Money Laundering Research Articles

Introduction to Special Issue on “Understanding Money Laundering: Empirical and Theoretical Insights into Offenders, Typologies, and Determinants of Criminal Behaviour”

Introduction to Special Issue on “Understanding Money Laundering: Empirical and Theoretical Insights into Offenders, Typologies, and Determinants of Criminal Behaviour”

Analisis Kontroversi Aksi Cepat Tanggap Berdasarkan Perspektif Maqashid Syariah

Indonesia, as the country with the largest Muslim population in the world, is also recognized as the most generous country according to the World Giving Index 2022. Islamic philanthropy in Indonesia has experienced rapid growth since the reform era, marked by an increased awareness of the importance of professional management to maximize the impact on the underprivileged. Aksi Cepat Tanggap (ACT) is one of the prominent Islamic philanthropic organizations with various initiatives such as Global Qurban and Global Wakaf, which have received positive responses from the Indonesian public. However, in 2022, ACT faced several allegations of financial misconduct, including embezzlement, misuse of donation funds from Boeing, mismanagement of waqf funds, excessive donation deductions, and money laundering. These scandals not only disrupted ACT's financial stability but also led to legal consequences for several of its executives. In Islam, the concept of Maqashid Syariah provides a framework for analyzing phenomena that may harm the Muslim community, including controversies involving ACT. This study employs a descriptive qualitative approach to examine the ACT controversies through the lens of Maqashid Syariah. Based on this analysis, as an Islamic philanthropic institution entrusted with managing ZISWAF (Zakat, Infaq, Shadaqah, and Waqf) funds, ACT should adhere to the principles of Maqashid Syariah to avoid actions that undermine the protection of intellect, life, and wealth, which are part of the Maqasid al-Khamsah. This study contributes to the literature on Islamic Economics by providing insights into the application of Maqashid Syariah in the context of Islamic philanthropy. The practical implications of this research emphasize the importance of accountability and transparency in the management of ZISWAF funds by Islamic philanthropic organizations, regulators, and the community to ensure compliance with Maqashid Syariah.

Analysis of Implementation of Anti-Money Laundering Mechanisms in Blockchain-Based Smart Contracts under Indonesian Regulation

One of the most widely adopted forms of information technology application today is electronic trade through the internet network to make transactions. This transaction system was initially centralized, but with the risk of system failure and hacking, distributed systems such as blockchain were developed to improve security and efficiency. Blockchain also gave birth to derivative technologies such as smart contracts, automated blockchain-based digital agreements. Despite offering many advantages, the anonymity and decentralization of smart contracts raise concerns of misuse for illicit activities such as money laundering. Therefore, regulatory updates in Indonesia are needed to regulate the validity of smart contracts and money laundering actions through this technology. This article analyses the validity and regulation of smart contracts and efforts to implement the AML system in blockchain-based transactions in Indonesia.

Addressing the challenges of weak AML measures in developing countries: Key concerns of FATF and consequences of greylisting

This article aims to explore the challenges faced by developing countries while adhering to international AML requirements and designing effective AML frameworks. Developing countries, which are faced with the dichotomy of complying with or breaching international requirements, also struggle with the impact of weak AML measures on their economies. By exploring this dichotomy, this research aims to provide valuable insights and recommendations for policymakers in developing countries to encourage the fight against money laundering and predicate offenses. It also contributes to the literature by shedding light on the adequate mechanisms through which developing countries can weigh up the consequences of being grey listed against the ability to attract illicit inflows, on which their economy may depend.

Analysis of The Flow of Funds of Money Laundering Crime With Predicate Crime of Narcotics Crime by Foreign Nationals, A Case Study at the National Narcotics Agency of Bali Province

The flow of funds of foreign nationals at home and abroad can be used in proving money laundering crimes in Indonesia because based on Article 69 of Law Number 8 of 2010 concerning Prevention and Eradication of Money Laundering Crimes, which states that in order to be able to carry out investigations, prosecutions, and examinations in court against money laundering crimes, it is not mandatory to prove the original criminal act first, with this intention it does not mean that in conducting investigations, prosecutions, and examinations in court it is not mandatory to prove the original criminal act. This study aims to determine and analyze the analysis of the flow of funds of money laundering crime with predicate crime of narcotics crime by foreign nationals. This research method uses normative research supported by empirical research using various types of primary legal materials. The results show that the flow of funds of foreign nationals at home and abroad can be used in proving money laundering crimes in Indonesia because based on Article 69 of Law Number 8 of 2010 concerning Prevention and Eradication of Money Laundering Crimes, which states that in order to be able to carry out investigations, prosecutions, and examinations in court against money laundering crimes, it is not mandatory to prove the original criminal act first. This research has implications for the importance of strengthening international cooperation in tracing and tracking the flow of funds involving foreign nationals, as well as the need to strengthen regulations related to the supervision of cross-border financial transactions.

The role of the central bank of Iraq in confronting economic crime

The Central Bank of Iraq has made strenuous efforts to combat economic crime in Iraq, represented by financial and administrative corruption, money laundering and terrorist financing issues, as it is the highest regulatory and supervisory authority over the work of financial institutions, banks and banks, through issuing laws and legislation that have limited this crime, in addition to complying with international laws and recommendations issued in this regard, by Iraq's compliance with financial transparency, financial disclosure and accountability. It has also used advanced technological methods and effective regulatory and supervisory systems in its efforts to combat this crime, and the activation of the law (Where did you get this from?) contributed to increasing the role of the Central Bank of Iraq in monitoring economic crime. As the highest authority in managing financial and monetary affairs in Iraq, it may publish in its annual reports on an ongoing basis statistics related to corruption, money laundering and terrorist financing issues, and these reports are subject to periodic follow-up by international financial and monetary institutions, including the World Bank, the International Monetary Fund, the Financial Action Task Force (FATF), and other relevant institutions. This enabled it to achieve tangible success in reducing corrupt practices and illegal financial activities, and it was able to get off the monitoring and follow-up list. This is a clear indication of the escalation of local efforts in cooperation with these institutions. Despite the presence of some obstacles, it has achieved tangible progress in combating corruption

Mining corruption, environmental damage, and the increasing unauthorized properties of state officials

Indonesia is blessed with natural resources in the form of minerals and coal. Their use must be directed towards the greatest welfare and prosperity of the people based on the 1945 Constitution. However, what is currently happening is the opposite. the Attorney General revealed case of alleged corruption in the trading system of tin commodities in the Bangka Belitung region. The suspects include businessmen, directors, crazy rich Indonesians, and artists who are now increasingly attracting public attention. The total state losses were equivalent to $16,667 billion USD. This research used a sociological legal research model. The research object was the legal behavior in the reality of society. It was found that to formulate appropriate law enforcement for mining corruption, Friedman’s legal system theory approach was used. This theory includes legal structures, with good synergy from each law enforcement institution. Concerning the legal substance, apart from using the Corruption Crime Law, perpetrators also need to be impoverished by regulating the crime of money laundering. In terms of legal culture, state officials should uphold ethics and integrity to achieve good governance. Meanwhile, restoration of environmental damage resulting from mining activities can begin with future environmental policies that are directed towards ensuring the safety and health of the human life as well as controlling the wise use of natural resources. The integration of environmental law and Islam can be carried out using a prophetic ethical approach. The prophetic paradigm interprets nature as something sacred as humans only borrow it and manage.

Leveraging Artificial Intelligence to Combat Money Laundering and Related Crimes in the South African Banking Sector

Abstract Money laundering and related financial crimes, such as fraud and terrorism financing, pose a significant threat to the integrity and stability of South African financial markets. This article explores the application and use of artificial intelligence (AI) to detect and prevent money laundering in South African banking institutions. The implementation of big data technologies, data processing analytics and AI could enhance the detection and prevention of money laundering activities in South Africa's banking sector. AI should be carefully utilised to improve the detection of suspicious activities and the accuracy of financial intelligence, and to combat evolving money laundering techniques. The article also examines the benefits and challenges of implementing AI as an anti-money laundering (AML) measure in the South African banking sector. These include the need for quality data, integration with existing regulatory systems, regulatory compliance and ethical considerations. The article highlights the potential use of AI in transaction monitoring, customer due diligence, outcomes-based risk assessment and the improved detection of suspicious transactions. This could be done by utilising AI to enhance the effectiveness and efficiency of AML measures. The importance of effective coordination between banking institutions, regulatory authorities and law enforcement bodies is also highlighted as a key component of leveraging AI to combat money laundering and related financial crimes in South Africa's banking sector.

Financial Markets Integration and the Consequences for Financial Stability

Financial integration, as part of the financial market union, implies closer interaction between global economies. The positive contribution of digitization can be found in the specialized literature, but it fails to provide an overview of the link between financial intermediation indicators and the use of digitization, taking into account the impact on the individual. In this sense, the motivation of this research consists in emphasizing therole of digital financial services in reducing poverty, having a beneficial impact on economic development and the economy welfare.The study relevance resides in capturing the Global Findex Index trend, by measuring the use of financial services every 3 years, starting in 2011. As a result, the research aims to analyze the financial intermediation degree, and, implicitly, digitization, based on a survey of 140 economies, using a Vector Autoregressive model, impulse response functions and the variance decomposition of the included macroeconomic variables.The research resultssummarize the fintech contribution in diminishingthe financial instability risks and outlining the policy implications for governments, benefits such as money laundering and reducing corruption.

Global tax avoidance and evasion: A landscape through insights from a systematic literature review and bibliometric analysis

This research aims to comprehensively investigate contemporary practices and factors influencing global tax avoidance and evasion through a systematic literature review (SLR) and bibliometric analysis. This study methodology uses SLR with bibliometric analysis to map this research trend. Relevant literature was collected and systematically analyzed to identify key themes, methodologies, and findings regarding tax avoidance and evasion. The study’s findings identify various tax avoidance practices, including profit shifting, transfer pricing strategies, and the use of tax havens by multinational corporations. The report also highlights various forms of tax evasion, such as money laundering and illicit financial flows. Key factors influencing tax behavior are ethical considerations, government policies, economic factors, and corporate governance practices. This analysis highlights the complex interactions between these factors in shaping tax practices globally. The study’s conclusions show that effective tax governance requires a multifaceted approach integrating ethical standards, a strong regulatory framework, and international cooperation. Ethical corporate behavior and transparent reporting are essential in promoting tax compliance and fairness. This study emphasizes the critical role of policymakers in designing and enforcing tax policies that discourage aggressive tax planning while encouraging economic growth and equality. Recommendations from these findings are to increase transparency in multinational operations, strengthen international tax cooperation, and improve global tax administration capabilities. In addition, increasing taxpayer education and awareness can foster a culture of compliance and ethical tax practices. Future research should prioritize longitudinal studies and case-specific analyses to deepen understanding and develop targeted interventions to address tax avoidance and evasion challenges.

A Proposed Paradigm Using Data Mining to Minimize Online Money Laundering

A Proposed Paradigm Using Data Mining to Minimize Online Money Laundering

Money Laundering: A Review of Literature and Future Research

Money laundering is one of the financial crimes that has become a major concern in most countries worldwide. The rising number of reported instances of money laundering could be driven by several reasons. With this growth, there is a growing academic interest in money laundering research; therefore, opportunities should be created for interested academics to evaluate the evolution of research in this field. This study was intended to evaluate published studies in this field from the origin of the idea of money laundering to the present to identify major trends or issues in money laundering research and to propose a research agenda for the future. A qualitative research design was adopted using a content analysis approach. It was found that most of the research focuses more on the relationship of money laundering with other offenses and the detection methods but lacking in the understanding of money laundering and the rules and regulations related to money laundering. This study is intended to be useful to current and future scholars in the field of financial crimes who are interested in the evolution of the literature and in identifying areas for future research

Balancing privacy and public interest in the fight against illicit financial flows: Lessons from an European Case Study

Illicit Financial Flows (IFF) – such as corruption and money laundering – have a significant negative impact on the enjoyment of human rights. Combating IFF is an integral part of the 2030 Agenda for Sustainable Development. SDG 16 explicitly promulgates the relation between the rule of law, social security and the fight against IFF. Cross-border data access and exchange by enforcement authorities is crucial to map and disrupt IFF, punish suspects and take away their criminally earned assets. At the same time, human rights restrain national enforcement authorities when combatting IFF. States must abstain from undue interference with individuals’ privacy rights, such as the storage of information relating to an individual’s private life and the sharing of such information. Pursuant to article 8 ECHR, interference with the right to respect for private – in accordance with the law – is only permissible if this is necessary in a democratic society, e.g. in the interests of national security and public safety. In this article we explore the balance between individual rights and states’ responsibilities in the fight against IFF; between privacy and the common good of fighting bad money. To what extent may privacy concerns be an obstacle to investigate global IFF? Our conclusion is that there is an imbalance. We suggest that human dignity and human security should be given more weight in the balancing of human rights in this context.

Anti-Money Laundering (AML) Information Technology Strategies in Cross-Border Payment Systems

This paper aims to explore the application of information technology in the implementation of anti-money laundering (AML) measures within cross-border payment systems, analyzing how it enhances the compliance of financial institutions and strengthens the effectiveness of financial regulation. By examining the use of information technologies such as big data analytics, artificial intelligence, and blockchain in the field of AML, this paper reveals how these technologies assist financial institutions in more effectively identifying and preventing money laundering activities. Additionally, the paper discusses the challenges that may be encountered in the implementation of these technologies, such as data privacy protection, technical compatibility, and security issues, and proposes corresponding countermeasures and suggestions. The research findings indicate that, despite challenges, the application of information technology is of great significance for improving the AML compliance and regulatory efficiency of cross-border payment systems, providing new perspectives and solutions for financial regulatory authorities and institutions.

The power of data: Transforming compliance with anti-money laundering measures in domestic and cross-border payments

Financial crime is on the rise. The interconnectedness of global payments is making illicit cross-border transactions increasingly frictionless, while digitisation has not only increased the attack surface but also enabled criminals to employ increasingly sophisticated methods to evade detection, such as social engineering. Compounding the threat is the ever-growing mountain of data being generated, which is threatening to drown detection and prevention efforts. It is clear that a new level of defence is required in the fight against financial crime. This paper argues that the implementation of data-driven technologies, with a focus on artificial intelligence (AI), is a near-term imperative for effective risk-based anti-money laundering (AML) compliance programmes in the payments industry, where legacy AML programmes over-rely on a rule-based approach with a checklist of predetermined rules and indicators to flag potentially suspicious activity. To support the development and implementation of such data-driven enhancements, this paper hones in on the current hurdles, and explains the benefits and technical aspects of AI integration, emphasising the foundational importance of ISO/IEC AI-related standards. Finally, the paper discusses future opportunities for broader collaboration to build stronger collective defences.

Cryptocurrency and its Nexus with Money Laundering and Terrorism Financing within the Framework of FATF Recommendations

Cryptocurrency has emerged as a viable alternative to conventional payment systems, offering its users notable advantages such as cost efficiency and rapid transaction processing. However, cryptocurrencies’ decentralized nature, anonymity, and susceptibility to cyber threats introduce the potential for their exploitation in illicit activities, notably money laundering and terrorism financing (ML/TF). This scholarly investigation seeks to investigate the roles played by international organizations actively combating such criminal activities. In this academic context, a meticulous consideration of the inherent risks associated with the aforementioned criminal endeavors is undertaken, aligning with the guidelines and recommendations set forth by the Financial Action Task Force (FATF). The study underscores a significant finding that cryptocurrency accounts can be opened anonymously, with no centralized registry to monitor cryptocurrency ownership. This characteristic poses a formidable challenge in confiscating funds linked to terrorist activities. Even in instances where cryptocurrency transactions may be traced, accessing this critical data necessitates the involvement of third-party entities, given that cryptocurrency transactions are recorded in decentralized ledgers spanning multiple jurisdictions. Furthermore, the study underscores the imperative of coordination and information exchange as indispensable elements in the ongoing battle against organized and transnational criminal activities, specifically ML/TF. Moreover, the study elucidates the incongruence between cryptocurrency and FATF regulations governing electronic fund transfers, as cryptocurrencies can make transactions through opaque and unregulated conduits, such as the deep web.

Uganda: Strengthening the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Regime

Uganda: Strengthening the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Regime

NEW AML TOOLS: ANALYZING ETHEREUM CRYPTOCURRENCY TRANSACTIONS USING A BAYESIAN CLASSIFIER

The emergence of cryptocurrencies as a form of digital payments has contributed to the emergence of numerous opportunities for the implementation of effective and efficient financial transactions, however, new fraud and money laundering schemes have emerged, as the anonymity and decentralization inherent in cryptocurrencies complicate the process of monitoring transactions and control by governments and law enforcement agencies. This study aims to develop a mechanism for analyzing transactions in the Ethereum cryptocurrency using a Bayesian classifier to identify potentially suspicious transactions that may be related to terrorist financing and money laundering. The Bayesian approach makes it possible to consider the probabilistic characteristics of transactions and their interrelationships to increase the accuracy of detecting anomalous and potentially illegal transactions. For the analysis, data on transactions of the Ethereum currency from June 2020 to December 2022 were taken. The developed mechanism involves determining a set of characteristics of transaction graph nodes that identify the potential for their use in illegal financial transactions and forming intervals of their permissible values. The article presents cryptocurrency transactions as an oriented graph, with the nodes being the entities conducting transactions and the arcs being the transactions between the nodes. In assessing the risks of using cryptocurrencies in money laundering, the number/amount of transactions to and from the respective node, the balance of these transactions (absolute value), and the type of node were considered. The analysis showed that among the 100 largest nodes in the network, 11 were identified as having a «critical» risk level, and the most closely connected nodes were identified. This methodology can be used not only to analyze the Ethereum cryptocurrency but also for other cryptocurrencies and similar networks.

How do Ivorian Cyberfraudsters Manage Their Criminal Proceeds?

This article delves into the intricacies of managing illicit financial gains among Ivorian cyberfraudsters, shedding light on the findings of a field study conducted in Côte d’Ivoire by Swiss and Ivorian research teams. The study involved interviews with cybercriminals, law enforcement officials, and subject matter experts, in order to answer a specific question: What strategies do Ivorian cyberfraudsters use to manage and launder the criminal proceeds originating from romance scams and sextortion? The results explore the tactics employed by cyberfraudsters to obfuscate the illicit financial flows, their organizational structures, and the strategies they employ in managing and using their gains. It confirms certain elements from the scientific literature, in addition to introducing new insights for a better understanding of the processes of money laundering and the use of illicit funds. The article also unravels the multifaceted challenges encountered within the anti-money laundering framework in the context of cybercrime and raises avenues for further reflection and future work to enhance the fight against this scourge.

Enhancing anti-money laundering capabilities: The strategic use of AI and cloud technologies in financial crime prevention

Integrating Artificial Intelligence (AI) and Cloud Technologies is transforming the fight against money laundering in the financial sector. As digital financial platforms become more prevalent, traditional Anti-Money Laundering (AML) methods are proving inadequate against increasingly sophisticated criminal tactics. This study examines how AI and Cloud Technologies can enhance AML capabilities by improving real-time threat detection, reducing false positives, and ensuring compliance with global regulatory standards. Through a qualitative analysis of recent literature and case studies, the research highlights the effectiveness of AI in identifying complex, suspicious activity patterns that traditional systems often miss. Cloud Technologies complement AI by offering scalable, flexible, and secure solutions, enabling financial institutions to manage evolving risks and regulatory demands better. The findings suggest that the strategic use of these technologies represents a significant advancement in financial crime prevention. However, the study also notes challenges, including concerns about data privacy and the need for specialized skills to manage AI systems. The conclusion emphasizes that while AI and Cloud Technologies provide powerful tools for enhancing AML frameworks, ongoing research, and development are needed to address these challenges and fully realize their potential in safeguarding the financial system. This strategic adoption of technology marks a critical shift in combating financial crimes, ensuring that financial institutions remain resilient against the dynamic threats from money laundering.