Current developments in money laundering and terrorism financing

Abstract

PurposeWhilst the existing literature focuses on developing prevention mechanisms for banks, this paper aims to demonstrate the ongoing feasibility of money laundering and financing terrorism undetected. This study thereby reveals that the current anti-money-laundering and anti-terrorism-financing mechanisms can easily be circumvented.Design/methodology/approachA three-stage research process was used, including both qualitative and quantitative methods. The empirical findings are based on a qualitative content analysis of 50 informal interviews with illegal financial services providers and 50 formal interviews with compliance experts and law enforcement officers.FindingsDuring these interviews, specific methods of financing terrorism and limiting the risks of being prosecuted were discussed. Hence, specific methods of money laundering and terrorism financing have been analyzed.Research limitations/implicationsThe findings thus convey only the perspectives of the 100 interviewees, such that generalizability is limited.Practical implicationsThe practical implications include suggestions for financial regulators, financial institutions and compliance officers on how to more effectively combat money laundering and terrorism financing. Although the empirical findings are limited to Europe, the results could be applied globally.Originality/valueThis paper reveals new insights about criminals’ actions, which help to develop more effective compliance mechanisms.