Anti-money Laundering Regime Research Articles

Is the South African effort toward reducing money laundering optimal?

Purpose – A measure of how much money is laundered is required to determine the effectiveness of any anti-money laundering regime and the reduction of money laundering in targeted areas. In the absence of useful estimates, authorities need to look at the best quality data available to arrive at a meaningful estimate and a consequent target for reduction of money laundering. Since tax crimes are viewed as one of the top three sources of laundered money, an understanding of the underlying predicate offence – tax evasion – may be indicative of the values or volumes involved in order to facilitate a target setting process. It is suggested that a “whole of government approach”, as is advanced by the OECD, is applied between the tax administration and the financial intelligence centre in South Africa. The paper aims to discuss these issues. Design/methodology/approach – By reviewing tax gap and money laundering estimation models and results from South Africa's first tax amnesty, it is proposed that micro analysis methodologies are applied to arrive at an estimate of the size and impact of money laundering which results from tax evasion practices. Findings – By making basic inferences from the results of the 2003 voluntary disclosure programme, it is estimated that a potential revenue gap of between ZAR4 billion and ZAR12 billion exists for personal income tax alone and that the value of personal assets acquired from the proceeds of crime can, at any time, be as high as ZAR1.4 trillion. Originality/value – In the absence of empirical and statistical data, it is necessary for authorities in developing countries to identify and make use of the most relevant and detailed data to assess its effectiveness in identifying, quantifying and reducing money laundering.

The International Anti-Money Laundering Regime and Its Adoption by Vietnam

The international anti-money laundering (AML) regime has developed and diffused rapidly in the last two decades. Most developing countries have engaged with the international AML regime under pressure from other states rather than on a voluntary basis.1Establishing the national AML regime in these countries in compliance with international standards is very expensive, while the benefits are elusive.2This paper reveals that the adoption of basically similar AML norms by many developing countries results from the global diffusion of the international AML regime through two major mechanisms: coercion (by powerful economies and international institutions) and socialization (through tactical communications). This paper points out that although the AML regime of Vietnam was established under external coercion and socialization, domestic factors determine the extent of compliance with international standards. In Vietnam, a determinative factor is the political willingness of the Communist Party in fighting money laundering.

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.

Recent Trends in Regulating Money Laundering & Terrorism Financing in the Banking, Insurance and Capital Market Sectors of the Financial Economy of Nigeria: Role of the Financial Regulators

In the recent past, more countries are becoming vulnerable to the risks of money laundering and its contagious effects. According to the International Monetary Fund (IMF), the scale of money laundering globally could be between 2% and 5% of World Gross Domestic Product at the very lowest. This translates into a range of anything between US Dollars 590 billion to USD 1.5 trillion of laundered money per year.According to a very recent release by the Nigerian Economic and Financial Crime Commission (EFCC), an estimated $129 billion dollars (equivalent to N21 trillion Naira) was illicitly transferred out of Nigeria in the last ten years (2003-2013). The sources of the funds are often corruption, tax avoidance, tax evasion, illegal mining activities, drugs and human trafficking. The Nigerian Financial Intelligence Unit domiciled with the EFCC estimates that between 2009 and 2013, about $25.4 billion dollars were moved out of the country through cross border physical movement of cash and financial instruments. While these figures may not be necessarily indicative of the proceeds of crime, it shows vulnerabilities associated with cash movement within and outside the West African sub-region..The African region and indeed most of the developing countries are vulnerable to money laundering and terrorist financing particularly because of their cash-based and open economies. In Africa, this is further aggravated by the porous and weak controls at the borders. Combating money laundering and terrorist financing in these economies is further complicated by weak or ineffective regulation of financial institutions, lack of comprehensive legal framework, weak law enforcement agencies and poor coordination and collaboration between law enforcement agencies and financial regulatory bodies.Recent studies, including the ones carried out by the Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA) and the Financial Action Task Force (FATF), suggest that advances in technology and the progressive tightening of Anti-Money Laundering (AML) regulations are leading money launderers to make more complex arrangements outside the formal financial services industry, such as the use of various professional services, and in particular the real estate business, legal practitioners, tax consultants, chartered accountants and designated Non-Financial Institutions or sectors, such as the International football, casinos and gaming, hotels, supermarkets, dealers in luxury goods, cars and jewelry.The above opportunities and skills acquired by money launderers and their collaborators led to the renewed strategy and initiatives adopted by the Nigerian Government between 2011 and October 2013 in combating money laundering and terrorism financing in Nigeria. This resulted in the promulgation of the Money Laundering (Prohibition) Act, No. 11, 2011, which inter alia, repealed the 2004 Act, made comprehensive provisions to prohibit the financing of terrorism, provide for appropriate penalties and expand the scope of supervisory and regulatory authorities so as to address the challenges faced in the implementation of the anti-money laundering regime in Nigeria. A year later, amending the 2011 Act, the Money Laundering Act, No.1, 2012 introduced new initiatives that greatly improved and added value to the provisions of sections 2, 3, 6, 9, 11, 15, 16, 20, 23 and 25 of the amended 2011 Act. Furthermore, the other recent trend is the provision for liability regime for financing of terrorism under the Terrorism (Prevention) Act, 2011 as amended by the 2013 Terrorism (Prevention)(Amendment) Act and strengthened by the 2013 Regulations on the Freezing of International Terrorists Funds and other related Measures.It is against this background that this paper seeks to realize the following objectives:1. To examine why and how is combating money laundering and financing of terrorism a top priority for the international community;2. To appraise the development and initiatives reflected in the legal and institutional frameworks in combating money laundering and financing of terrorism in Nigeria;3. To highlight the critical roles of financial regulators in regulating money laundering and terrorism financing in the banking, insurance and capital market sectors of the Nigerian economy;4. To conclude with some recommendations.

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...

A burning desire

Purpose– This article purports to show that an adequate anti-money laundering (AML) regime must be integrated into the carbon emissions market industry in order for it to function effectively, meet its intended goals, and prevent criminals from developing innovative methods to take advantage of particular vulnerabilities this unique market type has created.Design/methodology/approach– This article discusses the formation of the international carbon emissions marketplace. It posits that critical to the formation and effective operation of any carbon emissions trading market is the simultaneous coexistence of an AML regime preventing criminals from taking advantage of legislative deficiencies. Lastly, the article formulates and analyzes emerging criminal typology threats to which current, developing, and future carbon emissions markets are and will be subject.Findings– Under the EU ETS, effective AML safeguards were not initially included in the implementation and formation of the EU's carbon emissions trading market, subjecting it to numerous threats and abuses from criminals. The lack of an effective AML regime has resulted in novel and unique criminal typology threats that are currently emerging and need to be addressed to prevent abuses in new and existing carbon emissions trading markets.Research limitations/implications– The EU has recently started addressing its lack of effective AML safeguards in its carbon emissions trading market. As such, the adequacy of legislative developments needs to be examined over time. Additionally, because many of the emerging criminal typologies identified are based on recent and limited data, further research on the extent of criminality that is actually occurring is recommended.Originality/value– Because emerging criminal typology threats in carbon emissions trading markets has not been researched at the scholarly level, this article is unique and has substantial value to the AML community.

Using friends for money: the positional importance of money-launderers in organized crime

Despite the significant amount of attention and resources invested into the global anti-money laundering (AML) regime, there is a dearth of empirical studies on the role of money-launderers in illicit markets. This research tests two primary justifications of AML policy: 1) most money-launderers would not be detected through criminal investigations of predicate crimes and organized crime groups; and, 2) professional money-launderers play an important role in illicit markets and criminal networks. We extracted information about money-launderers in the drug market from police intelligence reports over a three-year period. Social network analysis was used to assess the positional importance of the launderers. The results show that most individuals are self-laundering, and relative to other market roles, launderers are not particularly central players. Policy implications for AML enforcement are discussed.

Michael Freeman, ed. Financing terrorism: Case studies

Michael Freeman, ed. Financing terrorism: Case studies Farnham: Ashgate, 2012. 266 pp $89.96 (cloth) ISBN: 978-1-4094-4261-5By the turn of the millennium the not-yet 10-year-old international anti-money laundering regime already appeared moribund. It was the War on Terror that reinvigorated this regime with a newfound zeal to counter terrorism financing. The Financial Action Task Force the regime's central inter-governmental actor to fight money laundering was asked to target terrorism financing. Several states proposed new legislation, or amended existing legislation, to make terrorism financing illegal. A broad literature emerged on international and national policies to counter illicit finance. Though we have a fair sense of how criminal organizations launder funds, less is known about how terrorist organizations finance their activities. Financing Terrorism, edited by Michael Freeman, attempts to address this gap.Financing Terrorism is not a theory-driven book; contributors present detailed accounts of terrorist organizations from around the world, their principal modes of operation, and their financing activities. The book's objective is to be practical on the assumption that better policy should come from a more complete understanding of how specific organizations operate. The book largely assumes that terrorist organizations need sustained and reliable funding to pursue their political objectives, continue operations, and in many cases, buy popular legitimacy. Contributors consider four key funding sources: state sponsorship, illegal activities, legal activities, and popular support (often provided knowingly or unknowingly through charitable donations). The book presents terrorist organizations region by region: the Middle East (Iraqi insurgent groups, Hezbollah), Asia (Partiya Karkeren Kurdistan, Lashkar-e-Taiba, the Taliban, the Liberation Tigers of Tamil Eelam, and Filipino terrorist groups), Europe (Loyalists in Northern Ireland, and Islamist groups in Albania), and the Americas (FARC and National Liberation Army, Colombia). Contributing authors come from academia as well as from military establishments in the US and elsewhere; all appear to possess excellent knowledge of the groups under consideration. Taken as a whole, the book provides a comprehensive overview of how various terrorist organizations finance and support their activities.Financing Terrorism's main conclusion, which is more implicit than explicit, is that while combating terrorism financing is important to diminishing a terrorist group's capacity to inflict harm, it is only one instrument among many with which to target organizations. From a Canadian perspective, the chapter on the Tamil Tigers written by Christopher L. Corley is most enlightening. The Tigers' apparent demise, as Corley argues right from the start, had more to do with the offensive launched by the Sri Lankan military in 2008 2009 than with any measure to block the organization's financing operations. The listing of the Tigers as a terrorist organization by foreign governments, including Canada's in 2006, made fundraising more difficult for the Tigers, especially from the diaspora. …

AML‐CTF: a forced marriage post 9/11 and its effect on financial institutions

PurposeThe purpose of this paper is to explain the incompatibility of anti‐money laundering (AML) and counter‐terrorist financing (CTF) measures as a hasty over‐reaction after 9/11, focusing on the compliance burdens that this imposes on the regulated sector, most notably financial institutions.Design/methodology/approachThis paper explains the fundamental differences between money laundering and terrorist financing. It follows the evolution of the marriage between AML and CTF measures in the USA and the UK, comparing the pre and post‐9/11 phases. Consequently, the specific legal burdens placed on financial institutions as a result of this marriage are discussed.FindingsThe paper, while recognising the importance of targeting terrorist money, contends that inherent differences exist between money laundering and terrorist financing, and fusing them together is a hasty reaction to the 9/11 attacks. It argues that the need of the hour is to focus on terrorist profiling, rather than attempting to target terrorist financing through the AML regime. It also concludes that financial institutions are unfairly burdened with the task of “suspecting” terrorist funds, while receiving little or no guidance in this respect.Originality/valueThis paper is of value to governments, regulators, and financial institutions considering the effective implementation of the AML‐CTF regime in the UK and the USA.

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.

EU Anti-Money Laundering Regime: An Assessment within International and National Scenarios

The present work is divided into three main parts. Part I aims at providing the proper background against which assessing the recent evolution of the EU anti-money laundering legal framework, by first illustrating the economic menaces posed by the crime at issue and, secondly, by accounting for the rise of new international standards and assessing the performance of a sample domestic anti-money laundering (AML) pieces of legislation. It outlines the serious threats posed by transnational laundering operations in the context of economic globalization, showing, at the same time, the key reasons for international responses to such a crime. We focus on the phenomenological aspect of money laundering (ML) as the necessary means through which criminal activity can live on and proliferate.

Laundering Pirates?: The Potential Role of Anti-money Laundering in Countering Maritime Piracy

Officials only recently have begun considering the use of financial investigative techniques, especially anti-money laundering (AML) tactics, in counter-piracy efforts. Europol and INTERPOL are attempting to establish coordinated law enforcement approaches to the problem of piracy, while the Financial Action Task Force on Money Laundering has generated early research on the possible use of AML in particular. Based on an analysis of the evolution of the AML regime more broadly, we suggest that a financial law enforcement approach, on paper, could be a valuable additional tool in countering piracy. To date, however, two obstacles have limited the wider acceptance of those tools. First, until very recently, no ‘norm entrepreneur’ has stepped forward to make financial investigative tactics a central tool in counter-piracy efforts. Secondly, while ‘following the money’ has much potential as a means of fighting piracy, we still know too little about the on-shore side of piracy to put those tools to use.

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.

The global anti‐money laundering court as a judicial and institutional imperative

PurposeThe paper aims to argue the case for the introduction of a global anti‐money laundering (AML) court. The proposed court as an institution can engender a rule‐based ethos as well as an environment for the transposition of AML regimes and requisite global changes into the society.Design/methodology/approachThe paper was written by exploiting the significance of the court system to the development of any society. In particular, the paper draws on a pivotal role played by the European Court of Justice in enhancing economic integration of European member countries. Another example utilised by this paper was the dispute settlement mechanism (DSM) in the WTO. The DSM evolved an effective framework for settling international trade disputes and fundamentally helped to streamline the system. This paper is of the contention that the court would ease the adoption of global AML regimes and consequently ease the co‐existence of countries in relation to global AML initiatives.FindingsThe paper has delineated that any global initiatives either on money laundering (ML) or otherwise will have to reside in a form of institutional framework for them to work effectively. Short of that, it is possible that there will be enormous challenges for global AML regimes to function properly as envisaged.Research limitations/implicationsThe author is cognizant of the fact that states are still mandated to veto his prepositions based on the principle of sovereignty of nations. States can also refuse to lend their support – in its various dimensions to the proposed court.Practical implicationsIt has to be noted that creating global AML regimes that are not going to work is not good enough and in case it amounts to a wastage of scarce resources that would better be utilised somewhere else.Social implicationsML in its various manifestations has far reaching consequences for lives of people wherever it is committed and should be accorded the seriousness it deserves.Originality/valueThe paper has been written based on the appreciation of the need to create enforcement mechanisms of engendered global AML/combating financing of terrorism (CFT) regimes. There are so many regimes masquerading as global, having been constituted with the mandate that give them a global reach and yet, they do not live up to their expectation.

Global financial governance and the developing anti-money laundering regime: What lessons for International Political Economy?

The developing anti-money laundering (AML) regime exhibits a specific, non-financial set of policy preoccupations. Yet it is important to examine AML from a global financial governance perspective as the regime essentially imposes controls on the movement of money. This article analyses the political, institutional and regulatory evolution of the regime and argues that it serves to address a need for action on a diverse set of public policy goals (corruption, drug trafficking or terrorism); to relieve financial centres in advanced economies from offshore competitive pressures; and, unintentionally, to shape private sector practices so as to consolidate the position of key market institutions. The article stresses that the achievements with respect to its goals remain modest at best in relation to its ambitions, while important side-effects raise concerns about its role, efficiency and legitimacy. It also examines the possibility that AML has been tacitly accepted as the price for capital mobility.

My Brother's Keeper: An Empirical Study of Attorney Facilitation of Money-Laundering Through Commercial Transactions

In recent years, various “gatekeeping initiatives” have been introduced through inter-governmental standard-setting organizations, such as the Financial Action Task Force, as well as through federal legislation in the United States, which seek to apply the mandatory customer due diligence, record keeping, and suspicious activity reporting obligations contained in the existing anti-money laundering regime to lawyers when they conduct certain commercial transactions on behalf of their clients. The organized bar has argued against such attempts to regulate it, in part, due to the lack of empirical data showing that, as a threshold matter, lawyers unwittingly aid money laundering in a significant number of cases. Through the analysis of a sample of money laundering cases from the Second Circuit, this Article empirically examines whether lawyers are involved in a significant number of transactions that serve to launder elicit funds, and it considers the implications of the study on whether lawyers are in a position to serve as gate-keepers against money-laundering.

Insulating the vaults from the tide of dirty money: are the floodgates secure?

PurposeThe purpose of this paper is to discuss the issues faced by financial institutions in detecting threats to their stability and integrity, and taking adequate steps to ensure that those who engage in abuse are detected and sanctioned. The focus is on financial institutions in Nigeria. The paper proffers practical recommendations towards greater effectiveness of Nigeria's anti‐money laundering (AML) and counter terrorist‐financing regimes.Design/methodology/approachThe paper explores Nigerian legislation on money laundering, terrorism, and related crimes. Data are also drawn from analysis of reports of relevant law‐enforcement agencies, regulatory agencies, as well as English and Nigerian case law.FindingsThe paper highlights the deficiencies in current money laundering and counter‐terrorist financing (CTF) legislation in Nigeria. It reveals that financial institutions may still be liable to their customers in the course of complying with applicable legislation. The paper suggests that the power of law‐enforcement agencies to “freeze” assets be expanded, while legislation should be enacted with explicit guidance on treatment of politically exposed persons, and terrorism.Practical implicationsThe paper calls for a progressively risk‐based approach to reporting of suspicious transactions by Nigeria's financial institutions, as well as greater attention to the provision of training to compliance personnel.Originality/valueThis paper highlights issues requiring urgent legislative intervention; it also draws attention to areas where law‐enforcement agencies and financial institutions could collaborate better in managing cost of compliance and securing the overall effectiveness of the AML and CTF regimes.

Discussion on the role of epistemic community in Russian AML regime

PurposeThe purpose of this paper is to open a theoretical discussion on the preventive anti‐money laundering (AML) regime, both international and domestic in Russia, building theoretical assumptions on the role of epistemic community in the AML network in Russia.Design/methodology/approachThe discussion is based on the analysis of the preventive pillar of the AML regime in Russia. Cognitive (or knowledge‐based) approach is used to study domestic AML regime and to reveal the main reason of the network deficiencies in Russia.FindingsThe paper argues that the representatives of banking community in Russia should play the role of epistemic community to foster better understanding of the context and purposes of the AML regime, thus, decreasing uncertainty, facilitating cooperation between the stakeholders, and eventually having a great influence on the quality of the AML regulations elaborated by the policy makers.Research limitations/implicationsThe paper limits its scope to the study of money laundering (ML) prevention focusing on the financial institutions – banks – which play the most important role in Russian AML network.Practical implicationsThe paper reveals the roles of the main actors of Russian AML regime play. The ineffectiveness of the regime could be eased by increasing communication and cooperation between the stakeholders. The formal compliance approach used by the regulator in the financial sector supervision has not been effective and should be reviewed with the shift to the reasonable judgment approach used by both supervisor and financial institutions to prevent ML in Russia.Originality/valueStudies of the peculiarities of the AML legislation implementation in different countries is one of the helpful tools to measure the efficiency of the global AML regime.