Anti-money Laundering Policies Research Articles

Reorienting the lens – towards a new research agenda on the lived experiences of money laundering prevention officers

PurposeThis paper aims to propose a new research agenda that integrates the often-overlooked insights and experiences of compliance professionals into anti-money laundering (AML) policy formulation and academic research. It seeks to highlight the importance of a bottom-up approach in developing AML strategies that are not only theoretically robust but also practically effective and grounded in real-world application.Design/methodology/approachUsing a comprehensive literature review and theoretical analysis, this study outlines six broad research focus areas. These areas are explored through the lens of existing theoretical frameworks that underscore the significance of practical insights, interdisciplinary collaboration and adaptive policymaking in enhancing AML efforts.FindingsThis paper highlights a significant gap in current AML research and policymaking, namely, the underrepresentation of compliance professionals’ perspectives. It argues that integrating these frontline insights can lead to more nuanced and effective approach to AML.Practical implicationsAdopting the proposed research agenda could significantly enhance the practical applicability of AML policies, leading to more effective prevention and detection of financial crimes. It encourages the development of support systems for compliance professionals, fostering a workforce that is both competent and resilient.Social implicationsBy promoting a more inclusive and practice-based approach to AML policymaking, this paper advocates for a societal shift in how money laundering is tackled.Originality/valueThis paper contributes to the AML discourse by proposing a shift towards a more inclusive research and policymaking paradigm that values the contributions of compliance professionals. It extends the existing literature by suggesting a comprehensive framework for bridging these divides, thereby offering a novel perspective on enhancing the effectiveness of AML strategies.

What works in policing money laundering?

PurposeThis paper aims to provide a comprehensive review of literature on policing money laundering to evaluate the quality of evidence presented in academic and grey literature. In doing so, this paper reflects upon what strategies and mechanisms work in preventing, detecting and disrupting money laundering.Design/methodology/approachTo investigate the quality of evidence presented in academic and grey literature on money laundering, the authors have conducted a structured literature review of over 1,000 sources. The authors have then evaluated the quality of evidence of these sources by using three distinct methods, namely, the Maryland scale, research excellence framework and quality of empirical evidence framework.FindingsThis paper finds a large number of studies on money laundering meeting the highest academic quality standard. However, only a very small number of those studies include empirical evidence that policing measures actually work with no study able to demonstrate a correlation between money laundering measures and risk factors at any point in time.Originality/valueThis paper provides practical and theoretical insights into what works in money laundering and the role of scientific evaluations. It is particularly relevant for the successful implementation of anti-money laundering policy measures, including, for example, the UK’s Economic Crime Plan 2023–2026, which aspires to measure the progress and impact of policing in this area.

THE EFFICIENCY INFLUENCE OF AGENCIES ON CONTROLLING MONEY LAUNDERING IN BANGLADESH

Money laundering has emerged as a global concern in recent times, impacting both affluent and developing nations. Among emerging economies, Bangladesh faces pronounced challenges in addressing financial illicit activities due to its lenient regulatory framework and unstable financial sector. The Bangladesh Central Bank issues guidelines to streamline the implementation of the Prevention of Money Laundering Act. To ensure the stability and security of their institutions, financial entities are required to devise anti-money laundering policies in accordance with the stipulations of the Bangladesh Bank. This study centres on assessing the effectiveness of sanctioned organizations in countering money laundering. The research delves into the latest transformations in financial wrongdoing from the Bangladeshi context. It thoroughly explores strategies to prevent money laundering and other financial offences through enhanced efficiency. Presently, money laundering constitutes a complex and evolving criminal activity, with perpetrators constantly devising novel tactics to undermine the financial system. The study will advance the discussion of the influence of combatting the efficiency of authorized agencies to fight against money laundering in Bangladesh.

THE ROLE AND CHALLENGES OF AUTHORIZED AGENCIES IN COMBATING MONEY LAUNDERING IN BANGLADESH: A CONCEPTUAL STUDY

Money laundering has recently become a global threat, impacting developed and poor countries. In developing countries like Bangladesh, it is more difficult to combat financial crime than in developing countries because of the inadequate regulatory environment and vulnerable financial system. Bangladesh’s central bank issues guidelines to facilitate the implementation of the Prevention of money laundering act. According to the guideline of Bangladesh Bank, all financial institutions must develop anti-money laundering policies to ensure the safety and soundness of their institutions. This study aims to focus on the role of authorized agencies in combating money laundering. In this paper, the latest trends in financial crimes have been discussed from Bangladesh's perspective. The preventive measures for money laundering and other financial crimes have been discussed elaborately. So far, money laundering is a sophisticated and dynamic crime; the criminals continuously took innovative processes to use the financial system to launder money. Hence, the challenges of authorized agencies are crucial to combat money laundering. The study will take a step in pointing out the role and challenges of the authorized agencies in combatting money laundering in Bangladesh.

Banks’ Level Factors Affecting the Effective Implementation of Anti-Money Laundering Practices in Nepalese Banks: An Employee and Customer Perspectives

Purpose: Money laundering can affect global macroeconomic projections, currency markets, and financial stability by fueling shadow economies. Thus, the efficiency of the Anti-Money Laundering (AML) procedure must be investigated. Understanding such elements may help prevent money laundering. This necessitates studies to raise awareness and emphasize its importance. This study sought to assess customer understanding and examine the factors that affect the efficient application of AML regulations in Nepalese banks.Design/Methodology/Approach: This study includes responses from 201 bank consumers and 156 bank employees. The study focused on customers' AML awareness and how bank employees implement AML regulations in their respective banks.Findings: According to the study, consumers apprehend money laundering, terrorist financing, and their implications. According to bank employees, customers are unaware of money laundering and its consequences. Banking and financial institutions should prioritize education and awareness to improve the implementation of anti-money laundering regulations. Control over company sophistication, business ethics, customer awareness, and the AML system all have a favorable influence on Nepali banks' AML policies. The analysis reveals that business sophistication control is quite important.Originality: The study focused on consumer and employee AML knowledge, revealing ground-level perspectives. The study found the variables related to the bank's management and compliance department's views on AML policy implementation. This research assists government agencies and policymakers in developing national anti-money laundering measures and aids academics in AML procedure implementation.

Is money laundering a hurdle to achieving Sustainable Development Goals?

PurposeThe purpose of this study provide answers to the following research questions: Whether and to what extent money laundering affects the achievability and the trend of Sustainable Development Goals (SDGs)?; Does the influence of money laundering on the SDGs’ achievement differ from developing to developed countries?; How does the influence of money laundering vary among the 17 SDGs?Design/methodology/approachThe paper’s analysis involves two key parts. In the first part, the authors perform a multivariate analysis to examine the influence of money laundering on the achievement of SDGs, and then in the second part, the authors make use of an ordered probit regression model to investigate the impact of money laundering on the trend of attaining each SDG.FindingsUsing a sample of 98 developed and developing countries, the regression results from multivariate analysis estimates show that money laundering has a strong inhibiting effect on the achievement of almost all the SDGs in the whole sample of countries and the sub-sample of developing countries, whereas no significant effect is observed for developed countries. However, for the SDG trends, the ordered probit estimates reveal that the harmful effect of money laundering occurs for all countries regardless their development level. In addition, perhaps surprisingly, the results from both the approaches yield also evidence advocating that money laundering activities might be associated with positive externalities on production and consumption. In fact, money laundering is found to have a significant positive influence on the achievement and the trend of SDG12 (Sustainable Consumption and Production). Overall, this study’s findings do have interesting policy implications, especially for developing countries. In these countries, prioritising the formulation and implementation of sound anti-money laundering policies is a necessary requirement for their progress towards achieving the SDGs.Originality/valueThe long-standing tradition of previous empirical studies examining the nexus between money laundering and sustainable development concentrates mainly on the economic dimension of sustainability (i.e. economic growth). However, little is known about the consequences of money laundering activities on the environment and the societies. Consequently, this study seeks to fill this gap by assessing the influence of money laundering on the achievement of the economic, environmental and social goals of sustainable development. To the best of the authors’ knowledge, this is the first integrated study to analyse the potential repercussions of money laundering on the SDGs’ achievement.

‘Follow the Money’

Given the wide reach of transnational crimes and the illegal flow of money, policing at an international level has become a new frontier for authorities who aim to control these threats. The United States has taken the center stage in this effort ever since the proclamation of the war on drugs and the continuing war on terror by promoting the ‘follow the money’ principle as a fundamental strategy to be adopted worldwide. In this paper, we will focus on US efforts to expand the anti-money laundering agenda and policies to Latin America, mobilizing the policy diffusion approach. By incorporating this thinking tool, we also aim to highlight the United States hegemonic position when establishing agendas and priorities internationally. Therefore, we will trace US official documents describing strategies, practices and policies aimed at promoting anti-money laundering policies in Latin American institutions through coercion, competition, learning and emulation mechanisms. By promoting training events and formulating evaluation mechanisms, the US has stimulated Latin American countries to elaborate their own law enforcement efforts inspired by these same paradigms.

Growth effect of trade misinvoicing in Sub-Saharan Africa: the role of governance

PurposeThe growing volume of trade misinvoicing in Sub-Saharan Africa (SSA) calls for serious concern, particularly given its effect on macroeconomic fundamentals. Despite the growing body of literature on the growth effect of trade misinvoicing, empirical evidence on the role of governance in moderating the effect is quite scarce, particularly for SSA. The purpose of this paper is to provide insights into the growth effect of trade misinvoicing in SSA as well as the moderating role of governance in this regard.Design/methodology/approachThe feasible generalised least square estimator was applied to analyse relevant data, spanning 2009–2018, of 35 SSA countries. Governance indicators were classified into economic, political and institutional governance, and their individual role in moderating the nexus between trade misinvoicing and economic growth was explored.FindingsThis paper showed the presence of cross-sectional dependence among SSA countries and long-run convergence of the estimated variables. The empirical finding showed that trade misinvoicing has a negative growth effect in the selected SSA countries, but both economic and political governance are crucial in lowering the observed negative growth effect.Practical implicationsTo curtail trade misinvoicing, SSA policymakers should go beyond just designing anti-money laundering policies to effectively implementing the policies for improved growth prospects. More so, the government of each SSA country must devise means of strengthening governance and building effective, accountable and transparent institutional frameworks that will constantly check and discourage trade misinvoicing activities.Originality/valueThe originality of this paper stems from its novel assessment of the role governance plays in moderating the growth effect of trade misinvoicing in SSA using the feasible generalised least square estimator. It also details the strategies needed to effectively tackle trade misinvoicing.

An overview of anti-money laundering practice in the indian financial system

Money laundering is a menace to economies and a central concern globally. The financial system remains the primary target of money launderers. While the risk of money laundering cannot be entirely eliminated, it can be mitigated through specific preventative measures. In this regard, FATF took its initial international step by presenting its 40 recommendations to combat Money Laundering and Terrorist Financing. These recommendations have since evolved into a model for successful national and global Anti Money Laundering and Countering Financing of Terrorism (AML/CFT) controls. This paper aims to assess and describe the anti-money laundering (AML) practice and framework within the Indian financial system, as well as to examine how the Indian financial system has addressed FATF's recommendations on AML. The study utilizes secondary data obtained from books, annual reports, and selected websites to achieve its objectives. The findings of the study demonstrate that the Anti-Money Laundering (AML) regime in the Indian financial system is regulated by the Prevention of Money Laundering Act (PMLA) along with an established regulatory and supervisory framework to address FATF Recommendations. The AML framework of the Indian financial system includes FIU-India, which operates as a national agency for receiving, processing, analyzing, and disseminating information related to suspicious transactions. Additionally, the Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), and Insurance Regulatory Development Authority (IRDA) serve as the regulatory and supervisory bodies for financial institutions in India. Regulating, supervising, and developing Anti-Money Laundering (AML) policies and practices for the Indian financial sector fall under the responsibilities of these three authorities.

From Crime Prevention to Norm Compliance: Anti-Money Laundering (AML) Policy Adoption in Singapore from 1989–2021

From Crime Prevention to Norm Compliance: Anti-Money Laundering (AML) Policy Adoption in Singapore from 1989–2021

Mitigating money laundering through technological and regulatory strategies

The main purpose of this research is to examine the technological and regulatory strategies to mitigate money laundering worldwide. Due to money laundering being a serious financial crime affecting several institutions, economies and countries globally, the researcher intends to gather the technological and regulatory strategies in order to limit and combat money laundering. A mixed research method is used by the researcher to collect both quantitative data through questionnaires and qualitative data through secondary research case studies. Eventually, the data is merged and mutually supported to obtain a suitable interpretation of the overall findings. In this study, there are five different variables which impact the mitigation of money laundering significantly, namely, improve anti-money laundering policy, structured employee training, data analytics, suspicious transaction reporting, and customer due diligence. The quantitative data was collected from registered professional accountants in Mauritius and the qualitative data was collected from five different case studies relating to each of the independent variables mentioned. The relationship between the five independent variables and their influence on the mitigation of money laundering is assessed through the Statistical Package of the Social Sciences (SPSS) software. The findings revealed that all the variables have a significant relationship with the mitigation of money laundering. The conclusion discussed in this study expresses that it is the responsibility of every country to continuously adopt and develop better technological and regulatory strategies in mitigating money laundering.

Money laundering conviction rate and capital formation in Nigeria

Drawing from the Financial Action Task Force (FATF, G7) recommendations and the Nigeria Anti-Money Laundering Act that provides the penance and dissuasion for crimes in Nigeria, this study sought to interrogate the efficacy of money laundering conviction rate as an instrument of anti-money laundering policy on capital formation in Nigeria. The study is hinged on contemporary deterrence theory. The study adopted the ex-post facto research design and used quarterly data from 1Q 2010 to 4Q 2019, which was sourced from the Nigerian Financial Intelligence Unit (NFIU), Economic and Financial Crime Commission (EFCC) and CBN statistical reports. Hence, Error Correction Model (ECM) was utilized to analyze the data. The findings indicate that the current money laundering conviction rate (MLCR) has a negative and non-significant effect on capital formation in Nigeria. Therefore, the study concludes that the current conviction rate is too weak to deter the act. Hence, it is recommended that the judicial system be rejigged with enabling legislation and autonomy to strengthen it to hasten the trial of such cases and ease conviction of culpable individuals, without necessarily putting innocent victims at jeopardy. Such autonomy should also be granted to the EFCC, ICPC, NFIU etc. and inter-agency synergy should be encouraged.

Tax amnesty schemes, anti-money laundering regulations and customer due diligence by financial institutes: an evaluation of the implementation issues in Pakistan

Purpose Tax amnesty (TA) schemes are typical in developing countries. Governments’ claims and suppositions are continually heightened; however, this may differ in actuality. This study aims to present an overview of the effectiveness of TA schemes and the problems they raise in implementing anti-money laundering regulations. Design/methodology/approach This study used a qualitative research design. Content analysis was used to analyse research articles, reports, legal documents and news articles. Findings Every amnesty offered in Pakistan from 1956 to 2018 failed to meet government expectations. Instead, the continuity resulted in an irrepressible black economy. The black economy’s uncontrollability undermines tax collection and hinders a robust anti-money laundering regime. Significantly, tax holidays with discrepant legislation strengthen evaders, plunderers and launderers. These policies severely impede the implementation of anti-money laundering policies in the financial institutions of Pakistan. Additionally, Pakistan's geopolitical location, circumstance and war against terror cannot afford any policy that provides monetary relaxation to offenders. Practical implications There is no concrete evidence to support long-term economic progress through the implementation of amnesty schemes as a revenue collection policy. This study evaluates previous studies and findings to understand the effect of tax amnesties on the financial industry of Pakistan. The findings have practical implications for tax collection authorities, policymakers and international financial bodies. Originality/value Previous studies have discussed the advantages and disadvantages of Pakistan’s regular tax amnesties. However, this study discusses the implementation of TA schemes concerning anti-money laundering regulations and customer due diligence by financial institutes and provides suggestions to minimise its negative implications.

Virtual money laundering: policy implications of the proliferation in the illicit use of cryptocurrency

PurposeThis study aims to explain how cryptocurrency is leveraged for illicit purposes across the global financial system. Specifically, it establishes how cryptocurrency has been changing the nature of transnational and domestic money laundering (ML). It then assesses the effectiveness of conventional anti-money laundering (AML) policy and legislation against the proliferation of crypto laundering, using Canada as a critical case study.Design/methodology/approachData was collected from court cases and secondary sources to build cross-case trends of cryptocurrency use in ML. Illicit International Political Economy forms the theoretical foundation for this study, whose contribution is situated in the current literature on crypto-ML.FindingsThis study finds that Bitcoin is common among crypto-money launderers, though most also use some form of alt-coin, and that the use of third-party currency exchanges is a prevalent method to create illicit funds and conceal proceeds of crime. The findings validate two hypotheses that illicit use of crypto is prevalent in the first two stages of ML, and that crypto is most often used in conjunction with other fiat currencies. Although law enforcement is improving on monitoring and understanding popular cryptocurrencies such as Bitcoin, alt-coins pose a significant challenge for criminal intelligence. New regulations for third-party currency exchanges are having a positive impact on curtailing crypto-laundering but are shown to be insufficient per se to contain the use of crypto in criminal activity.Originality/valueThis study contributes to a more robust understanding of the use of virtual currency in transnational and domestic ML. It contributes to an emerging body of literature on the role of technological change in enabling the global flow of illicit funds. It also informs public policy on virtual currency in general, and on AML regulation in Canada in particular.

The role of legal professionals in the European and international legal and regulatory framework against money laundering

PurposeThe aim of the present study is to shed light on the role of legal practitioners, namely, lawyers and notaries, in the fight against money laundering: Are they considered as facilitators or obstacles against money laundering? How does the global and the EU legal framework deal with the legal professionals?Design/methodology/approachThe research follows a deductive approach attempting to respond to questions such as: How do the lawyers’ and notaries’ societies react in front of the anti-money laundering measures that concern them and why? What are the discrepancies between the lawyers’ professional secrecy and the obligations that EU anti-money laundering legislation assigns them?FindingsThis study disclosures the response of the European union and international legal and regulatory framework as well as the reflexes of the international and European legal professionals’ associations to this danger. It also demonstrates the reaction of lawyers against European union anti-money laundering legislation, to the point that it limits not only the confidentiality principle but also the position of the European judicial systems to the contradiction between this principle and the lawyers’ obligation to report their suspicions to the authorities.Research limitations/implicationsTo fulfil the study goals, it was necessary to overcome some obstacles, like the limitation of existing sources. Indeed, transnational empirical research considering the professionals who facilitate money laundering is narrow. Besides, policymakers and academics only recently expressed more interest in money laundering and its facilitators.Originality/valueThis paper fulfils an identified need to study the legal professionals’ role not only in money laundering practices but also in anti-money laundering policies.

The effect of anti-money laundering policies: an empirical network analysis

AimThere is a growing literature analyzing money laundering and the policies to fight it, but the overall effectiveness of anti-money laundering policies is still unclear. This paper investigates whether anti-money laundering policies affect the behavior of money launderers and their networks.MethodWith an algorithm to match clusters over time, we build a unique dataset of multi-mode, undirected, binary, dynamic networks of natural and legal persons. The data includes ownership and employment relations and associated financial ties and is enriched with criminal records and police-related activities. The networks of money launderers, other criminals, and non-criminal individuals are analyzed and compared with temporal social network analysis techniques and panel data regressions on centrality measures, transitivity and assortativity indicators, and levels of constraint.FindingsWe find that after the announcement of the fourth EU anti-money laundering directive in 2015, money laundering networks show a significant increase in the use of foreigners and corporate structures. At the individual level, money launderers become more dominant in criminal clusters (increased closeness centrality). This paper shows that (the announcement of) anti-money laundering policies can affect criminal networks and how such effects can be tested.

Money laundering in the United Arab Emirates: the risks and the reality

PurposeThis study aims to examine the possibility of laundering money through the United Arab Emirates (UAE), the perceived risk and the stark reality. That money laundering prevention mechanisms are being circumvented is evident by reference to the international assessments by the Financial Action Task Force and information from key informants. To develop effective improvements, the modus operandi of money laundering needs to be re-examined.Design/methodology/approachThe empirical findings are based on over 60 semi-standardized interviews with alleged criminal and expert compliance officers operating in an international arena. These findings were subject to a qualitative content analysis, while a further quantitative survey of around 200 compliance officers expanded on the techniques of money laundering. This served to explore whether there was a discrepancy between the presentation of money laundering in the literature in contrast to reality.FindingsOwing to the transnational nature of money laundering, the global financial market is dependent on the uniformity of anti-money laundering (AML) regulations. Despite immense progress, there are still several key weaknesses in the financial system of the UAE, such as the existence of Free Zones and the divergence of AML awareness.Research limitations/implicationsThe scope of the interviews is limited to the personal experience of the informants. This is mediated by seeking uniformity in answers as well as literature support.Originality/valueThis paper, supported by empirical evidence, discerns why the current regulatory measures are minimally effective. There is an unmistakable need for the international coordination of financial regulatory bodies. The literature describes the occurrence of money laundering, but no studies have engaged to examine the pragmatic mechanism in place which allow money laundering to persevere despite the significant improvements of AML policies.

Challenges resulting from hawala banking for anti-money laundering and anti-terrorist financing policies of Swiss banks

PurposeThe purpose of this paper is to illustrate threefold how hawala banking poses a problem for Swiss banks implementing anti-money laundering (AML) and anti-terrorist financing (ATF) policies as a fulfilment of Switzerland’s UN commitment.Design/methodology/approachThe first author interviewed compliance officers and suspected criminals on hawala banking mechanisms. The authors formally recorded interviews with compliance officers, but interviews with suspected criminals were not recorded to maximize their potential forthrightness. In total, the authors conducted 70 formal interviews and developed a questionnaire based on this, which was sent to 200 compliance officers. The authors subjected the interviews to qualitative analysis and developed a system of categories that the authors assessed by means of triangulation. By substantiating proposed theoretical challenges with empirical findings, future recommendations for regulatory procedures are based on analytical evidence.FindingsThis study finds that hawala presents significant challenges for AML and ATF policies. Whilst it is possible to mediate the first two challenges laid out herein, it is the third hurdle that proves insurmountable. Ultimately, tolerating hawala banking passively counteracts any active effort made by implementing AML and ATF policies.Originality/valueWhilst the existing literature sufficiently connects hawala banking to terrorist financing, this study details how existing compliance measures are circumvented and the implications on the perceived commitment of Switzerland against financial crime.

From crime prevention to norm compliance: anti-money laundering (AML) policy adoption in Singapore from 1989–2021

PurposePolicy mobility scholarship concerning anti-money laundering (AML) has typically favoured the study of power structures and interests to the neglect of the constructivist perspective and the local cultural–symbolic driving forces of policy adoption. This study aims to redress this, by analysing the shifting ideational drivers of AML policy in Singapore over the past 31 years through a thematic analysis of Singapore’s parliamentary debates (Hansard).Design/methodology/approachThrough a thematic analysis of Singapore's Hansard over the past 31 years, this study seeks to present a social constructivist perspective of AML policy adoption in Singapore.FindingsThe thematic analysis reveals how the internal driving forces of AML policy in Singapore have shifted, from the idea of “crime prevention” in the early 1990s, to the symbolic value of “international norm compliance” by the 2010s.Research limitations/implicationsThis constructivist perspective of AML policy adoption is particularly useful in complementing the existing materialist theories of AML policy diffusion and allows us to better appreciate the historical nuances of AML policy transfer across the globe.Practical implicationsThis research will provide a useful comparative case study for other policy mobility scholars interested in presenting a constructivist account of AML policy adoption in different jurisdictions.Originality/valueThere is no literature in the field of policy mobility, explaining the diffusion/transfer of AML policy from a social constructivist perspective.

Emerging international compliance: Policy implications of a money laundering case

By conducting a qualitative single case study, we have depicted in this study a suspected case of international money laundering in Finland, and described its consequences in terms of policy changes. The case allowed us to investigate how new anti-money laundering policies emerge over time and thus advance knowledge relevant to formulating effective international business policies. Building on institutional heterogeneity and the co-evolutionary nature of change, we have proposed a new framework depicting emerging international compliance in order to promote understanding of this complex, yet dynamic phenomenon. The literature repeatedly highlights the role of formal policies in mitigating international money laundering, however, we have paid additional attention to unethical business practices and the moral aspect recognised to be important in terms of curbing the problem. This is particularly relevant for MNCs, as they can aid institutional change internationally by spreading ‘company best practices’. We also present the managerial and policy implications of solving moral problems related to money laundering from the perspective of governments, society and organisations.