Financial Crime Research Articles

The Criminal Protection of Citizenship Rights

This study investigates the relationship between financial crimes and economic – social sustainable development in developing countries and Iraq is one of these countries. The main objective of this study to explore and explain the above relationship. The economic analysis of current study points out of the existence of link between the variables that form that relationship. The main hypothesis of this study is that the financial crimes have important impacts on the achievement of sustainable economic – social developments goals. This study indicates some conclusions and recommendations to the policies financial crimes.

The Legal Path of Managing the Crime of Money Laundering in Digital Currency

The characteristics of decentralized anonymity of digital currency reduce todays financial crimes, especially the cost of money laundering crimes. Due to the relatively slow progress of Chinese research on digital currency, falling behind the current expansion trend of digital currency, there are many difficulties in governing digital currency crime. Therefore, the regulation of digital currency money laundering crime should start from the aspects of clarifying the legal attribute, introducing the standard judicial interpretation, and so on. The explosive growth of digital currency in 2017 has greatly reduced the cost of financial crimes of digital currency, seriously jeopardizing the economic order and peoples property security. Money laundering of digital currency is particularly rampant. Therefore, legal means should be adopted to regulate the application of digital currency in life.

Representation of social actors in economic and financial crimes reports in selected Nigerian newspapers

This paper investigates the representation of social actors in news reports on economic and financial crimes in four Nigerian newspapers: Punch, The Guardian, The Nation and ThisDay. Theo van Leeuwen’s socio-semantic inventory for the representation of social actors and Halliday’s Systemic Functional Linguistics (SFL) served as the theoretical framework. Five socio-semantic categories were applied in the news reports: functionalisation, backgrounding and suppression, activation and passivation, personalisation and impersonalisation and nomination and categorisation. Only the accused were both nominated and categorised. They were nominated when the reference is to people of high status and categorised when the reference is to ordinary or middle-class people. All the other social actors were nominated because of their roles in the fight against economic and financial crimes. The study shows that language is a medium for hidden meaning in the reportage of economic and financial crimes.

Arbitrators’ suspicion of money laundering: choices against principles

PurposeThis paper aims to examine the options available to arbitrators when they suspect money laundering during arbitration proceedings, considering their compatibility with fundamental principles and concepts of arbitration.Design/methodology/approachUsing a doctrinal analysis approach, the paper draws on legal principles, antimoney laundering regulations and relevant literature to explore the topic. It considers relevant international treaties, standards set by the financial action task force on money laundering, cases and arguments from legal analysts and experts.FindingsThe paper identifies three options for arbitrators: disregarding suspicions, initiating an investigation or terminating the proceedings. Disregarding suspicions is deemed inappropriate, as it may facilitate the concealment of financial crimes. Initiating an investigation is seen as a preferable option, aligning with the arbitrator’s role and the public interest in nullifying contracts linked to criminal conduct. Terminating the proceedings is not recommended, as it contradicts the principle of natural justice. The paper emphasizes the importance of reasonable grounds for suspicions, notifying the parties, and allowing them to address the concerns.Originality/valueThis paper contributes to the existing literature by comprehensively analyzing the compatibility of these options with arbitration principles and concepts. It underscores the need for clear laws and directives to guide arbitrators in addressing financial crimes within the arbitration process, maintaining a balance between party autonomy and preventing the misuse of arbitration for illicit activities.

Why Corruption in Nigeria? Experts’ Accounts on the Occurrences and Persistence

Corruption is increasingly becoming commonplace in Nigeria. Recent discoveries of hidden corrupt funds in Nigeria by anti-corruption agencies, particularly the Economic and Financial Crimes Commission (EFCC) in Nigeria, give insight into how severe the menace has become. The amount recovered during the early part of 2017 is shocking, despite the renewed effort to fight corruption by the present administration in Nigeria and, by extension, past governments. This has prompted the question of why corruption occurs and persists in Nigeria. To satisfy this urge, we believe that getting those involved in corruption will be of great significance in unraveling the reality of the issue. However, thoughtfully considering the situation in Nigeria, where, in most instances, even those caught in corrupt acts with overwhelming evidence often deny being corrupt and are ever ready to go to any length in proving their innocence, we oblige for a workable alternative, which is to meet experts from the anti-corruption agencies and get their perspectives on this. We believe that through these experts who have been interacting with corrupt officers as investigators and prosecutors, the reality of the matter will be revealed. Their experiences and understanding in the anti-corruption efforts can lead us to uncover why the occurrences and persistence of corruption in Nigeria. In achieving this goal, we conducted in-depth face-to-face interviews with the two anti-corruption bodies. Using thematic analysis, we find that six reasons explain why corruption occurs and then persists in Nigeria.

An Assessment of the Impact of EFCC in Curbing Vote Buying in Nigeria

This paper is an assessment of the performance of the Economic and Financial Crime Commission (EFCC) on the fight against vote buying in the Nigerian elections. Vote buying is a major problem in the Nigerian electoral system. The phenomenon reached an epidemic level in 2019 when the Independent National Electoral Commission (INEC) introduced a level of digitalization of the electoral process through the use of permanent voters' card and card reader machines in the Nigerian electoral system. The introduction of card reader machines and permanent voters’ cards reduced the incidences of electoral infractions like 'results writing' and 'impersonation' because the voters are expected to confirm their identities at the polling booths through the authentication of card reader machines. This technological innovation by INEC made the political class to concentrate more on vote buying. The paper shows that EFCC has not been effective in carrying out its duty as the government agency that has the legal responsibility of curbing vote buying in Nigeria.

Benefit or burden? An exploratory analysis of the impact of anti‐money laundering regulations on sustainable development in developing economies

AbstractOver the years, efforts have been put in place to address money laundering activities including financial crime and illicit funding controls. These efforts have been recognized to promote financial integrity and effective governance systems. They have been further adjudged by the United Nations' sustainable development (Goal‐16) with a major concern to achieve peaceful, just and inclusive development. Previous studies reveal that money laundering activities have major implications for economic growth. However, little is known about the main implications of anti‐money laundering (AML) regulations on sustainable development. On this note, this study contributes to the ongoing debate by investigating the relationship between AML regulations and sustainable development in 72 developing economies, consisting 29 upper middle income, 33 low middle income and 10 low income countries. Using instrumental variable generalized method of moment (IV‐GMM), panel quantile estimation technique and dynamic panel threshold analysis, the findings are as follows. First, AML regulations promote sustainable development. Second, the panel quantile regression reveals that countries with moderate AML regulations attain higher sustainable development than those with excessive regulations. Further results on regional analysis show that AML regulations are more effective in Latin America, South Asia, Europe & Central Asia and Middle East & North Africa than in Sub‐Saharan Africa and East Asia & Pacific. These results are robust and stable after conducting a number of robustness analyses. The study suggests that effective AML regulations should be moderate and well‐implemented to further improve economic, social and environmental sustainability in developing countries.

Combating Financial Crimes through Forensic Audit: Evidence from Nigeria

Curbing the menace of financial crimes through forensic audit is imperative due to the global failure of statutory audit. This study therefore examined curbing Financial Crimes through Forensic Audit: Evidence from Nigeria. This study employed a survey research method and obtained primary data sources collated through the questionnaire. The data collected was analyzed using regression models. The research discovered that P-value = 0.00<0.05 level of significance and the regression line is CFCs = 0.335 + 0.746β1 + 0.042β2-0.078β3+ut. The study also found that data based collection and data mining are effective enough and capable of curbing financial crimes in Nigeria, although ratio analysis is weak in doing that. The research concluded that forensic audit techniques are effective in combating financial crimes in Nigerian private sector. This study recommended that forensic audit courses should be given more spaces in the academic curricula of Universities to increase its awareness in Nigeria.

Technological Forensic Auditing and Financial Crime Detection in Nigeria: A Study of Selected Deposit Money Banks

Financial crime has been one of the current challenges faced by organizations especially deposit money banks. To ameliorate this ugly development, technology-enabled forensic auditing was introduced in addition to conventional auditing. This study examined the impact of technological forensic auditing on financial crime detection in Nigeria; a study of selected deposit money banks in Nigeria. The theories reviewed in the study are the strain theory, the theory of inspired confidence, and the credibility theory. The study adopted the survey design. The population of the study is made up of the accounting staff of five selected deposit money banks in Delta state namely; Zenith, First Bank, United Bank for Africa (UBA), Fidelity Bank, and Sterling Bank with a statistic of fifty-eight (58) staff/respondents. Data for the study were generated through the distribution of well-structured questionnaires to the corresponding respondents. Data was analyzed with the multiple linear regression method. The study found that robotic process automation, textual analysis, and data analytics contribute significantly to detecting financial crime in selected deposit money banks in Nigeria. It is therefore the recommendation of this study that forensic audit firms and deposit money banks should strategically employ the usage of software applications that can permit data analytics, textual analysis, and robotic process automation to redeem the credibility image of the forensic auditors’ report.

Forging a User-Trust Memetic Modular Neural Network Card Fraud Detection Ensemble: A Pilot Study

The advent of the Internet as an effective means for resource sharing has consequently, led to proliferation of adversaries, with unauthorized access to network resources. Adversaries achieved fraudulent activities via carefully crafted attacks of large magnitude targeted at personal gains and rewards. With the cost of over $1.3Trillion lost globally to financial crimes and the rise in such fraudulent activities vis the use of credit-cards, financial institutions and major stakeholders must begin to explore and exploit better and improved means to secure client data and funds. Banks and financial services must harness the creative mode rendered by machine learning schemes to help effectively manage such fraud attacks and threats. We propose HyGAMoNNE – a hybrid modular genetic algorithm trained neural network ensemble to detect fraud activities. The hybrid, equipped with knowledge to altruistically detect fraud on credit card transactions. Results show that the hybrid effectively differentiates, the benign class attacks/threats from genuine credit card transaction(s) with model accuracy of 92%.

Review of Nadia -Cerasela Anitei. Roxana Elena Lazar - Tax Evasion Between Legality and Crime

The work "Tax evasion between legality and crime" is structured in eight chapters, judiciously structured, in terms of information, but also in terms of dimensions, namely:
 Chapter I - "General notions of economic and financial crime";
 Chapter II - "Tax evasion. Theoretical approach";
 Chapter III - "Tax havens";
 Chapter IV - "Tax evasion in Romania";
 Chapter V - "Tax evasion and the European Union";
 Chapter VI- "National and European bodies with powers to detect and combat tax evasion";
 Chapter VII-"International tax evasion";
 Chapter VIII-"Tax evasion and economic growth".
 
 The way in which the legal and economic dimensions of the same unique phenomenon - tax evasion - are combined is such as to make this work unique.
 "Tax evasion between legality and crime" is addressed to students, master's students and legal practitioners alike, offering the opportunity for useful and enjoyable reading.

Virtual assets and the prevention of money laundering: a critical and comparative analysis of the laws of Mauritius, Japan and South Africa

PurposeDue to their particular nature, virtual assets (VA) are vulnerable to financial crimes such as money laundering and if the appropriate legal mechanisms are not established, this may result in the financial collapse of various economies. To this effect, best practices and standards have been published by some international organisations such as the Financial Action Task Force and IMF which are now domesticated in the national laws of several countries. Therefore, the purpose of this study is to analyse the anti-money laundering (AML) legislative framework in the context of VA in three countries, namely, Mauritius, Japan and South Africa.Design/methodology/approachTo achieve the research objective, the Mauritian AML laws in the context of VA were compared with the corresponding laws of some other countries, namely, Japan and South Africa. As such, a qualitative research method was adopted. In particular, the black letter approach was used to examine the relevant laws of these countries. A comparative analysis was conducted concerning the relevance of AML laws for each country when dealing with VA with the view of suggesting recommendations for Mauritian stakeholders to adopt to enhance the existing AML legal and regulatory framework.FindingsThe comparative study conducted has revealed that there are both similarities and divergences among the AML framework of the three countries further to which this research recommends that the Mauritian laws must be amended concerning the duration of information storage on VA, the definition of VA, advertisement by VA service providers and the electronic submission of annual reports. The Mauritian regulatory bodies also need to play a more active role in their joint collaboration to monitor suspicious VA transactions to combat money laundering.Originality/valueAt present, this study will be among the first academic writings on the efficiency of AML laws in the context of VA in Mauritius and also, because existing literature is quite scarce on assessing the adequacy of AML legislation in developing countries, this research aims at filling in the gap in literature. This study is carried out with the aim of combining a large amount of empirical, theoretical and factual information that can be of use to various stakeholders and not only to academics.

Bridging the Data Divide: Secure Sharing and Governance for Effective Cross-Agency and Industry Collaboration

Collaboration between public and private sectors is essential in today's complicated environment to tackle issues like financial crime and public health crises. Interoperability problems and complex data governance requirements are obstacles to safe data exchange, an essential part of this kind of cooperation. This study delves into the topic of safe data sharing methods that allow for collaboration between commercial companies (such pharma and fintech) and federal, state, and municipal governments. Data standardization and access control are among of the issues discussed, with examples from the pharmaceutical and financial technology industries to back up the claims of effective solutions. To overcome the data gap and harness the potential of industry and cross-agency cooperation for mutual benefit, this study argues for strong data governance frameworks and interoperable technology

MONEY LAUNDERING FRAMEWORK FOR PROFESSIONAL ACCOUNTANTS: POST COVID-19

Background and Purpose: The Covid-19 pandemic has sparked global challenges, economic disruption, and an increase in related crimes, such as scams, fraud, and cybercrime. It has also changed the routines of individuals, businesses, and governments in combating financial crimes, especially professional accountants. As front-liners in the anti-money laundering (AML) regime, professional accountants play a vital role in combating financial crime, including money laundering activities that have risen during the pandemic. However, limited study has investigated the money laundering reporting framework for the professional accountants. Hence, this study aims to investigate the money laundering framework for professional accountants that suits the post-pandemic period.
 
 Methodology: This study conducted a content analysis, focussing on the current red flags for money laundering activities specifically for the professional accountants mentioned in prior literature and publicly available reports such as Financial Action Task Force (FATF), ICAEW and ACCA Global. Since this study focuses on the money laundering framework for the professional accountants, this study also referred to the MIA Competency Framework that highlights the importance of professional scepticism and professional judgement.
 
 Findings: Findings showed that professional accountants must exercise high professional scepticism and judgement when dealing with money laundering risk indicators related to related party transactions, beneficial ownership and e-commerce activities. This is to provide quality reporting to the authorities and to proceed with money laundering investigations.
 
 Contributions: This study will contribute to the regulators and professional accountant by proposing a money laundering framework for the professional accountants that would assist them in fulfilling their role as money laundering reporting entity.
 
 Keywords: Money laundering, professional accountants, professional scepticism, professional judgment, Covid-19 endemic.
 
 Cite as: Zolkaflil, S., Syed Mustapha Nazri, S. N. F., Mohd Razali, F., Ahmad Tarmizi, M., & Masum, M. H. (2023). Money laundering framework for professional accountants: Post Covid-19. Journal of Nusantara Studies, 8(TI), 235-256. http://dx.doi.org/10.24200/jonus.vol8issTIpp235-256

Propuesta metodológica para la generación de soportes que apoyen la recolección de evidencia digital, en entidades del sector financiero

With the development of this article, a methodology is proposed that supports commercial and business processes for companies in the financial sector, as an alternative to face the high rates of cybercrime reported in recent years, ensuring orderly and articulated execution, among the different dependencies, to mitigate the impacts of an attack, in addition to facilitating the identification and collection of digital evidence for forensic investigation processes in cases in which it is demonstrated that an incident has occurred that violates cybersecurity mechanisms, this is a Currently a dominant need, because due to the social changes resulting from the pandemic, more and more people find themselves in need of resorting to digital infrastructures to access financial services and electronic commerce platforms. Based on the analysis and in accordance with the financial context, a review of documents recovered from digital repositories is carried out to identify the main computer infringements related to the materialization of financial crimes. By way of the scientific impact achieved through this research work, a starting point is established through which it is possible to reinforce the computer security of management systems in companies in the financial sector, complementing it with the generation of supports that can be used as digital evidence in an eventual forensic investigation process, it is also evidenced the need to implement a holistic vision in the processes, which allows an efficient response to IT security needs.

Detecting future financial statement fraud using a machine learning model in Indonesia: a comparative study

PurposeThis study aims to compare machine learning models, datasets and splitting training-testing using data mining methods to detect financial statement fraud.Design/methodology/approachThis study uses a quantitative approach from secondary data on the financial reports of companies listed on the Indonesia Stock Exchange in the last ten years, from 2010 to 2019. Research variables use financial and non-financial variables. Indicators of financial statement fraud are determined based on notes or sanctions from regulators and financial statement restatements with special supervision.FindingsThe findings show that the Extremely Randomized Trees (ERT) model performs better than other machine learning models. The best original-sampling dataset compared to other dataset treatments. Training testing splitting 80:10 is the best compared to other training-testing splitting treatments. So the ERT model with an original-sampling dataset and 80:10 training-testing splitting are the most appropriate for detecting future financial statement fraud.Practical implicationsThis study can be used by regulators, investors, stakeholders and financial crime experts to add insight into better methods of detecting financial statement fraud.Originality/valueThis study proposes a machine learning model that has not been discussed in previous studies and performs comparisons to obtain the best financial statement fraud detection results. Practitioners and academics can use findings for further research development.

Prosecuting Cybercrimes under International Legal Frameworks: Challenges and Innovations

Combating cybercrime is one of the most relevant areas of the legal community development since the widespread integration of digital technologies into all spheres of human activity demonstrates the need to regulate this sensitive area. The aims: are to study the international legal framework for countering cybercrime, as well as the system of challenges and innovations that exist in the modern world. Study design: 31 items of relevant scientific literature were analysed, which made it possible to comprehensively consider the issues of the article. Place and duration the study: The research took place during the second semester of the 2022-2023 academic years. Methodology: the main methods used in the article were the content analysis, forecasting method, and systematic method. Results: in the article modern interpretations of the term “cybercrime” were defined, certain legal international agreements that counteract its spread (primarily the Budapest Convention as an important current document of modern legal influence) and traces the mechanisms of counteraction and methods of their improvement were examined. Other important legal acts, such as the European Union Directive on the prevention of cyber-attacks on information systems and the European Commission Directive on combating fraud and other financial crimes on the Internet, were also considered. As a result, it was found that there were differences at the interstate level in the organisation of the cooperation, which included multilateral and bilateral agreements. The identified problems included insufficient interaction between the law enforcement agencies of different countries at the relevant stages, as well as the lack of an agreed mechanism for obtaining external data. The conclusions established that close ties at the level of international law enforcement systems aimed at addressing cybercrime issues could be effective in overcoming these difficulties.

Law enforcement, social demands and reputation risks as drivers of compliance functions: a comparative analysis of the largest banks’ disclosures in the UK and Brazil

Given the recent recurring cases of financial crime worldwide, national and international regulators have enacted new regulatory instruments intended to prevent or inhibit unlawful acts by banks and their representatives. These stricter regulations regarding the operations of financial institutions have reinforced the importance of best practices and the role of compliance within banks. Nonetheless, regulations regarding compliance structures and functions are not yet mandatory and give great flexibility to banks to define how they will set their compliance programmes. This research aims to understand how compliance functions have been implemented in the two largest banks in the UK and Brazil as a governance mechanism to fight financial crimes such as bribery and corruption. Document analyses of websites and financial reports of these banks examine disclosures provided by these corporations and shed light on the main drivers influencing their transparency regarding compliance functions, roles and responsibilities and their connections to the bank’s operations and profitability goals. This research demonstrates that the implementation and enhancement of compliance functions in UK and Brazilian banks are driven by attempts to respond to regulatory requirements, social demands and as a reputational risk instrument, reflecting different levels of development in each institution. The maturity of these disclosures demonstrates that Brazilian banks present a more reactive attitude, justifying their investments in compliance according to minimum law requirements, while banks in the UK tend to have a more proactive perspective on their compliance initiatives, reinforcing their importance for the bank’s competitive advantage and long-term continuity beyond regulatory compliance.

Impact of Fraud and Financial Crimes on the Growth and Development of the Nigerian Economy

Impact of Fraud and Financial Crimes on the Growth and Development of the Nigerian Economy

Socioeconomic Consequences of Corruption and Financial Crimes

Corruption and financial crimes are major obstacles to the socioeconomic development of many countries in the world. This study employed descriptive research design to assess the socioeconomic consequences of these crimes. The data were collected through questionnaire from 200 respondents. The study results indicate that financial crimes and corruption both have significant socioeconomic consequences by destroying public confidences, weakening public service delivery such as education, health service, it also demolishes private sector particularly small business growth which ultimately affect employment level, GPD and, life expectancy, defeat culture, values, ethics of the society and finally eliminates trust, partnership and collaboration among business organization, public institutions, and society. Moreover, the socioeconomic consequences of these crimes include inequality and poverty in the country. The study recommends strengthening the capacity of public institutions, good governance, strengthening internal control systems, establishing effective monitoring frameworks, promoting accountability and transparency of the public sector, establishing legal frameworks and anti-corruption strategies, and supervision mechanisms in public institutions.