Anti-money Laundering Laws Research Articles

Money laundering

Purpose The purpose of this paper is to provide an assessment of soft law as a technique for repressive and preventive anti-money laundering control (hereinafter AMLC). Design/methodology/approach This article focuses heavily on understanding the nature of international anti-money laundering (AML) law-making process. The approach towards this question is interdisciplinary and looks at the treaty and non-treaty AML obligations through a prism of two theoretical lenses (legal positivism and liberal/legal process theory) to explain the role of soft law in the area. Findings Current international effort to combat money laundering (ML) is fragmented (as evident in the enormous variety of law-making processes), despite the role of soft law. Part of the problem is the divergent nature of domestic criminal legislation, which is reflected in the choice of predicate crime and a lack of procedural rule to identify and enforce the law at the state level. To address the limit of current efforts, the paper will propose a uniform codification of AML law directed by a more representative body or commission of experts offering means of restating, clarifying and revising the law authoritatively and systematically. Research limitations/implications The research is focused mainly on the theoretical issues relating to the subject of ML and less on any empirical case study. Practical implications The paper will focus on the role of soft law as a technique for repressive and preventive AMLC. Based on current analyses of the role of soft law as an alternative to hard law or as a complement to hard law (leading to greater cooperation), it attempts to outline the possible advantages and disadvantages that soft law could have in the context of AMLC. For example, the use of soft law promotes harmonisation of international AML standards through the Financial Action Task Force, while the role of the FATF remains unclear in international law. This is important for the purpose of responsibility, as the law on state responsibility clearly states when a State is responsible, in the event of a breach, and the consequence in international law. Social implications The implication of the paper is that it contributes to the on-going debate about the increasingly role of soft law-making in international law. Originality/value The research perspective to the study of ML is theoretical and focuses on the nature of the law.

New developments in Hong Kong’s anti-money laundering laws

PurposeThe purpose of this paper is to discuss briefly new developments in Hong Kong’s (HK) Anti-Money Laundering (AML) laws, both in terms of case law and legislation.Design/methodology/approachIn terms of case law, the author discusses two decisions given by HK’s Court of Final Appeal relating to the dealing of proceeds of crime offence. Also, a guideline case on sentencing is also examined. In terms of legislation, the author briefly outlines the main provisions of the newly enacted AML and Counter-Terrorist Financing (Financial Institutions) Ordinance.FindingsAs suggested by the Financial Action Task Force, new measures need to be put in place. The AML laws, as they presently stand, need further improvement.Originality/valueA good AML regime is necessary as HK continues to thrive as a major financial/banking centre in Asia. This paper seeks to encourage more discussion on the topic.

Anti-money laundering law: a new legal regime to combat financial crime in Malaysia?

Purpose Before the enactment of the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA), the fight against financial crime can be found in several statutes such as the Penal Code, Anti-Corruption Act 1997 and Companies Act 1965. It is generally accepted that by freezing and forfeiting the proceeds of the crime, it would give significant impact on the fight against financial crime. However, under these legislations, there were few shortcomings of the procedures on how the proceeds of the crime could be seized and forfeited. As such, the enactment of the AMLATFA is considered timely to overcome these problems. This paper aims to examine how the AMLATFA could be utilized to combat financial crime in Malaysia. Design/methodology/approach This paper mainly relies on statutes as its primary sources of information. As such, the relevant provisions under the Malaysian anti-money laundering laws that relate to measures for freezing, seizure and forfeiture of proceeds of the crime will be identified and analyzed. Findings The AMLATFA provides innovative tools for the law enforcement officials to follow the money trail, which will eventually lead to those who committed the financial crime. It also provides authorities with more powerful seizure and forfeiture measures. This is seen as a new law enforcement strategy to combat financial crime. It is believed that this approach is more effective than the traditional approach, which only punished the individual criminal but failed to diminish the criminal operations. However, it is vitally important to ensure that the effectiveness of the regime must not jeopardize the innocent third parties who could lose their money or any other proprietary interest due to the invocation of the forfeiture order. Originality/value This paper analyzes the new legal regime under the Malaysian anti-money laundering law that can be invoked to combat financial crimes activities. This paper would provide some guidelines into this particular area for legal enforcement authorities, academics, legal practitioners and policy makers, not only in Malaysia but also elsewhere.

International anti-money laundering laws: the problems with enforcement

Purpose This paper aims to explore the underlying problem of tackling money laundering, namely, the difficulty of enforcing international laws and whether this is a problem which is too great to overcome in practice. Design/methodology/approach A doctrinal approach is used to discuss international anti-money laundering (AML) laws and question whether money laundering can be truly regarded as an international crime. A comparative approach with case studies of corruption in financial institutions illustrates the problems which law enforcement might encounter. The advantages and disadvantages of tackling money laundering will be highlighted to elucidate both the negative impacts of the crime and the reasons why some states may not be tackling money laundering as forcefully as they could. Findings Uniformity of AML laws among different countries may deter criminals from laundering money. The ratification of the Vienna Convention can help to facilitate uniformity of legal rules. States need robust domestic laws to tackle money laundering. Money laundering is an international crime, although not always a specific crime in international law. Moreover, it is generally advantageous to consider money laundering to be a specific crime under international law. Originality/value The article questions the effectiveness of current AML laws by examining the foundations of international law. Suggestions as to how uniformity can be achieved are given. A comparative approach is also used to demonstrate the extent of the crime, weaknesses in companies’ regulatory regimes and how each State responds to money laundering. The comparison also reveals State-specific issues which fuel money laundering. Moreover, the article explores the practical and legal advantages and disadvantages of money laundering being considered a specific crime in international law.

Managing money laundering risks in commercial letters of credit

Purpose The purpose of this paper is to critically examine the role of banks in detecting and mitigating money laundering risks in trade finance activities, especially in commercial letters of credit, and to answer the central question: do banks comply with regulations that are inadequate (if so, is more stringent regulation compatible with the commercial world of trade finance?), or are banks are in danger of non-compliance? Design/methodology/approach The relevant principles promulgated by international organisations as well as the law enacted in UK to prevent money laundering risks in commercial letters of credit was examined to assess banks’ compliance with their anti-money laundering (AML) obligations. The key provisions of the Money Laundering Regulations 2007, Proceeds of Crime Act 2002 and the Wolfsberg Trade Finance Principles were discussed, and the extent of banks’ compliance with these provisions was highlighted by carefully analysing the steps a bank might take at various stages of the operation of a commercial letter of credit and what the banks in fact do. The paper relies heavily on the findings of the recent study conducted by the Financial Conduct Authority (UK) to analyse the actual practice followed by UK banks in controlling money laundering risks in transactions involving commercial letters of credit. Findings The paper establishes that considering the formal nature of commercial letters of credit (which makes them independent from the underlying transaction), any stringent measures to regulate trade finance activities of a bank may destroy the effectiveness of commercial letters of credit as a tool for promoting international trade. The current law and regulations together with the Joint Money Laundering Steering Group Sectoral Guidance and the Wolfsberg Principles provide the requisite legal and regulatory framework to control money laundering risks in commercial letters of credit. The paper however establishes that the majority of banks in UK currently appear to be in danger of non-compliance with the UK AML regime and certainly need to meet their AML obligations in a more serious way. Practical implications The findings may influence banks to adopt a more vigilant approach in their trade finance activities and to undertake more responsibility in ensuring compliance with the current AML law and regulations, while highlighting that their current practice may put them in danger of non-compliance. Originality/value The paper demonstrates in an exceptional way the legal and regulatory requirements for banks to prevent money laundering risks in their trade finance activities and where, in practice, the banks are falling short of compliance with these requirements. By adopting a step-by-step approach in evaluating banks’ “current-and-must have” approach to controlling money laundering risks at various stages of a commercial letter, the paper makes a valuable contribution to the study of combating money laundering in commercial letter of credit transactions.

The Evolving EU Anti-Money Laundering Regime

Over the past twenty-five years, the European Union has developed a far-reaching legal regime aimed at countering money laundering. The evolution of this regime has been linked inextricably with the parallel development of global standards in the field, most notably by the Financial Action Task Force on Money Laundering (FATF). This article will critically evaluate the content of EU anti-money laundering law, by putting forward a comprehensive typology of the EU anti-money laundering regime as outlined in the successive EU Anti-Money Laundering Directives and consisting of three elements: the criminalization of money laundering and terrorist finance; the prevention of money laundering via the imposition of a series of duties on the private sector; and the focus on financial intelligence, via the establishment and co-operation of financial intelligence units responsible for receiving and analysing reports received from the private sector. The article will examine the evolution of EU law as regards all elements of anti-money laundering law, by focusing in particular on the changes brought forward by the post-Lisbon Fourth Money Laundering Directive. The article will cast light on the influence of the FATF in shaping these standards and will highlight the impact of the ever expanding EU anti-money laundering legal framework on fundamental rights and the rule of law.

A Comparative Study of Anti-Money Laundering Laws in the United States, Macau, and Singapore

A Comparative Study of Anti-Money Laundering Laws in the United States, Macau, and Singapore

Kuwait's Administrative Risk-Based Model for the Prevention of Money Laundering: Costs and Benefits of Compliance with the Financial Action Task Force (FATF) Standards

In the period 2013-2015, Kuwait adopted the new administrative risk-based anti-money laundering and combating the financing of terrorism (AML/CFT) regulatory framework. This article analyzes the costs and benefits of the compliance of the new framework with the FATF’s standards, focusing on the structural changes: (1) a move from a hybrid-prosecutorial to a full-fledged administrative model of financial intelligence unit (FIU); (2) adoption of the risk-based approach to prevention of money laundering and terrorist financing (ML/TF); and (3) the enhancement of reporting obligations and preventive measures. There are two main arguments advanced in the article. Firstly, while the new framework is highly compliant with FATF standards and will maintain the already low level of ML/TF in Kuwait, in comparison with the pre-2013 anti-money laundering laws and regulations, the costs of compliance for private parties, particularly financial institutions and their customers, are considerably higher, and likely to continue increasing. Secondly, the new framework faces other challenges: the need for an improvement of data availability and statistics on ML/TF risks across various sectors, and the need for quality supervision of reporting parties. These challenges are analyzed, and suggestions on how to respond to them are provided, along with a cautionary note on the economic and social effects of compliance with the FATF standards.

The impact of Jordanian anti-money laundering laws on banks

Purpose – The purpose of this paper is to examine the impact of the Jordanian anti-money laundering law and its instructions on the Jordanian banking industry. The anti-money laundering law in Jordan is newly enacted, but there are new developments not covered by the law. For instance, the revolutionary wave known as the Arab Spring surrounding Jordan has increased the crime rates in Jordan, and it has also reduced international coordination and cooperation to encounter money laundering operations. The emergence of new means for money transfer is affecting the efficiency and speed of bank transfers. Subsequently, the impact of the law on Jordanian banks is unknown. Design/methodology/approach – This paper relies on the Jordanian Anti-Money Laundering and Counter Terrorist Financing Law 2007 as a primary source of information. The relevant Jordanian anti-money laundering instructions that have directly been affecting banks include the Jordanian Anti Money Laundering and Counter Terrorist Financing Instructions Number (51) 2010. These instructions were considered the most important legislation for the purpose of this paper. Findings – While the Jordanian anti-money laundering law is based on certain principles, the effectiveness of the law is unknown. The Arab Spring, particularly the Syrian revolution, has negatively increased the crime rates and money laundering activities in Jordan. To make matters worse, the international cooperation and coordination between countries in combating money laundering are not at the required level, and this has encouraged money laundering groups to exploit the situation. Only time will tell whether the banks will be able to cope sufficiently with the increased anti-money laundering obligations. Obviously, it is critical at this stage to establish effective coordination between legislators, regulators and the banking industry to minimize problems encountered by the banks, thereby to ensure effective implementation of the law. Originality/value – This paper provides an examination of the impact of the Jordanian anti-money laundering law that has directly affected banks. It is hoped that this paper would provide some insight into this particular area for academics, practitioners, the legal advisers, banks and policy-makers not only in Jordan but also elsewhere. In view of the international nature of money laundering and banking, there will be significant interest in how the anti-money laundering law affects banks operation in Jordan.

Underbanked: Cooperative Banking as a Potential Solution to the Marijuana-Banking Problem

Numerous states have recently legalized recreational marijuana, which has created a burgeoning marijuana industry needing and demanding access to a variety of banking and financial services. Due, however, to the interplay between the federal criminalization of marijuana and federal anti-money laundering laws, U.S. financial institutions cannot handle legally the proceeds from marijuana activity. As a result, most financial institutions are unwilling to flout federal anti-money laundering laws, and so too few marijuana-related businesses can access banking services. This Note argues that the most viable policy option for resolving this "underbanking" problem is a financial cooperative approach such as a cannabis-only financial cooperative. Even in light of federal anti-money laundering laws, this Note contends that the Federal Reserve is legally authorized to grant some cannabis-only financial cooperatives access to its payment system services under the Monetary Control Act of 1980.

What can IT and Money Laundering Law do to Fight against Cyber Child Sexual Crime?

This paper will assess on how technology and anti-money laundering law perspectives can contribute in tackling cyber child sexual crimes. It is normally and classically problem that always emerge in the discussion of law and information technology (IT) is about the increases of crime. But the abnormal and modern problem is about the modernism of crimes with the high-quality level of crime itself. Cyber sexual crime became one of the highest online crimes which conduct through internet. Grooming, voyeurism, cyberstalking, child pornography happens very often in the world. This paper is using normative research methodology of law, by using statute and conceptual approach. The conceptual approach is using to build an ideal concept of prevention and eradication of the crime of online child sexual abuse. This paper is discussed through a qualitative research. The result of this paper is that Information Technology gives contribution in order to present a way out to tackle this problem, for example by giving solution on its surveillance. Other is from the perspectives of law. Money Laundering can assist in tackling online sexual crime toward children, for perpetrator and/or facilitator and/or pther third party who enjoy the illegal gain of this crime.

Suspicion as an argumentative move

In order to comply with Anti-Money Laundering (AML) laws, financial intermediaries are being engaged with unprecedented communicative activities, mainly oriented at detecting suspicious activities which must be reported to the Financial Intelligence Unit. The polysemous notion of ‘suspicion’ is pivotal to these communicative activities and needs to be clarified in order to establish to what extent argumentation is involved in their fulfillment. To this purpose, we apply the method of semantic analysis developed within Congruity Theory bringing to light the different semantic values of the verb ‘to suspect’ and its lexical derivates in a corpus of ordinary English; then we compare these meanings with the actual uses of this verb in the international and national AML laws. Amongst the numerous factors contributing to the polysemy of this word, we focalize on the difference emerged between an argumentative value of ’to suspect’ and another meaning in which suspicion is reduced to a mere hunch. This suggests that there exist different types of suspicion acts which are more or less argumentative. Interestingly, anti-money laundering international standards and some national implementations seem to admit suspicions at different argumentative degrees, entailing different levels of critical assessment expected from the financial intermediary. We also identify important implications for bank’s anti-money laundering activities deriving from the different semantic traits emerged in the analysis. We conclude the paper by eliciting from the outcome of the semantic analysis a number of questions that will guide the next steps of an ongoing research project in which Swiss banks’ AML practices are investigated from an argumentative perspective.

Enhancing effectiveness of anti-money laundering laws through whistleblowing

Purpose – The purpose of this paper is to review inadequacies of anti-money laundering (AML) and whistleblowing laws particularly in the UK financial services sector and suggest various reforms initiatives. Design/methodology/approach – The article relies extensively on secondary data analysis including extensive literature review, analysis of applicable cases and evaluation of current whistleblowing and AML laws. Findings – The preponderance of defensive reporting particularly in the financial services sector appears to blunt the effectiveness of AML laws in the UK. Working adults generally are unaware or unfamiliar with whistleblowing laws, whereas the laws themselves are also deficient in some ways even though they have been adopted and adapted in various other jurisdictions because of its perceived comprehensiveness. Preliminary indications from money laundering scandals demonstrate how and why early disclosures of wrongdoings through whistleblowing might have helped to reduce the magnitude of the adverse consequences and hence the importance of whistleblowing in the fight against money laundering. Originality/value – This article provides the argument that while money laundering is perpetuated by hard-core criminals, it could be aided along by others motivated by profits in the financial system and that those closes to the process and in particular workers when encountering such activities should be encouraged to report these via appropriate channels. This together with further revamping of the suspicious activity reports procedures required under AML laws is argued to be able to contribute to the reduction of defensive reporting thereby enabling enforcement agencies to have more effective focus on remedial actions.

Combating money laundering and the future of banking secrecy laws in Malaysia

Purpose – The purpose of this paper is to analyze banking secrecy laws against the background of the Malaysian anti-money laundering laws. It has been argued that the anti-money laundering law makes greater inroads into the banking secrecy rule when compared to the common law or other statutes. Banks can disclose customer’s information on even grounds of suspicion of money laundering. Banking secrecy is a customer privilege, whereas combating money laundering is critical for public safety and security. Indeed, achieving a proper balance is a desirable goal. But how do we go about achieving such a balance is a question encountered by many law enforcement authorities. This paper looks into these issues. Design/methodology/approach – This paper mainly relies on statutes as its primary sources of information. As such, the relevant Malaysian laws that provide the banking secrecy rule will be identified and analyzed. It will be necessary to examine the banking secrecy rule in the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA) and other relevant statutes in detail, as these are the most important legislation for the purpose of this paper. Findings – On closer inspection, it is submitted that AMLATFA provides sufficient safeguards to ensure that the disclosure of customer’s information is carried out in a manner that is not prejudicial to the interest of legitimate customers. This is a positive approach that could protect the innocent customers from being mistreated by the law. Ultimately, it can be said that the growing threat of global money laundering and terrorism makes the overriding of banking secrecy justified because without a flow of information from the banks, the effective prevention of the menace is not possible. Originality/value – This paper analyzes the inroads into the banking secrecy rule under the Malaysian anti-money laundering laws. It would provide some guidelines into this particular area for academics, banks, their legal advisers, practitioners and policy makers, not only in Malaysia but also elsewhere.

A Comparative Analysis of Anti-Money Laundering Law in the United Kingdom and Pakistan

Money laundering is an issue of considerable importance to the United Kingdom and Pakistan. This paper shall deal with the subject of anti-money laundering legal regimes of the United Kingdom and Pakistan. The comparison shall encompass an analysis of the legal and contextual origins of the anti-money laundering regimes in these states, whereby the geographical location of both states along with their turn towards neoliberal economics are believed to have played a crucial role. The impact of international organization in shaping the anti-money laundering regimes of these states cannot be overestimated, as both states had to resort to positive lawmaking instead of incrementally expanding their respective jurisprudences. However the discussion will focus only on the legal and criminal justice aspects their respective anti-money laundering regimes, leaving out certain relevant issues like international cooperation. A thorough examination of the legal devices used by these states shows that appreciable progress has been made. However the implementation and effectiveness of the legal regimes shows differing results, with Pakistan not being able to obtain successful prosecutions. Furthermore despite facing a potentially existential threat from terrorism, Pakistan's progress in counter financing of terrorism has also been painstakingly slow. Nevertheless Pakistan's recent attempts at rectifying the deficiencies within its laws can be judged as adequate. Besides some other issues it is political and administrative inertia, along with rampant corruption in key institutions that can be espoused as the prime reason why Pakistan has not been able to match United Kingdom's success in this area.

Scoping the regulatory environment for harnessing normative anti-money laundering laws in LDCs

Purpose – The paper aims to explore the regulatory environment in less developed countries (LDCs) to evaluate their preparedness to harness normative anti-money laundering (AML) regimes. The global AML/CFT regimes are evolved at a global level but implemented within sovereign states – different regulatory environments and the possibility of regulatory disparities. The fundamental question this paper seeks to answer is whether the global AML framework can be as carefully designed as to afford a level playing field to all participating countries? Is this a possible prospect and if not what should be the way forward? The paper articulates the regulatory environment in LDCs to evaluate its implications on individual state's ability to harness normative AML regimes. Design/methodology/approach – This paper was partly written by an empirical study based on the author's familiar experience in relation to financial markets regulation and the challenges in LDCs. The paper was also partly written drawing on the aut...

Socio-economic, environmental, and governance impacts of illegal logging

This article examines the main impacts of the illegal logging activities with emphasis on the most important timber production regions. Although the discussion is focused on the environmental, socio-economic and governance impacts, it must be stressed that the term forest governance is the umbrella where the economy, the environmental values, and welfare of forest-dependent communities are sheltered. Considering the effects/impacts of the illegal logging as a whole, we can summarize the following negative key points: (1) Degradation of the most valuable forest stands threatening biodiversity, including rare and endangered species. (2) Increase in soil erosion and landslides. Increase in CO2 release and climatic changes. (3) Human rights abuses and disrespect of the basic needs of local communities and their culture. (4) Corruption, crime, coercion, and money laundering. (5) Reduction of royalties, taxes, and other charges paid by logging companies to the producer States. (6) Depreciation of legal activities due to the unfair concurrence. Despite multiple efforts, the results in the combat of illegal logging are far from satisfactory. Increase the certification area in parallel with an accurate control, devolve the state land to the ancient local owners, increase the cooperation between civil society and forest authorities, and finally strongly improve forest governance, particularly anti-money laundering laws, are crucial aspects in the combat of illegal logging. Furthermore, governments and businesses must implement the triple bottom line concept in order to reach sustainability.

The impact of reporting suspicious transactions regime on banks: Malaysian experience

PurposeReporting suspicious transactions under anti‐money laundering (AML) laws creates a major dilemma for banks. On the one hand, failure to report suspicious transactions is an offence under the laws. On the other hand, if they report the transaction, they may breach their duty of confidentiality to their customer or could be liable for tipping off the suspected customer. More importantly, it can also undermine customers' trust. The purpose of this paper is to look into these issues and analyse them against the background of the Malaysian AML laws.Design/methodology/approachThis paper mainly relies on statutes as its primary sources of information. As such, the relevant Malaysian AML that affect the reporting obligations will be identified and analyzed. It will be necessary to examine not just the provisions of the Malaysian Anti‐Money Laundering and Anti‐Terrorism Financing Act, but also its regulations and guidelines which affect banks in detail, as this is the most important legislation for the purpose of this paper.FindingsIt is apparent that the reporting suspicious transactions regime has had a significant impact on the operations of banks in Malaysia. While the regime is based on sound principles, the effectiveness of the regime is still unknown. As such, only time will tell whether the banks will be able to cope sufficiently with the increased AML obligations. Obviously, it is critical at this stage, to establish effective coordination between legislators, regulators and the banking industry, in order to minimize problems faced by the banks and thereby to ensure effective implementation of the regime.Originality/valueThis paper provides an examination of the impact of the reporting suspicious transactions regime on Malaysian banks. It is hoped that the study would provide some insight into this particular area for academics, banks, their legal advisers, practitioners and policy makers, not only in Malaysia but also elsewhere. In view of the international nature of money laundering and banking, there will be significant interest in how the AML laws affect banks operating in Malaysia.

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.

The money laundry: regulating criminal finance in the global economy

A generation ago not a single country had laws to counter money laundering; now, more countries have standardized antimoney laundering (AML) policies than have armed forces. In The Money Laundry, J. C. Sharman investigates whether AML policy works, and why it has spread so rapidly to so many states with so little in common. Sharman asserts that there are few benefits to such policies but high costs, which fall especially heavily on poor countries. Sharman tests the effectiveness of AML laws by soliciting offers for just the kind of untraceable shell companies that are expressly forbidden by global standards. In practice these are readily available, and the author had no difficulty in buying the services of such companies. After dealing with providers in countries ranging from the Seychelles and Somalia to the United States and Britain, Sharman demonstrates that it is easier to form untraceable companies in large rich states than in small poor ones; the United States is the worst offender. Despite its ineffectiveness, AML policy has spread via three paths. The Financial Action Task Force, the key standard-setter and enforcer in this area, has successfully implemented a strategy of blacklisting to promote compliance. Publicly identified as noncompliant, targeted states suffered damage to their reputation. Subsequently, officials from poor countries became socialized within transnational policy networks. Finally, international banks began using the presence of AML policy as a proxy for general country risk. Developing states have responded by adopting this policy as a functionally useless but symbolically valuable way of reassuring powerful outsiders. Since the financial crisis of 2008, the G20 has used the successful methods of coercive policy diffusion pioneered in the AML realm as a model for other global governance initiatives.