Combating Money Laundering Research Articles

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Money laundering is increasingly becoming an issue of concern to the international community, as the states have realized that the harmonious activity of all international actors through the observance of the foreseen international standards is the most effective way of combating this type of crime. International documents have established a basic framework of activities for combating money laundering. This paper is focused on the analysis of the activities of international entities and their role in creating international standards in this field, as well as the impact of money laundering on various aspects of society and countries. In this connection, the paper first explains the international entities, then states their roles and all the most important international documents and then the results of the money laundering risk assessment in the Republic of Serbia with special emphasis on the criminal offenses with high degree threats for money laundering. Furthermore, it points to the importance of international entities and standards for the establishment of national systems that will be able to respond to the effects of money laundering and thereby create a successful financial system. Finally, the paper concludes that without the existence of international standards and activities of the international entities, appropriate conditions for effective combating of money laundering cannot be created, thereby providing more favorable conditions for the free flow of people and capital, as well as easier management of financial systems.

Риск-ориентированный подход как составляющая системы внутреннего контроля в области противодействия отмыванию доходов и финансированию терроризма в лизинговых компаниях России

Риск-ориентированный подход как составляющая системы внутреннего контроля в области противодействия отмыванию доходов и финансированию терроризма в лизинговых компаниях России

Legal Nature of Primary and Public Financial Intelligence Entities in the Field of Combating Money Laundering

One of the most important global problems facing society is the control of cash flows, as well as the fight, counteraction and prevention of money laundering. In particular, the process of laundering such revenues poses an extreme threat not only to the financial system but also to the national system as a whole. Currently, there is an urgent need to develop a strategy that will quickly and effectively combat cases of abuse of the financial system of the state. The definition of financial intelligence was provided as a set of measures defined at the legislative level by authorized entities of primary and state financial intelligence and aimed at fulfilling the requirements of current legislation in the context of combating and preventing money laundering. The article determined that in accordance with the current legislation, the financial intelligence system is a two-tier system. This is due to the fact that the financial intelligence system consists of two levels – primary and state intelligence. Given the global nature of the problem of money laundering and terrorist financing, the issue of financial intelligence was considered in the context of two levels – national and supranational. The article analyzes different approaches to the classification of financial intelligence entities. In particular, the category of entities within the competence for financial intelligence was determined: leading and auxiliary. Entities depending on the level of financial intelligence are singled out – primary entities and entities of state financial intelligence. An approach to the classification of financial intelligence entities according to their main purpose was defined. According to this criterion, direct and indirect entities of financial intelligence were distinguished.

BC’s Public Registry to Combat Money Laundering: Broken on Arrival

BC’s Public Registry to Combat Money Laundering: Broken on Arrival

Concepts and features of interaction of the State service of financial monitoring of Ukraine with law enforcement agencies concerning counteraction to legalization of criminal incomes

The article is devoted to the formulation of the author’s definition of the concept of interaction of the State Financial Monitoring Service of Ukraine with law enforcement agencies to combat money laundering, followed by the definition of the peculiarities of such interaction. The relevance of the proposed article is due to the high level of financial and economic crime, at which the laundering of criminal proceeds causes significant damage to the economy. Accordingly, this state of affairs necessitates the joint efforts of different actors in the fight against this negative phenomenon. It is noted that the category of “interaction” is used in various fields of scientific knowledge, while from the point of view of law this category is most often studied by scientists in the field of criminology, criminal procedure, criminology and operational and investigative activities. Signs of interaction are defined. The interpretation of the financial intelligence unit is considered, as the State Financial Monitoring Service of Ukraine was created as such a unit. The content of the concept of “law enforcement agencies” is revealed by analyzing the legislative and doctrinal definitions, as well as clarifying which tasks-functions certify the law enforcement nature of the activity and allows to refer a body to the category of law enforcement. The author’s vision of the category “law enforcement agencies” is given. The essential signs of legalization of criminal proceeds are singled out. It is established that at the doctrinal level money laundering can be considered in material, procedural, economic and legal aspects. It is concluded that the interaction of the State Financial Monitoring Service of Ukraine with law enforcement agencies to combat money laundering means regulated and agreed under a number of conditions the activities of these entities, which are independent of each other, which is carried out using special methods and carried out in specific forms, in order to counteract the granting of lawful possession, use or disposal of proceeds of crime. Peculiarities of interaction in the context of the researched question are singled out.

Međunarodni standardi za suprotstavljanje pranju novca sa osvrtom na Republiku Srbiju

Money laundering is increasingly becoming an issue of concern to the international community, as the states have realized that the harmonious activity of all international actors through the observance of the foreseen international standards is the most effective way of combating this type of crime. International documents have established a basic framework of activities for combating money laundering. This paper is focused on the analysis of the activities of international entities and their role in creating international standards in this field, as well as the impact of money laundering on various aspects of society and countries. In this connection, the paper first explains the international entities, then states their roles and all the most important international documents and then the results of the money laundering risk assessment in the Republic of Serbia with special emphasis on the criminal offenses with high degree threats for money laundering. Furthermore, it points to the importance of international entities and standards for the establishment of national systems that will be able to respond to the effects of money laundering and thereby create a successful financial system. Finally, the paper concludes that without the existence of international standards and activities of the international entities, appropriate conditions for effective combating of money laundering cannot be created, thereby providing more favorable conditions for the free flow of people and capital, as well as easier management of financial systems.

The extent of commitment of Jordanian banks to apply internal control procedures to detect and prevent money laundering operations: مدى التزام المصارف الأردنية بتطبيق إجراءات الرقابة الداخلية لاكتشاف ومنع عمليات غسيل الأموال

This study aims at demonstrating the role and importance of internal control measures in combating money laundering operations in Jordanian banks through the statement of internal control procedures that contribute to the discovery of money laundering operations. The study shows the role of internal control procedures in detecting money laundering through electronic programs, and the existence of a system for keeping files and records Money laundering The researcher used the descriptive analytical approach, which is based on the collection of information on the main elements of the study, analysis and interpretation in order to build the theoretical framework for them based on the audit literature and instructions of the Central Bank and commercial banks on internal control of money laundering operations, which dealt with the subject of internal control systems, and anti-laundering law Funds and control measures related to combating money laundering. Through the theoretical framework, a questionnaire was designed on the application of internal control procedures and its relation to combating money laundering operations and distribution to the study population which includes 14 Jordanian banks, with 3 questionnaires for each bank for both internal and external auditors and head of anti-money laundering unit in a bank. The study concluded that it is important to apply the internal control procedures to a high degree among respondents to the questionnaire in preventing and detecting money laundering operations in Jordanian banks

The Role of Accounting in the Reduction of Money Laundering Operations - Current Practice: An Empirical Study in the Kingdom of Saudi Arabia: دور المحاسبة في الحد من عمليات غسل الأموال ــ الممارسة الحالية: دراسة ميدانية في المملكة العربية السعودية

This study aims to shed lights on the extent of adherence by Saudi banks to Anti- Money Laundering standards and procedures, and by identifying the extent to which bank employees are aware of red- flag activities and suspicious indicators of money laundering. Furthermore, the study aims to identify the level of effectiveness of accounting procedures and internal controls in regard to preventing and deterring money laundering. This study employs the extrapolation approach. A questionnaire was distributed to bank employees working in Saudi banks. A total of (48) questionnaires were distributed, (36) questionnaires were suitable for analysis. A number of findings have been reached. The most important findings include: first, the significance of adherence by banks to the policies and procedures issued by the Saudi Arabian Monetary Authority. Second, the significance of awareness by Saudi bank employees of the money laundering activities and the procedures to combat them. Third, the direct or indirect contribution of accounting procedures in preventing and combating money laundering through the use of modern accounting systems, financial reports & statements, letters of credit, and accounting books. Fourth, bank employees exhibit high levels of awareness of the money laundering activities and methods of detecting and preventing them. Finally, it has been found that banks implement a number of accounting procedures, and develop internal controls that assist in combating money laundering activities.

Новите регулаторни мерки в Директива (ЕС) 2018/1673 за борба с изпирането на пари по наказателноправен ред

On 12 November 2018, Directive 2018/1673 on combating money laundering by criminal law was published in the Official Journal of the European Union. As a part of a legislative package that extends the scope of anti-money laundering measures and strengthens the existing ones, the Directive aims to facilitate the police and judicial cooperation between the Members States.

MORTGAGE LENDING IN THE CONTEXT OF THE NATIONAL RISK ASSESSMENT OF ILLEGAL FINANCIAL OPERATIONS

The article deals with the problems that prevent the development of mortgage lending in Ukraine, in particular, experts include the following: low solvency of both business and individuals, lack of long-term and inexpensive credit resources, not developed enough market infrastructure; a high proportion of the shadow sector in economy that does not declare income. The importance of the problem of the shadow economy in Ukraine is emphasized (the scope of the shadow economy ranges from 40 to 60% of GDP). The impact of macroeconomic indicators on the volume of mortgage loans has been investigated using Fechner correlation coefficient, which can be applied to statistical variables that do not have normal distribution law. The classification features of illegal transactions in the field of mortgage lending (on the subject of composition, on the basis of distortion of information) and ways of committing fraud with financial resources are indicated. Consequences of mortgage lending fraud have been revealed, namely: interest rate growth; rising real estate prices; raising the level of the shadow economy. It should be noted that due to the sufficiently high intellectual level of fraudulent schemes used to commit crimes against credit resources of banks and non-banking institutions, the issue of encroachment in the mortgage lending field is more pressing than ever. Therefore, in order to identify (actualize) national risks (threats, vulnerabilities, consequences) in the system of combating money laundering and terrorist financing, identify the elements of their management and assist in the development of the strategy for combating money laundering and terrorist financing in risks Ukraine, a National Risk Assessment is conducted. In order to ensure a sustainable and progressive anti-money laundering and terrorist financing system, Ukraine has made important steps towards implementing and adhering to international anti-money laundering and terrorist financing standards. The National Risk Assessment is an important step in defining a common vision of the risk base, as well as understanding what risks should be taken into account, mitigated, leveled and / or transferred (transposed to a supranational level). The National Risk Assessment facilitates the development of recommendations and priorities setting for enhancing the integrity and sustainability of certain types of economic activity, sectors, enterprises, institutions, organizations. Keywords: national risk assessment, mortgage lending, mortgage lending fraud, vulnerability, shadow economy.

Determining the level of bank connectivity for combating money laundering, terrorist financing and proliferation of weapons of mass destruction

The study aims at developing an approach to determining the bank connectivity level. This will contribute to implementing a risk-oriented approach to counteracting money laundering, terrorist financing and the proliferation of mass destruction weapons. The article proposes to assess the degree of bank connectivity and determine the impact of these circumstances on money laundering risk using banks from foreign banking groups, whose capital share in the Ukrainian banking system amounts to more than 40 percent. Using the resulting correlation dependencies, two-dimensional binary matrices were constructed, which became the basis for creating graphs of links between banks. The institutions under study are found to be predominantly connected in terms of their sets (varieties), since the average proportion of banks with close direct links is over half, and the non-connectivity coefficient for them is about 40%. Each surveyed bank, on average, has direct links with eight other banks and inverse links with four other banks. Considering banks as tops of the graph, one can assume that there is a hidden relationship between some banks. This approach allows calculating all existing relationships between banks to assess risk. Transforming the graph from non-oriented to oriented made it possible to identify and clearly demonstrate possible directions of links between the investigated financial institutions, which should be further verified to determine the risk of money laundering, terrorist financing, etc.

The Effects of Money Laundering on Monetary Markets Introduction

The aim of this study is to determine the impact of money laundering on: the competition in the financial and monetary markets, the stability of the investment sector in Jordan, the ability of the government to control the monetary policies in Jordan, the attraction of foreign investments to the markets in Jordan and the Jordanian dinar exchange rates. A survey of the components and sample of the study population, composed of employees of the Central Bank of Jordan and the Audit Bureau, was used. A questionnaire was developed as a tool for the study, distributed to the study sample of (35).
 The study concludes that: Money laundering has a massive effect on monetary markets, competition in the financial and monetary markets, the government’s capability to control monetary policies, the investment sector’s stability, attracting foreign investments for the marketplace, and Jordanian Dinar’s exchange rate. Depending on the results of the study, the researcher recommends Introducing laws and regulations to combat money laundering, fostering the role judicial authorities, empowering prohibiting and punishment of involved financial institutions, confiscating of funds, punishing perpetrators, and developing legal procedures that regulate banks’, financial institutions’ and companies’ activities.
  

Application of Technological Solutions in the Fight against Money Laundering—A Systematic Literature Review

With the growing interest in technological solutions aimed at combating money laundering, several studies involving the application of technology have been carried out. However, there were no records of studies aimed at identifying, selecting, rigorously analyzing and synthesizing the literature on solutions that adopt technology to combat money laundering. This paper presents a systematic review of the literature on the application of technological solutions in the fight against money laundering. Seventy-one papers were selected from the 795 studies initially retrieved for data extraction, analysis and synthesis based on predefined inclusion and exclusion criteria. The results obtained with the data analysis made it possible to identify a general categorization of the domains of application of the approaches, as well as a mapping and classification of the support mechanisms adopted. The findings of this review showed that, among the application domain categories identified, the detection of suspicious transactions attracted greater attention from researchers. Regarding the support mechanisms adopted, the application of data mining techniques was used more extensively to detect money laundering. Topics for further research and refinement were also identified, such as the need for a better description of data analysis to provide more convincing evidence to support the benefits presented.

Combating the Crime of Money Laundering in Light of Banking Secrecy Acts and Their Impact on Legal Liability , A Comparative Study

One of the most serious contemporary challenges that appear as a result of mmodern technology is money laundering which is practiced through banking operations governed by banking secrecy Acts.This research aims to determine the scope of legal exceptions to combat money laundering that allow banks to disclose and provide public authorities with information and data in specific cases attaining interest of the state and society.These exceptions do not diminish the importance of bank secrecy, but they identify common interests in accordance with the interests of banks, clients and the public interest.This research has reached some results ,the most important of which is that bank secrecy is compatible with combating the crime of money laundering and the secrecy of banking if we consider that the basis is the secrecy of banking and exception is the withdrawal of this secrecy. Keywords: Combating money laundering, bank secrecy, legal liability, Jordanian legislation, obligation to disclose information, comparative legislation. DOI : 10.7176/JLPG/91-03 Publication date: November 30 th 2019

The problem of regulating the easy way out – EU money laundering regulation

PurposeCurrent research within law and economics focus on money laundering as an externality problem caused by financial institutions. Thus, when existing research and legislation place the responsibility on financial institutions, it creates a void where it is neglected that clients of financial institutions may, in fact, play a vital role in the problem of externality. However, based on the definition of money laundering, this paper aims to examine and analyze the need to focus on the clients as part of the externality problem with regard to money laundering.Design/methodology/approachThis paper examines how a lack of regulatory focus on the clients of financial institutions lead to inefficient anti-money laundering regulation. Through a functional approach of law and economics, it analyzes the externality problem of money laundering based on both the legal definition and the economic conditions of the problem.FindingsBased on the fourth anti-money laundering directive, the paper argues that present regulation has a tendency to focus on financial institutions, thereby not considering the entire scope of the externality problem in money laundering. For regulation to efficiently combat money laundering, it is necessary to place some responsibility on the clients of financial institutions and not solely on the financial institutions. Nevertheless, the inclusion of client responsibility might lead to some legal or economic complications, which need to be subject to further research.Originality/valueThe paper identifies the need for a fundamental change in the perception of the externality problem of money laundering, and thus, presents the required approach to reach an efficient solution.

Prospects of Legal Regulation of Crypto Economy and ICO in Russia and Other Countries

This article discusses the key issues of legal regulation of the crypto economy in some countries (USA, Switzerland, France, Russia, Belarus, Israel, and the EU as a whole). Special attention is paid to the legal regulation of ICO as a way to attract foreign investments. The statements of regulatory authorities of different countries are considered; the existing practice of ICO project regulation and the current state of the primary token placement market are analyzed; the aspects of the extraterritorial effect of the U.S. securities legislation are studied, and so are thekey risks for the investor and the creator of an ICO project. A separate paragraphis devoted to the known methods used by law enforcement services (e.g. Europol)to fight money laundering and terrorism financing through criminal cryptocurrencytransactions. As a result of the analysis, taking into account the current practice of combating money laundering, recommendations are made to changethe relevant legislation. In addition, this article discusses the problems of legal uncertainty regarding the taxation of crypto assets. The authors analyzed the currentlegal framework in the Russian Federation aimed at regulating the turnover of crypto assets. In particular, the bill on digital financial assets was considered. The overall conclusion of the study is that, in general, Russia today has the opportunityto become one of the leaders in the new market. Russia ranks second in the world in the number of ICOs, and the country has launched a number of blockchainprojects that are popular around the globe.

The Effectiveness of Money-Laundering Regulations: Evidence from Money-Services-Business Industry in Malaysia

The International Monetary Fund defines money laundering as the process of assets being spawned by criminal activities to hide or make obscure any connections established between the funds and their illegal origins. Nowadays, money laundering has already been labelled as a global crime where global strategies and policies should be developed to curb money laundering. Thus, global courts should be formed to put into trial all money-laundering cases and make sound decisions in reference to punishments and penalties. The aim of this study is to gauge the effectiveness of anti-money laundering (AML) regulations in the Money Services Business (MSB) industry in Malaysia. There are three (3) predictors that have been expected to influence money-laundering activities, namely customers’ record-keeping, suspicious transaction reporting, and employee training. The respondents have been selected from MSB officers across Malaysia by using simple random sampling. The questionnaires were distributed to all 344 MSB through the Money Service Association. The compliance officers have been selected as the primary participants in the study since their roles and responsibilities within the MSB correlates with the three constructs identified in the study. The total of 150 (43.6%) questionnaires returned and have been used for analysis. The sample was then analysed using the descriptive and multiple regression analysis. The results revealed that all hypotheses are supported, which indicates that customer record keeping, suspicious transaction reporting, and employees training have a significant impact on combating money laundering. This study proposes that money-laundering activities could be controlled by focusing on customer record keeping, suspicious transaction reporting, and employee training. The findings provide evident on how The Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA) has filled an imperative gap in fight towards combating money laundering in Malaysia. The similar studies could be conducted in other settings with different rules and regulations towards money laundering.

The viability of recent enforcement mechanism to combat money laundering and financial terrorism (AML/CFT) in Nigeria

Purpose This paper aims to evaluate the recent steps and enforcement mechanisms employed in Nigeria to combat money laundering and terrorism financing to give a clear and deeper insight to the potential that it portends and locate its workability by combing through various policies that are adapted to reinforce the existing anti-money laundering/combating financing terrorism (AML/CFT) legal and regulatory framework in Nigeria. The paper, therefore, provides a comprehensive assessment of these measures to exhume necessary reinforcement elements required to achieve the desired result by exploring developments from other jurisdictions that have surpassed the country in the AML/CFT crusade. Design/methodology/approach This study adopted qualitative research methodology. It is structured in such a way that mixed qualitative methodology approach as a research strategy is employed. This is achieved by putting into use the combination of doctrinal and non-doctrinal research methods. Descriptive, interpretative and content analysis methods are used to analyse various AML/CFT government policies along with the existing AML/CFT laws. Judicial pronouncements, various scholarly opinions, along with the anti-money law (AML/CFT) within the Nigeria context are analysed in line with the 40 “Recommendations” of the Financial Action Task Force which depicts the acceptable legislative and regulatory precedent and an international standard to measure the adequacy or otherwise of any national or local laws on money laundering. Findings Factors that were militating against the effectiveness and positive performance of Nigeria government to combat money laundering-related matters were identified. A clear-cut amendment to the existing provisions of law that will address the issue is suggested to enhance the effectiveness and combat other similar challenges that are likely to come out of these policies, otherwise more problems would be created than could be solved. Originality/value This paper exposes deficiencies in the present mechanism adopted to combat money laundering in Nigeria and proffers necessary antidote to facilitate the effectiveness of the legislation. It provides necessary information that could facilitate amendments and new legislation(s) to curb the defects by the lawmakers and could serve as a veritable source of information to law students, legal practitioners and academia.

The treatment of Austrian private foundations under the Ultimate Beneficial Ownership Act

Abstract As part of the implementation of the fourth Anti-Money Laundering Directive in Austria, the Wirtschaftliche Eigentümer Register Gesetz, (The Ultimate Beneficial Owner Register Act) was introduced. The main aim of this Act is to provide accurate and up-to-date information on the ultimate beneficial owner (UBO) of entities, trusts, and foundations. This information is seen as a key factor in combating money laundering and terrorist financing. Paragraph 2 of the Ultimate Beneficial Ownership Act defines the UBO, which corresponds to the definition in paragraph 3 subparagraph 6 of the Anti-Money Laundering Directive. In the case of corporate entities, ultimate ownership and control are relevant for determining the UBO. In the case of trusts and private foundations, it is not ownership and control that are relevant for determining the UBO, but the function the person has with respect to the trust/foundation. All definitions have in common that the UBO has to be a natural person. Obliged entities are required to identify and report their UBOs to the register, in the case of a breach of duty/law severe penalties apply.

THE PHENOMENOLOGY OF MONEY LAUNDERING IN UKRAINE

The article investigates the problems of the spread of complex socio-economic phenomenon-money laundering in Ukraine. The attention is focused on the results of the fifth round of mutual evaluation of Ukraine in the sphere of AML by the Committee of the Council of Europe MONEYVAL and conclusions on the lack of effectiveness of the national mechanism of combating money laundering in Ukraine. The necessity of monitoring and conducting appropriate macroeconomic and criminological analysis on the basis of scientific knowledge of the phenomenon of «money laundering», the factors of its manifestation and spread in Ukraine. As a methodology for the study of money laundering in Ukraine as a socio-economic phenomenon, the application of phenomenology based on the combination of the philosophical method of knowledge of the phenomenon in reality based on the essential characteristics of its nature, and criminology — the doctrine of crime. The results of the survey of specialists of the law enforcement system in the field of anti-money laundering are chosen as an empirical basis. The analysis covers several groups of indicators, in particular, characterizing the spread of money laundering in the country as a whole, and the vulnerability of individual sectors of the economy. Attention is focused on the significant spread of the phenomenon of money laundering in Ukraine, as evidenced by 84.5% of respondents, and the most vulnerable is determined by the credit and financial sector (82.0%). Based on the use of a special group of indicators, the analysis of the connection of money laundering with other socially dangerous socio-economic phenomena: corruption, the shadow economy, capital flight, organized crime and the like. The article focuses on the extreme demand of corrupt officials on laundering of corruption revenues, as noted by 85.4% of respondents. It is concluded that it is necessary to introduce fundamental changes regarding the system of combating money laundering in Ukraine.