Anti-Money Laundering in the Insurance Sector

The insurance sector mainly consists of insurance companies, insurance agencies, brokers, and reinsurers. For many years, false damages, without being linked to money, have undoubtedly been the most attractive aspect of the insurance industry. However, for quite some time, the insurance sector is also used by money launders to launder crime revenues due to the increasing volume of money transactions day by day. In order to mitigate the risk of money laundering, the insurance sector in Turkey is implementing the compliance program of Turkish Law No: 5549 on “prevention of laundering proceeds of crime.” The main components of this compliance program are the identification of the customers and reporting of suspicious transactions. It is concluded that the risk of money laundering should also be considered during damages and compensation payments, especially in life and pension companies. Policy and contract cancellations should be periodically reviewed, and the reasons for cancellations should be documented well.

Money Laundering and Institutional Quality

Money laundering is considered an illegitimate global phenomenon that deteriorates any country's economic stability. The main objective of this chapter is to investigate the relationship between money laundering and institutional quality by considering several variables such as government stability, corruption, bureaucracy quality, law and order, and democratic accountability. The study investigates these relationships by using panel quantile regression. The findings suggest a significant relationship between good governance and money laundering and a significant negative relationship between government stability and illicit financial flows. In order to eradicate or control money laundering, governments need to be stable, and institutions should operate under favorable conditions. However, if money launderers manage to infiltrate these institutions with bribery and corruption, then it becomes incredibly difficult to stop the planned crimes like money laundering.

Effect of Terrorism Financing on Selected Global Indices

Investment is a part and parcel of life. There are various avenues to invest and one of those is the stock market. But the decision of the investor depends on various factors and one of these factors is terrorism. The chapter focuses on the long and short-run association (LSA) and the influence of terrorism on major global stock indices and gold. The Paris attacks of 2015 are taken as a base, and the ARDL model is used to study the long and short-run impact on the selected stock indices. An attempt is also made to study the impact of terrorism on the stock returns using the Miller and Modigliani model. The study reveals a short-run impact of terrorism on the five selected global indices, but there is no long-run impact.

Money Laundering in Real Estate (RE)

Money laundering is a defiance of law and order within the real estate (RE) sector in Canada. Laundering of illicit funds impacts the stability, reliability, and integrity of the government, financial institutions, and the economic sectors. Due to its mysterious nature, there are more unknowns about the quantum of snow washing in the property market or its effects on price inflation. Using data from the Cullen Commission about money laundering in Canada, this chapter is an effort to examine the nuances that law enforcement encounters while investigating illegal investment operations. This chapter illuminates a broad range of problems around the investigations of unlawful investments and recommends pragmatic solutions to the illicit flow of money in RE sector of Canada.

Risk-Based AML/CFT Regulations for Effective Supervision

Money laundering is a global threat that requires an urgent attention of policymakers to protect financial systems from criminals. A jurisdiction is required to develop a regime to control or mitigate the impact of crimes that have multi-dimensional impacts on global economies. Prevention of global crimes is a challenge not only to jurisdiction but also to the global standard setters. The final impact of these crimes hit the financial system and other regulated institutions. Anti-money laundering/combating the financing of terrorism (AML/CFT) supervision is an emerging area; therefore, a sound regime of AML/CFT supervision is essential to support global initiatives in this regard. This chapter discusses the implementation of a sound risk-based AML/CFT supervision of financial institutions as well as designated non-finance business and professions. This is important for AML/CFT regulators to strengthen the AML/CFT regime of a country.

Compliance Monitoring and Testing Seismometer to Detect Compliquake

Effective corporate compliance function has been the focus of all the financial institutions (FI) and the regulators across the globe in this fast-changing and dynamic business landscape. The compliance function is a key component of financial institutions' (FIs) lines of defence in terms of managing and mitigating the risks. Compliance monitoring and testing by the compliance departments can act as an effective “seismometer” in detecting the “compliquakes” in the FIs if implemented effectively. If FIs across the globe internalize this philosophy, the author opines that the overall financial services and the financial institution's ecosystem will be a much better world in terms of identification and strengthening of the compliance control framework.

Factors Influencing the Outcome of Money Laundering Investigations

Money laundering is a global issue that must be effectively mitigated across the nation. Despite various initiatives, investigation outcome either in the form of prosecution, conviction, or confiscation remains low. Therefore, this study aims to investigate the factors influencing money laundering investigating outcome, based on rational choice theory. The study conducted focus group interviews with 15 investigating officers to have an in-depth understanding of factors and challenges faced by investigating officers in conducting money laundering investigation which influences their investigation outcome. The findings demonstrate that money laundering investigation outcome is influenced by three factors, which are cost-benefit analysis, individual belief, and organizational context. The findings of the study provide significant contributions in confirming the theoretical foundations underpinning this research and suggest recommendations for the relevant regulators in improving money laundering investigation and prosecution decision making.

Fraud Risk Management in Banks

White collar crimes refer to the criminal activities by a professional holding a responsible position in the organization. Banking frauds are one of the most pronounced forms of white collar crimes. These frauds impact the reputation of the bank and also effects its financial sustainability. The chapter entails the frauds that happen in banks and identifies reasons for the failure of banks to prevent such frauds. The author pinpoints the best practices in developing fraud prevention frameworks and emphasizes the importance of corporate governance in preventing such frauds. Best practices and future trends are also identified that are important to prevent and detect banking frauds.

Money Laundering

This chapter intends to discuss in detail the complex phenomena of money laundering. This chapter presents the definition, the three stages, characteristics, the negative consequences, and recent trends in money laundering. This chapter demonstrates that money laundering is an international issue by discussing the occurrence of money laundering cases around the globe. This chapter further identifies global efforts to prevent money laundering. This chapter is of value to the layman, government, policymakers, and law enforcement agencies to understand the concept of money laundering. While the chapter presents the basic understanding of the concept of money laundering, the overall finding proves that money laundering is an organized crime. Wherever cash-intensive business exists, there exists the opportunity for money laundering through financial arrangements. Therefore, collaborative domestic and international efforts are needed to combat this crime.

Financing as a Livewire for Terrorism

Terrorism is a global security concern that dominates the theatre of intellectual discourse in the contemporary world. This chapter is taking the case of one of the deadliest insurgents and a terrorist group in the history of Nigeria and also examined various sources of finances of this group in detail. From radical preaching, this group transformed into a terrorist group attacking security, innocent citizens, and all and sundry. As a qualitative study, the social conflict model is adopted in explaining the framework of the existing literature. The data obtained was analyzed critically using content analysis. The study discovered that insurgents sourced their finances through internal and external sources, legal and illegal engagements. The study recommends among several others that the Nigerian Government and security operatives should intensify the process of identifying, tracing, and blockage of the sources of finances for terrorism.