Financial Crime Research Articles

Track Record in Fight Against Corruption in Serbia – How to Increase Effectiveness of Prosecution?

To improve efficiency in the suppression of corruption and to fulfil international obligations, Serbia adopted the Law on the Organization and Competence of State Bodies in Suppression of Organized Crime, Terrorism and Corruption in 2016. The law foresees many new solutions that should contribute to the effectiveness of processing of corruption. One of the reasons for the adoption of law was the fulfilment of GRECO’s recommendations from the second round of evaluation, as well as the obligations stipulated in the national policy documents, the National Strategy for the Fight against Corruption (2013–2018), the Action Plan for Chapter 23 and the Strategy for Investigating Financial Crimes for the period 2015–2016.The measures and activities that were foreseen in the Strategy for Investigating Financial Crimes are aligned with European standards and good practice and are transposed in the Law on the Organization and Competence of State Bodies in Suppression of Organized Crime, Terrorism and Corruption. After six years of implementation of this law, it necessary to analyse the results and impact of its application.The goal of this research is to provide recommendations for the improvement of both national legislation and the practice of public prosecution in the suppression of corruption. In the paper, authors started from the assumption that the effectiveness of its suppression depends on the quality of the legal solutions that regulate the work of the public prosecutor’s office, as well as their application in practice. To realize the goal of the research, the dogmatic-legal method and content analysis were used in the paper.

A content analysis of illicit tobacco-related crimes reported in Australian media.

Australian survey and seizure data suggest a growing illicit tobacco market. As an illicit product, accurately tracking trends in illicit tobacco growing, manufacture and sales is challenging. We examined trends in Australian illicit tobacco-related crimes using a content analysis of news articles. We analysed Australian news articles identified in the Factiva database and government press releases describing Australian illicit tobacco-related crimes reported between January 2000 and December 2023. Sources were coded for crime type, location, product type, dollar value of seized products, methods of distribution or storage, agencies involved, and other crimes involved. We identified 447 crimes reported in 389 sources. The number of illicit-tobacco related crimes reported increased between 2000 and 2023. The most common crimes were possession of illicit tobacco (n=196/43.7%) and smuggling (n=187/41.8%), and the most common product type was 'illicit cigarettes' (n=197/44.1%). The most common distribution/storage method reported was via residential premises (n=98/21.9%). One-hundred and twenty incidents involved other crimes such as financial crimes involving money laundering (n=59/13.2%). Across all included news articles, the quantity of seized products totalled 827,529,307 cigarette sticks, 76,185 cartons, 668,687 packs, 239 hectares (of land growing tobacco plants), and 2,149,000 plants of illicit tobacco between 2000 and 2023. The median value (worth; AUD) of each seizure was $1,500,000 (range $43 to $67,000,000). Australian media reporting on illicit tobacco-related crimes increased over the past two decades, particularly since 2018. These findings highlight a need for improved border detection measures, investment in enforcement and other deterrent activities. This media analysis confirms trends identified in national survey data that indicate a growing illicit tobacco market in Australia since 2013 with a marked increase since 2018. While survey data suggests that Australian tobacco tax policy, which has included regular large tax increases since 2010, has decreased consumer demand for tobacco overall, it may have also incentivised criminal networks to supply illicit tobacco products due to it being a 'low risk' and 'high reward' activity. Controlling the Australian illicit tobacco market should be a policy priority.

Editorial: Prison is not a viable pursue strategy in financial crime; the “serious violence duty” can help improve prevent strategies

Editorial: Prison is not a viable pursue strategy in financial crime; the “serious violence duty” can help improve prevent strategies

Corruption in the Nigerian Public Sector: Causes, Consequences and Sustainable Solutions

Corruption in Nigeria's public sector has long hindered the nation's development, stability, and prosperity. It permeates various facets of governance and society, leading to detrimental consequences, including economic stagnation, social injustice, and the erosion of public trust. Historical factors, such as the legacy of colonial exploitation and successive post-independence governments' mismanagement, have entrenched a culture of corruption. Despite efforts to combat it, including the establishment of anti-corruption agencies like the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC), corruption remains pervasive. This study adopts a qualitative research design to explore the complex dynamics of corruption in Nigeria's public sector. Using Albert Bandura's social learning theory as the theoretical framework, and it explores how corrupt behaviors are observed, imitated, and reinforced within the public administration. The research identifies multiple causes of corruption, including institutional weaknesses, economic pressures, and cultural norms, which create an environment conducive to corrupt practices. The consequences of corruption are enormous: It undermines economic growth and development, deters foreign direct investment, exacerbates poverty and inequality, erodes public trust in government, and fuels political unrest and instability. Addressing corruption requires a comprehensive approach involving the strengthening of institutional frameworks, promoting transparency and accountability, improving public sector management, and fostering a culture of ethical leadership. Sustainable solutions to combat corruption include; enhancing the capacities of anti-corruption agencies, to be independent of the executive body, implementing public procurement reforms, ensuring budget transparency, and enforcing stringent anti-corruption measures.

Money laundering and other forms of financial crime

Money laundering and other forms of financial crime

Money laundering and the automobile industry: a comparative study between the laws of Mauritius and UK

Purpose Motor vehicles play a vital role in the economic and social growth of any country. However, they have recently become instruments and a source of illegally obtained financial gains for criminal bodies and individuals. This study aims to assess the laws of Mauritius on AML procedures to prevent money laundering through vehicles transactions. Design/methodology/approach To achieve the research objective, the black letter research method was used by analysing laws, regulations and case laws on the subject matter. A desk-based and doctrinal approach was also used by examining policy papers, scholarly articles and newspaper materials on the researched topic. Additionally, the research adopted a comparative analysis by assessing how the laws of another country address the issue of money laundering through vehicle transaction and the selected country is the UK. Findings The research concluded that Mauritius AML laws are lagging behind of the UK laws and accordingly, some measures were suggested to deal with the issue of money laundering through vehicles transactions. Accordingly, this research recommended that motor vehicle dealers who are high value dealers engaged in cash transactions above certain threshold, must also be categorised as reporting persons under the FIAMLA such that the prescribed AML measures apply to them. Additionally, it is convenient for the FCC to be embodied with some additional punitive and corrective powers to assist the Commission in its fight for the prevention and elimination of financial crimes in Mauritius. Originality/value At present, this study will be among the first academic writings on the intersection between money laundering and the automobile industry and on the effectiveness of the legal and regulatory measures undertaken by the Mauritian authorities to prevent money laundering through vehicles transactions. The 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.

Effectiveness of the UK AML System and Strategies for Improvement

As the cost of anti-money laundering (AML) compliance in the UK continues to rise, financial crime rates have not fallen. This study assesses the effectiveness of the UK’s anti-money laundering (AML) system and proposes strategies for improvement. The research examines the current legal framework, including the Proceeds of Crime Act (POCA) and the Money Laundering Regulations 2017 (MLR2017), assessing their role in preventing and combating financial crime. Analyzing case studies and statistical data, the findings suggest that while the UK AML system has been effective in identifying and deterring money laundering, significant challenges remain. Insufficient sharing of information between agencies, uneven allocation of resources, and inconsistent regulatory enforcement hinder overall effectiveness. To address these shortcomings, the study makes several strategic recommendations: strengthening inter-agency cooperation, leveraging advanced technological solutions for data analysis and reporting, improving training and awareness programmes for financial institutions, and improving the legal framework to adapt to emerging threats. Implementing these recommendations could strengthen the UK’s anti-money laundering (AML) efforts, making them more robust and responsive to the evolving financial crime landscape. Ultimately, this study aims to contribute to the current debate on the effectiveness of AML and to make recommendations for improving the AML system’s response to the complexities of money laundering in order to strengthen the UK’s position in the global fight against money laundering.

Bridging Theory and Practice : An Integrated Approach to Blockchain and Data Analytics Education

This article presents a comprehensive framework for building a strong foundation in blockchain technology and data analytics, two rapidly evolving fields that are increasingly intertwined in today's digital landscape. We propose a structured approach that combines theoretical knowledge acquisition with practical skill development, designed to equip aspiring professionals with the necessary tools to succeed in this dynamic sector. The framework encompasses key areas such as blockchain fundamentals, smart contracts, cryptography, data analysis techniques, and advanced machine learning concepts including neural networks, deep learning, and artificial intelligence. We emphasize the importance of leveraging diverse educational resources while highlighting the critical role of hands-on projects in reinforcing learning outcomes. By detailing strategies for developing blockchain applications and conducting advanced data analytics, this article bridges the gap between academic understanding and practical application. We explore real-world use cases demonstrating the synergy between blockchain and AI in areas such as financial crime prevention, supply chain management, and healthcare. Our findings suggest that this integrated approach not only enhances technical proficiency but also cultivates the problem-solving and analytical skills essential for advancing towards professional roles in blockchain and data analytics. This research contributes to the growing body of literature on technology education and provides a roadmap for individuals seeking to establish a robust foundation in these interconnected fields.

Advancing AML tactical approaches with data analytics: Transformative strategies for improving regulatory compliance in banks

The growing complexity of financial crimes necessitates advanced Anti-Money Laundering (AML) strategies that leverage data analytics to improve regulatory compliance in banks. As traditional AML methods face challenges in detecting sophisticated money laundering schemes, data analytics offers transformative solutions by enabling real-time monitoring, enhanced risk detection, and predictive analysis. This review explores the integration of data analytics in AML systems and its impact on regulatory compliance, focusing on strategies that banks can adopt to mitigate risks and adhere to evolving regulations. Data analytics empowers financial institutions to analyze vast amounts of transactional data, identifying suspicious patterns and anomalies with greater precision. Machine learning algorithms and artificial intelligence (AI) further enhance these capabilities by automating risk assessments, reducing false positives, and improving decision-making processes. Through predictive analytics, banks can anticipate emerging threats, adapting their AML strategies proactively to counter new money laundering techniques. A key advantage of data-driven AML approaches is the ability to streamline compliance processes. By automating Know Your Customer (KYC) procedures and cross-referencing data from multiple sources, banks can efficiently verify customer identities and monitor for unusual behavior. Additionally, the adoption of data analytics improves reporting accuracy, ensuring compliance with stringent regulatory frameworks such as the Financial Action Task Force (FATF) and the Bank Secrecy Act (BSA). This review highlights the transformative role of data analytics in enhancing AML efforts, emphasizing the importance of real-time data integration, predictive modeling, and automation. The shift from reactive to proactive AML approaches not only strengthens regulatory compliance but also fosters a culture of vigilance and risk management within banks. As financial institutions continue to embrace digital transformation, leveraging data analytics for AML will be crucial in combating financial crimes and maintaining compliance in an increasingly complex regulatory environment. Keywords: Anti-Money Laundering (AML), Data Analytics, Regulatory Compliance, Banks, Financial Crime, Machine Learning, Artificial Intelligence, Know Your Customer (KYC), Predictive Analytics, Risk Management.

Legal Support of Artificial Intelligence in Countering Anti-Money Laundering and Terrorism Financing Regimes in the BRICS Plus Countries

The increasing integration of artificial intelligence technologies into the financial structures of the BRICS Plus countries (comprising the original member countries of Brazil, Russia, India, China, and South Africa as well as the four new member countries of Egypt, Ethiopia, Iran, and the United Arab Emirates) presents both opportunities and challenges in combating economic crimes, which include money laundering and terrorism financing. This article explores the complex regulatory landscape that governs the application of artificial intelligence in these efforts. It examines how artificial intelligence can enhance the performance of anti-money laundering and counter-terrorism financing frameworks by enabling the evaluation of massive datasets, the identification of anomalous transaction patterns, and the automation of compliance procedures. Simultaneously, the article addresses the highly challenging situations that arise when using artificial intelligence. For instance, these technologies can make it difficult to understand the fluctuation of illicit price ranges, thereby complicating efforts to determine their origins and destinations. Through a comparative analysis of the frameworks throughout the BRICS Plus countries, this research highlights the varying levels of regulatory readiness of these frameworks and proposes pathways for harmonizing artificial intelligence-driven economic security measures. The overarching goal of an artificial intelligence model is to enhance both the effectiveness and the integrity of the financial sectors in the BRICS Plus consortium, necessitating a collaborative approach to combating financial crimes in an increasing number of digital economies across the world.

THE SPATIAL LINKAGES BETWEEN INTERNATIONAL MIGRATION AND SECURITY: THE EMPIRICAL FINDINGS FROM TURKEY HOSTING MOST REFUGEE IN THE WORLD

The increasing international migration in the world, especially due to the conflict, have potential negative impacts in immigrant countries. An increase in crime rates caused by unemployed immigrants who cannot meet their food and housing needs is one of them. Accordingly, the study investigates the effects of international immigrants, whose numbers reached about 3,9 million in Turkey, on violent and financial crime rates. The Spatial Error Panel Model with Fixed Effects covering Turkey’s 26 NUTS-II regions and 2016-2019 period indicate that there are positive and statistically significant relationships between immigrants and these crime rates. However, the negative impacts of international migration on security are mainly observed in financial crimes rather than violent crimes. Furthermore, the most important determinants of these crimes are high food and housing costs. And also, there is a negative relationship between uneducated employment and financial crimes rather than violent crimes. On the other hand, the findings indicate that regions have spatial dependency positively in terms of violent crimes. It means that as average violent crimes increase in the neighbors of a region, the violent crimes of that region also increase.

Unveiling the Concealed Risks: The Influence of Digital Finance on Cyber Financial Crime in China

Digital finance has emerged as a pivotal catalyst for economic growth in China, profoundly altering social structures and behaviors. Despite its benefits, it has also engendered financial risks, thereby complicating social governance. This study utilizes a panel dataset from China’s provinces spanning 2011 to 2021 to analyze the influence of digital finance development on cyber financial crime rates. The results reveal a positive correlation: an increment of one unit in the digital finance index is associated with a 0.058 unit increase in cyber financial crime rates. These findings are robustly supported by tests for endogeneity and robustness. Variations in impact are observed across urbanization levels and average wage brackets. And the study identifies income distribution and traditional financial demand as the mechanisms of the effect. Furthermore, this study presents strategic recommendations to enhance financial inclusion, facilitate income redistribution, strengthen cyber crime governance, and integrate digital and traditional finance for the advancement of financial modernization.

Another Arrow in the Quiver? The Prospects and Challenges of Combating Corruption through a Specialised Court in Malawi

In 2022, an amendment to Malawi’s Courts Act created the Financial Crimes Division (FCD) of the High Court. This is a ‘specialised court’ meant to deal with any ‘financial crime matter.’ While the FCD has jurisdiction to deal with ‘financial crimes,’ it seems that one of the key motivations for its establishment was the creation of an avenue for expedited disposal of corruption-related cases. Through a doctrinal analysis with a comparative approach, this article examines the prospects of the FCD, particularly in the fight against corruption while advancing some recommendations for dealing with some of the possible challenges.

The Magnitude Of The Informal Remittances Flow To Kenya: An Augmented Gravity Model Approach.

Background: In Kenya remittances are now a proper source of external finances. Kenya received $4.19 billion in form of diaspora remittances in year 2023. Over the years, remittances are proving to be more stable, well diversified and are promising more growth relative to foreign direct investments, official development assistance, private capital and exports. On the micro scale the remittances are helping achieve Kenya’s developmental goals of having a globally competitive human resource and an adequately and decently housed population as outlined in the country’s development blueprint - The Kenya Vision 2030. Though the remittances are these important, official remittance data in Kenya, as well as in many African countries, only include remittances sent through formal channels such as banks and Money transfer Operators. Remittances through the informal channels such as hawalas and hundis are not recorded. This means that the recorded remittances are grossly understated impeding the capacity of policy makers to design appropriate policies aimed at encouraging remittances. The study employed panel data analysis and a thought experiment on remittance data between 2013Q1 and 2022Q4. Through a thought experiment, the study asks what impact a reduction of the costs of sending remittances would have on remittances if the transaction costs were reduced to that of the informal channels of sending remittances. The analysis revealed that the size of the informal remittances in Kenya is between 20% and 26% of the formal remittances. On the determinants of remittance flows to Kenya, the study establishes that Kenyan migrants send more when the economic freedoms and economic conditions improve in their host nations but send less when economic freedoms back at home improve. Accurately measuring informal emittances in Kenya is vital for creating effective government policies. This data would reveal the true extent of remittances' impact on the economy, allowing policymakers to develop strategies that fully utilize their potential for development. By encouraging people to send money through official channels, the government can increase tax income, improve access to financial services, and better monitor these transactions. Additionally, understanding the size of informal remittances is essential for combating financial crimes like money laundering and ensuring that resources are used efficiently

The trifecta against financial crime: A collaborative analysis of the roles of banks, consulting firms, and governments

The roles of banks, consulting firms and governments are intertwined in combating financial crime. Banks are on the frontlines as they process financial transactions and engage directly with customers. Banks are extraordinarily strategic because they interface with customers and are heavily involved in handling financial transactions worldwide. They watch accounts for any suspicious activity and report such activities to the legal bodies as expected under AML regulations. Consulting firms help banks, as well as other financial organizations to create various tools for evaluating threats and devising strategies for firms to conform to. They also do training in the area of financial crime prevention. Governments put in place measures in the form of legislation that seeks to prevent and curtail acts such as money laundering, financing of terrorism and tax evasion among others. Materials and Methods: The study’s literature was obtained from electronic databases. Only the articles that investigated the effectiveness and efficiency of anti-money laundering/counter-terrorist financing policies and regulations and/or sources that compared financial institutions’ cooperation with consulting companies and governmental agencies were included. Among the reviewed sources 53 from 1980 till 2023, which included academic books, journal articles, government and international organization reports. Results: The literature shows that relying on the regulation is inadequate for controlling finance related crimes. Banks have a profit-driven culture and it lacks scrupulousness towards integrity risks. For the same purpose, prescriptive regulations increase disproportionate compliance costs for small jurisdictions and financial institutions. Companies seeking risk management services get these from consulting firms that also profit from molding compliance frameworks. Syndication enables the employment of unique features possessed by each party. While the banks have an effective network and reach, the consulting firms can analyze data accurately, and the government has statutory power and control. Discussion: Shifting social norms are another driver: peoples’ behavior in financial markets today is a shift from that of even a decade ago and there is a need to address financial crime in a shared manner and increase cooperation at a global level. To put measures in place, the roles and responsibilities should be well defined based on strengths of each of the entities. Banks are also in good shape for transaction monitoring although they need some regulation to do so. Analyzing the motives for consulting firms, it is possible to state that the provision of technical solutions is possible only if there are factors that guarantee the transparency of actions. Governments provided the blueprint in achieving the proportionate, risk adjusted policies while leaving it to the private sector to drive the processes. This is because we have seen that financial globalization means that nations have to ideally move in synchrony. International agencies such as the UN, FATF, FSB, IMF and others have contributed to the development of international standards, whereas in national situations, the effects vary from one country to another. Conclusion: It can therefore be seen that no single entity can deal with such complicated concepts of transnational financial crimes in isolation. The utilization of the mandated strategies by banks, consulting companies and governments as essential collaborators in tandem with their core competencies is the most useful approach. This triumvirate, therefore, has great potential to add real value to anti-financial crime efficiency when properly aligned and adequately supervised in a manner consistently and holistically operationalized.

An anti-money laundering authority for the European Union: a new center of gravity in AML enforcement

AbstractThe establishment of an Anti-Money Laundering Authority (AMLA) heralds a milestone in the European Union’s (EU) institutional framework for the enforcement of anti-money laundering and countering the financing of terrorism (AML/CFT) rules. This contribution explores the competence and powers of the new AML/CFT supervisor. While AMLA is a true enforcement actor with investigative and sanctioning powers to address breaches of AML/CFT requirements, the scope of AMLA’s enforcement powers will be limited. AMLA will nevertheless have an important regulatory impact and it will enhance the fight against cross-border financial crime by supporting the work of other bodies and agencies in the field.

Setting new benchmarks for combating financial crimes and ensuring the safety and security of America's digital financial landscape

The increasing digitalization of financial services in the United States has introduced significant challenges in combating financial crimes, including fraud, money laundering, and cybercrimes. As digital transactions become more pervasive, so too do the opportunities for illicit activities that exploit the vulnerabilities of these systems. This research seeks to establish new benchmarks for combating financial crimes and ensuring the security of America's digital financial landscape. By leveraging advanced technologies such as Artificial Intelligence (AI), Machine Learning (ML), and blockchain, this study explores innovative approaches to enhancing fraud detection, improving transparency, and reducing the risk of money laundering. A mixed-methods approach was employed, combining qualitative analysis of existing regulatory frameworks with quantitative case studies to assess the effectiveness of these technologies in real-world applications. The results indicate that AI and ML significantly enhance financial institutions' ability to detect fraudulent activities in real-time, reducing false positives and allowing for more efficient resource allocation. Furthermore, blockchain technology improved financial transactions' traceability, enhancing financial systems' transparency and accountability. The study concludes with recommendations for policy and practice, emphasizing the need for adaptive regulatory frameworks, increased investment in advanced technologies, and more vital collaboration between the public and private sectors. These findings suggest that a proactive approach, integrating technological innovation with strategic policy measures, is crucial for safeguarding America's financial infrastructure against emerging threats in the digital era.

Sanctions compliance as a basis for non-performance of contractual obligations

Targeted financial sanctions are routinely used to combat financial crime. As they are endorsed by the United Nations and the Financial Action Task Force, the vast majority of jurisdictions have established regulatory frameworks that make provision for targeted financial sanctions. These frameworks translate into compliance obligations and expectations for so-called regulated entities, which includes banks. Although sanctions have been the subject of much discourse recently in the wake of the escalation of the Russia-Ukraine conflict, the risk of non-performance of contractual obligations due to sanctions compliance has not been explored sufficiently. The objective of this contribution is to shed light on the distinction between compliance with domestic sanctions and compliance with foreign sanctions with specific reference to the risk of non-performance of contractual obligations. It focuses on the basis and legal implications of compliance in each case within the context of the bank-customer relationship. This is undertaken primarily from a South African perspective. The contribution finds that compliance with domestic sanctions may give rise to an interference with contractual performance that is rooted in law, while compliance with foreign sanctions may necessitate an interference that is based on either a contractual provision (force majeure clause) or business and reputational considerations. In both instances, clients of banks are less certain that their payment instructions will be processed and banks, in turn, run the risk of being sued. This tension between sanctions and international banking and finance requires serious reflection by the relevant authorities.

Fair value accounting and untraceable financial crime

Fair value accounting and untraceable financial crime

Forensic accounting as a panacea to financial crime in Bangladesh: An empirical investigation

Forensic accounting as a panacea to financial crime in Bangladesh: An empirical investigation