak terantisipasi.