Anti-money Laundering Laws Research Articles

The Financial Action Task Force and the AMLA of the Philippines: Dynamics between Veto Players and a Non-Veto Player in Policymaking

The article is about the dynamics between an international organization and the institutional actors vis-a-vis the policymaking process. It argues that the Anti-Money Laundering Law (AMLA) was exogenously driven, as the policy was instigated purely by external demand and enacted under external pressure. AMLA is considered an imposition of the Paris-based intergovernmental organization, the Financial Action Task Force (FATF). The swiftness of the enactment of AMLA exemplifies the immense influence that an international financial organization can have on the policy actors as well as on the policymaking process. The policymaking process in this type of institutional engagement — between institutional actors (executive and legislature) within a polity and an international organization — is efficient in producing a policy output. However, the process represents an issue of international override on a state, as a nonveto player dictates to the institutional veto players. This experience supports the global pattern that, in issues associated with global financial standards, policymaking will less be shaped by the institutional actors and will extensively be defined by international actors. The making of AMLA presents an archetype of how international organizations can hold sway over the state.

Policy Decisiveness, Public Regardedness, and Unity of Purpose: The FATF and the Policymaking Process for AMLA

The story of the Anti-Money Laundering Law (AMLA) is about the contemporary impact that an international organization has on the policymaking process. The dynamics of the crafting of this law illustrated the asymmetrical relationship between the international organization and the central policy actors. The Financial Action Task Force (FATF), a non-veto player, through incentives and constraints, profoundly influenced the behavior of the veto players, determined the tempo of the process, and delineated the legislative outcome. First, the FATF, was able to set the agenda and subdue the political inertia that worked against the law in the executive and legislative branches. Second, the FATF ensured the enactment and amendment of the law. Third, it made certain that the law did not cater to vested interests and complied with international standards. The external demand was so overwhelming that the FATF was able to guarantee the unity of purpose (the threat of sanction compelled the veto players to collaborate) that in turn resulted in the policy decisiveness of the process (the unyielding deadline defined the pace and direction of the proceeding), and in the public regardedness of the policy (the global standard shaped the content of the AMLA). In the theoretical sphere, the engagement between the FATF and institutional policy actors demonstrated a new dimension in the veto players framework, and modified the conventional proposition — that the more veto players, the harder it is to generate or change policy (policy stability), and the more watered down the output policy (private regardedness) will be. Instead, the presence of an international organization “refashioned” the lawmaking process, making policy enactment easier (policy decisiveness) regardless of the number of veto players, and ensuring that the policy responds more to global interest (public regardedness) notwithstanding the presence of a multiplicity of interests among the veto players.

Power Politics in Policymaking: The Anti-Money Laundering Act of the Philippines

The Anti-Money laundering law (AMLA) is a financial regulation enacted mainly because of external demand, as the Financial Action Task Force (FATF) called on the Philippine Government to comply with the Anti-Money Laundering (AML) regime. The FATF not only summoned the Philippine Government, but also determined the shape and content of the AMLA by requiring the institutional policy actors to conform to the global standards. Thus the FATF exercised direct powers — agenda setting and decision making — in persuading the Philippine Government to enact the law. The institutional policy actors were impelled to prioritize the consideration and deliberation of the financial regulation (agenda setting) and compelled to enact and rework the content of the policy to conform to the FATF standard within a time frame (decision making). The FATF’s use of direct powers was made possible and reinforced by the context-shaping power of the prevailing financial structure, specifically, the establishment of the AML regime. Context-shaping bound the institutional actors to enact the policy because of the prevailing AML regime established by the FATF. As the context-shaping power underscored the exercise of the agenda-setting and decision-making powers, the lawmaking experience that created the AMLA highlights the employment of the different dimensions of power as well as the contemporary dynamics in the global financial structure vis-a-vis the policymaking process.

Anti‐money laundering law of Turkey and the EU: an example of convergence?

PurposeThis paper critiques the recent anti‐money laundering (AML) legislation in Turkey and the European Union (EU) in order to determine whether there is convergence between them. Given the fact that Turkey is a candidate country for the EU membership, harmonisation of Turkish and the EU AML frameworks has become increasingly important. These AML laws pose important responsibilities for the financial and legal sectors.Design/methodology/approachIn order to facilitate the evaluation process, the AML regimes examined are compared in regards to various aspects, such as criminalisation of money laundering, recording and reporting obligations, enforcement and sanctions mechanisms. Findings from activity reports from the regulatory bodies as well as semi‐structured interviews conducted with relevant professionals are incorporated into the discussion.FindingsIt can be argued that the Turkish AML regime is in line with the EU AML framework. However, there is a need for government authorities to coordinate their efforts with the relevant independent regulatory professional bodies that represent the liable professionals in Turkey. While it is evident that each national regime in the EU has adopted a unique AML framework, minimum standards provided by international (e.g. the Financial Action Task Force) and regional (e.g. EU) instruments have been the main driving force behind all national laws.Practical implicationsThe involvement of professional regulatory bodies will enhance competence to monitor compliance and provide training mechanisms and guidance for liable professionals pertaining to AML regulations.Social implicationsEffectiveness of AML initiatives will enhance with improved cooperation and communication between the executive, law enforcement agencies and businesses. This will improve the reporting of suspicious financial activities and subsequent enforcement.Originality/valueThe paper provides an up‐to‐date account of the Turkish legal regime pertaining to AML and demonstrates its shortcomings whilst assessing it against the EU AML framework. The findings of the study contribute to the existing literature and shed light on areas for reform.

The institutional framework against money laundering and its underlying predicate crimes

PurposeThe purpose of this paper is to underscore the current supranational anti‐money laundering (AML) regimes articulating challenges of harnessing them as a robust framework. Some aspects of the above framework are created under the auspices of the United Nations treaties, some are regional‐based initiatives while others are ad hoc arrangements.Design/methodology/approachThe paper was written on the basis of the supranational framework against money laundering such as the United Nations Convention against drug trafficking and other psychotropic substances. Owing to the limitations of the above AML model law, the paper utilised a qualitative research methodology, exploring a wide range of the current AML regimes. The paper has also exploited the revised AML framework which expands the scope of the offence to encompass, not only proceeds from drug trafficking but also serious criminal activities (smuggling, fraud, serious financial crimes, and the sale of stolen goods). Ideally, the paper has been written based on the provisions of the United Nations Convention against transnational organised crimes and its attendant three protocols adopted in Palermo (2000); and the Financial Action Task Force (2004). The foregoing regimes underscore an essential framework for the study of money laundering and its attendant predicate offences globally.FindingsThe findings of the study clearly demonstrate that the current AML framework is not robust enough to caution countries against the threat of money laundering. There is a gaping gap in the law of money laundering within and between regions even though there is a global framework in place. This is presumably the reason why some countries have not fully transposed some aspects of current AML regimes locally.Social implicationsThe gaps in the law against money laundering – both in relation to the way they are created and enforced signify that states still need to do more collectively to stem the threat of money laundering. The current intransigence in application of AML laws in some countries sign‐post the inherent challenges of globalisation of international finance.Originality/valueWhile there is a growing body of literature generated on supranational AML regimes, this paper is distinctly based on the interplay of global and local factors in harnessing it. Thus, the research design of this paper is connected by two strands – a review of existing supranational AML framework and the inherent challenges faced by individual states in domesticating it. The paper is also written based on some practical experiences of harnessing global AML regimes in some countries.

International Anti-Money Laundering Programs- Empirical Assessment and Issues in Criminal Regulation

The purpose of this paper is to present an empirical assessment and outline issues in criminal regulation relating to international anti-money laundering (AML) programs. Design/methodology/approach – In the first part, this paper outlines the serious threats posed by transnational laundering operations in the context of economic globalization, and calls for highly co-ordinated international responses to such a crime. The second part of the paper centres on elements of international criminal regulation of ML.The focus is on the phenomenological aspect of ML and highlights that to a large extent it is an economic issue. Economic analysis calls for an accurate legal response, with typical trade-offs: it should deter criminals from laundering by increasing the costs for such illicit operations, calling for enhanced regulatory and enforcement activities; however, stronger enforcement yields increased costs and reduces privacy. These features have lately inspired the recent paradigm shift from a rule-based regulatory framework to a risk-based approach which still represents an extremely delicate regulatory. Both at the international level and within the single domestic legal system, AML law is typically characterised by a multidisciplinary approach combining the repressive profile with preventive mechanisms: an empirical evaluation of the International Monetary Fund-World Bank AML program is presented, where these two aspects are assessed. The non-criminal measures recently implemented under the auspices of the main inter-governmental public organisations with competence in these fields seem to be consistent with the insights of economic analysis. However, some key criminal issues need to be better addressed.

International anti‐money laundering programs

PurposeThe purpose of this paper is to present an empirical assessment and outline issues in criminal regulation relating to international anti‐money laundering (AML) programs.Design/methodology/approachIn the first part, this paper outlines the serious threats posed by transnational laundering operations in the context of economic globalization, and calls for highly co‐ordinated international responses to such a crime. The second part of the paper centres on elements of international criminal regulation of ML.FindingsThe focus is on the phenomenological aspect of ML and highlights that to a large extent it is an economic issue. Economic analysis calls for an accurate legal response, with typical trade‐offs: it should deter criminals from laundering by increasing the costs for such illicit operations, calling for enhanced regulatory and enforcement activities; however, stronger enforcement yields increased costs and reduces privacy. These features have lately inspired the recent paradigm shift from a rule‐based regulatory framework to a risk‐based approach which still represents an extremely delicate regulatory. Both at the international level and within the single domestic legal system, AML law is typically characterised by a multidisciplinary approach combining the repressive profile with preventive mechanisms: an empirical evaluation of the International Monetary Fund‐World Bank AML program is presented, where these two aspects are assessed. The non‐criminal measures recently implemented under the auspices of the main inter‐governmental public organisations with competence in these fields seem to be consistent with the insights of economic analysis. However, some key criminal issues need to be better addressed.Originality/valueThe paper offers insights into international AML programs, focusing on criminal regulation.

Issues of the International Criminal Regulation of Money Laundering in the Context of Economic Globalization

This work has a twofold aim. First, it outlines the serious threats posed by transnational laundering operations in the context of economic globalization, showing, at the same time, the foremost reasons for sustaining the need of international responses to such crime. In the first part the focus is on the phenomenological aspect of money laundering as the necessary means through which criminal activity can live on and proliferate. Moreover, we analyse the main results economic studies on the matter has lately achieved. In this way, we aim at highlighting that money laundering is also (if not mainly) an economic issue and an accurate diagnosis of it can not exclude its economic essence and consequences. The economic analysis calls for an accurate legal response, which faces a typical trade-off. It should, indeed, deter criminals from laundering by increasing the costs for such illicit operations. Arguably this aim can be achieved by intensifying regulation and enhance the enforcing activities. However, a stronger enforcement yields increased costs and reduces the privacy of citizens. Both at the international level and within the single domestic legal systems, anti money-laundering law is typically characterised by a multidisciplinary approach combining the repressive profile with preventive mechanisms. The non-criminal measures lately implemented both at the international level and by the national legislation seem to be consistent with the insights the most recent economic studies on money laundering have put forward. On the other hand, the economic analysis highlights that some crucial criminal issues are in the need of further revision. Therefore, the second part of our work centres on elements of international criminal regulation of the crime under discussion. The adoption of international hard law instruments since 1988 is encouraging. The treaty-approach regarding criminalisation has unquestionably contributed in calibrating the national responses and, in some cases (e.g. the definition of the actus reus, and the promotion of the liability ex crimine for legal entities) formulating them ex novo. Nonetheless, there still seems to be a hiatus between the well-recognised need of concerted criminal strategies, the challenges posed by transnational dynamics of laundering crimes, and a certain determination of States to maintain their criminal prerogatives. For instance, issues regarding the national definitions of predicate offences persist. Again, the emergence of causal chains stretching across national jurisdictional boundaries with effects that transgress one or more national criminal norms poses serious jurisdictional challenges.

The Banco Delta Asia affair: The USA patriot act and allegations of money laundering in Macau

The anti-money laundering laws of the US are the most powerful in the world. Their broad provisions and extra-territorial reach pose risks to financial institutions around the world. Although they are not widely understood, recent cases demonstrate how these laws operate. In this paper I briefly describe Macau, the new gambling capital of the world; analyze the alleged role of Banco Delta Asia (BDA), a small, family-owned bank in Macau, in money laundering on behalf of North Korea; and offer some observations on the controversial use of Section 311 of the USA Patriot Act.

Anti-Money Laundering in Europe: Banks as Rent-Seekers in the Enhancement of the Third Money Laundering Directive

Criminals organising their criminal activities for profit is not something of the last few years, but it hails back to the early Christian world. Nevertheless, the knowledge of the average citizen about organised crime is generally limited to a superficial image of the Sicilian Cosa Nostra or South American Drugs Cartels due to large Hollywood productions that romanticise these criminal constituencies. The true nature of these criminals and their activities has for the most part remained unclear for the public and policy makers. With some cynicism one could argue that policy makers are more or less as blind about organised crime as the average ignorant citizen.In the last two decades, the European Legislature has tried to lever criminal activities by organized crime. This has led to a well elaborated anti-money laundering framework. The approach taken in the contemporary European anti-money laundering framework is threefold. First, the framework comprises a set of first-pillar Community Regulations and Directives. These measures form the backbone of the European ant-money laundering framework. The latest regulatory initiative is the Council of Europe's third Money Laundering Directive (2005/60/EC). Coordinated measures on the Community level were necessary to prevent money launderers from abusing the European Community's frontierless internal market for their criminal activities. Second, this category contains additional legislative measures against money laundering. One of these measures is Regulation 1889/2005 on the Controls of Cash Entering or Leaving the Community. The necessity of this regulation laid in the highly divergent approaches taken by the Member States. Third, this category includes third pillar measures against cross-border money laundering. Third pillar measures mainly require Member States to diminish money laundering by monitoring their banking transactions, accounts and confidentialities.On the contrary to prior anti-money laundering laws, the latest (third) Money Laundering Directive has a central role for banks. The banking sector is involved in the enforcement of the third Money Laundering Directive through the introduction of disclosure requirements (customer due diligence). The aim of the Directive is to involve all the actors that might get in contact with cross-border money laundering transactions. This paper will examine whether banks indeed have the incentive to enforce the Directive. The first presumption is that, albeit the newest Money Laundering Directive is wider (i.e. broader scope and covers more topics and players) than prior regulatory ventures, it does not necessarily bring a more sophisticated regime. The second presumption is that, there is a risk of rent-seeking that prevents private banks from actually maximizing their gatekeeper role. The rent-seeking risk is mainly fostered by the regulatory framework in which banks operate. Both presumptions form the backbone of this paper and will be thoroughly examined.

Implementing the New Anti-Money Laundering Directive in Europe: Legal and Enforcement Issues - The Italian Case

In this paper a first assessment of the 2007 reform of Italian anti-money laundering (AML) law is presented. In light of the relevant literature on AML, the reform seems to improve the Italian AML framework in many ways, but there persist some drawbacks both on the legal and the enforcement side. As for the former, there are some advances in the definition of ML and the institutional framework, but a closer coordination with other specific legislations and some adjustments in the sanctions regime would be needed. On the enforcement side, the risk-based approach and the inclusion of professionals' associations among AML agents are promising, but the persisting noticeable gap in the number (and significance) of suspicious transactions reports, both across the categories of agents and the geographic areas, needs to be explored to investigate the possible influence of (polluting) environment factors hampering the implementation of the AML regulation.

United Arab Emirates: Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of Terrorism

This paper highlights the detailed assessment report on antimoney laundering (AML) and combating the financing of terrorism in the United Arab Emirates (UAE). The AML law needs to be amended to expand the range of predicate offences and to provide greater powers for the financial intelligence unit. The authorities have taken positive initiatives to address the issue of Hawala dealers, and have introduced a voluntary system of registration and reporting. The central bank intends progressively to formalize its oversight regime for this sector.

Implementing the new anti-money laundering directive in Europe: legal and enforcement issues; the Italian case

In this paper, a first assessment of the 2007 reform of the Italian Anti-Money Laundering (AML) law is presented. In light of the relevant literature on AML, the reform seems to improve the Italian AML framework in many ways, but there persist some drawbacks on both the legal and the enforcement sides. As for the former, there are some advances in the definition of Money Laundering (ML) and the institutional framework, but a closer coordination with other specific legislations and some adjustments in the sanctions regime would be needed. On the enforcement side, the risk-based approach and the inclusion of professional associations among AML agents are promising, but the persisting noticeable gap in the number (and significance) of Suspicious Transactions Reports (STRs), both across the categories of agents and the geographic areas, needs to be explored to investigate the possible influence of (polluting) environmental factors hampering the implementation of the AML regulation.

The International Trust, 2nd Ed, By John Glasson and Geraint Thomas, Eds

This new edition, a book edited by John Glasson and Geraint Thomas, continues the aim of the first edition to provide, in a convenient single volume form, guidance to international trust practitioners and litigators on a wide range of specialist topics. The material is largely derived from contributions to the loose-leaf encyclopaedia, also published by Jordans—International Trust Laws. These are the general chapters which accompany the country-by-country analysis of trust laws. This second edition includes three new topics. John Rhodes and Ed Powles of Macfarlanes of London deal with Trusts, Trustees and the UK Money Laundering Regime and how the provisions of the Proceeds of Crime Act 2002 apply to the trust industry. These are not specific trust provisions so it is necessary to see how general provisions apply. An interesting quotation at the beginning of the chapter by Bertolt Brecht says: ‘Amateur criminals rob banks. The real professionals create them’. This seems to be a true statement, even if Bertolt Brecht did not have money laundering in mind as the criminality of professional bankers! Although this chapter deals with the UK anti-money laundering law, the next new chapter on the liabilities of trust service providers in international financial law takes a wider view although, in considering how the law on the investment of trust funds and the liabilities of trust service providers are moulded by the international law of finance and financial regulation, there is still a considerable emphasis upon the Financial Services Act of the UK.

The impact of Switzerland's money laundering law on capital flows through abnormal pricing in international trade

The objective of this research is to determine the impact of Switzerland's money laundering law on the movement of money through false invoicing in international trade. This study evaluates every reported import and export transaction between the USA and Switzerland during the period 1995–2000. The study indicates that there were significant changes in the degree of abnormal international trade pricing subsequent to the enactment of Switzerland's antimoney laundering law. The study supports the view that individuals and companies will find substitute techniques and channels to launder money when central banking authorities enact legislation that only focuses on financial institutions.

The weapons of war: The use of anti-money laundering laws against terrorist and criminal enterprises – Part 2

In the first part of this paper, published in Journal of International Banking Regulation, Volume 4, Number 1, the author analysed the use of a variety of legal devices that have been developed to assist in the identification and interdiction of the proceeds of serious crime in the ‘War Against Terror’. He explored the relationship between attacking the profitability of criminal enterprises and the processes of money laundering, as well as referring to the new measures taken in the wake of the 11th September, 2001 attacks on the USA and the perhaps largely unforeseen consequences on world financial stability that may result from their implementation. In this, the final part of the paper, the author refers to the development of new strategies designed rather to disrupt criminal and subversive activities than bring individuals and their wealth before the courts, and the implications that these may have on the traditional justice system.

The weapons of war: The use of anti-money laundering laws against terrorist and criminal enterprises — Part 1

The weapons of war: The use of anti-money laundering laws against terrorist and criminal enterprises — Part 1