Prevention Of Money Laundering Research Articles

Spatio-Temporal Network-based Bank Transactional Behavior Analysis to Detect Suspicious Activities

Money laundering refers to the act of disguising the proceeds of illegal activities as legitimate funds. This is a significant problem as it enables criminals to profit from illegal activities and finance further criminal endeavors. Money laundering is also linked to other crimes, such as drug trafficking, terrorism financing, and corruption. To combat money laundering, governments and financial institutions have implemented various measures, such as Know Your Customer (KYC) regulations, Anti-Money Laundering (AML) laws, and the use of financial intelligence units. However, the existing money laundering system is complex, making it difficult to detect and prevent money laundering activities. Many current systems rely on outdated technology and manual processes, which can be time-consuming and prone to error. Therefore, there is a need for effective detection and prevention systems that can identify suspicious transactions and patterns of behavior. This project aims to prevent and detect money laundering activities by identifying suspicious transactions and monitoring the movement of funds through the financial system. The proposed system uses Long Short-Term Memory (LSTM) to detect and prevent money laundering activities. By analyzing the data in a time-series format, LSTM can identify unusual patterns of transactions and flag them for further investigation. LSTM can also predict future trends in financial data, allowing for the detection and prevention of potential money laundering activities before they occur. The proposed transactional network and behavior analysis system provides a more efficient and accurate method for identifying potential money laundering activities. This system can ultimately lead to a more effective and efficient anti-money laundering system. Keywords: Anti-Money laundering, Long short-term memory, Legitimate funds, Transaction network, behavior analysis, Time series format

Money laundering prevention: the challenge of insurance termination for outlaw biker gangs’ club houses

Purpose The purpose of this paper is to discuss the legal barriers to termination of an insurance arrangement where there is suspicion of money laundering when paying insurance premiums. Design/methodology/approach Trials in court between insurance firm and outlaw biker gangs regarding insurance of their clubhouses. Findings Protection of insured seems more important than prevention of money laundering. Research limitations/implications This is a case study that cannot be generalized. Practical implications Anti money laundering is difficult when competing with other considerations. Social implications Accusations of money laundering is not sufficient to terminate an insurance contract. Rather, solid evidence is needed. Originality/value This is a real case of failing anti-money laundering efforts.

Know Your Customer Principle as a Measure to Prevent Money Laundering In Banking (Study at BSI KCP Banjarmasin A. Yani)

Abstract This research is motivated by the problem of implementing the Know Your Customer Principle which can be seen through the implementation of customer acceptance policies, and procedures for identifying customers and monitoring procedures for customer accounts and transactions. This research aims to find out the implementation of Know Your Customer Principles in Sharia banking and also to find out how to prevent Money Laundering carried out by BSI KCP Banjarmasin A.Yani. This research is field research with a qualitative descriptive approach. The location of this research was carried out at Bank Syariah Indonesia (BSI) KCP Banjarmasin A. Yani. The results of this research reveal that the implementation of the Know Your Customer Principle has been carried out optimally with customer identification procedures and the use of the BISA Application in the context of implementing the Know Your Customer Principle. Apart from that, by having internal supervision of customers and the customer acceptance process is also carried out strictly, through identification and verification of customer data to avoid the entry of customers with bad intentions to the bank, this can prevent the crime of Money Laundering. Keywords: Know Your Customer Principle; Money Laundering; Bank Syariah Indonesia   Abstrak Penelitian ini dilatarbelakangi oleh permasalahan penerapan Prinsip Mengenal Nasabah yang dapat dilihat melalui penerapan kebijakan penerimaan nasabah, dan prosedur identifikasi nasabah serta prosedur pemantauan terhadap rekening dan transaksi nasabah. Penelitian ini bertujuan untuk mengetahui penerapan Prinsip Mengenal Nasabah pada perbankan Syariah dan juga untuk mengetahui cara pencegahan Pencucian Uang yang dilakukan oleh BSI KCP Banjarmasin A.Yani. Penelitian ini merupakan penelitian lapangan (field research) dengan pendekatan deskriptif kualitatif. Lokasi penelitian ini dilakukan di Bank Syariah Indonesia (BSI) KCP Banjarmasin A. Yani. Hasil penelitian ini mengungkapkan bahwa penerapan Prinsip Mengenal Nasabah telah dilakukan secara optimal dengan adanya prosedur identifikasi nasabah dan penggunaan Aplikasi BISA dalam rangka penerapan Prinsip Mengenal Nasabah. Selain itu, dengan adanya pengawasan internal terhadap nasabah dan proses penerimaan nasabah juga dilakukan secara ketat, melalui identifikasi dan verifikasi data nasabah untuk menghindari masuknya nasabah yang beritikad tidak baik ke bank, maka hal ini dapat mencegah terjadinya tindak pidana Pencucian Uang. Kata kunci: Prinsip Mengenal Nasabah; Pencucian Uang; Bank Syariah Indonesia  

The Role Of A Notary In Preventing Money Laundering

<em>The Notary's participation in preventing money laundering is to report to PPATK when they know of suspicious financial transactions related to the deed they made. The Notary's position as a whistleblower in the event of suspected suspicious financial transactions as an effort to prevent money laundering has not violated the principle of confidentiality of position. Instead, the Notary must apply the precautionary principle. Notary as the reporting party is an implementation of its obligations stipulated in Article 16 paragraph (1) point an of UUJN, namely acting trustfully and honestly. The State appoints notaries to serve the public in civil Law. Therefore Notaries must also take care not to let the State be harmed by attempts to disguise money from criminal acts. Notaries with this submit to higher interests. This is so that Notaries do not get involved in money laundering cases because they are considered to help carry out a criminal act</em>

Beneficial Ownership – Demand for Transparency, Threat to Privacy

The basic idea behind establishing the register of beneficial owners is to increase the transparency and accessibility of data on beneficial ownership of companies and other legal entities with the aim of ensuring the public availability of data on domestic and foreign natural and legal persons. However, the possibility of the data being accessible to the general public instead of to persons or organizations that can demonstrate a legitimate interest raised the issue of violating the principles of respect for private or family life and the protection of personal data. Consequently, this raises the question of drawing the line between contributing to the common good and fighting against money laundering and terrorist financing, on the one hand, and protecting personal data, with the possibility of their misuse, on the other. A balance as well as a response to the possibility of setting soft limits of legitimate interest that would result in the achievement of all set goals was sought in the practice of the European Court of Justice. One of the legislative solutions regarding the extent of access to data on beneficial owners for the entire public, along with the establishment of different types of registers in order to prevent money laundering and terrorist financing, is described using the example of Croatia.

Challenges of the Use of Virtual Assets in Money Laundering

Cryptocurrencies have vast potential, but they also present significant risks related to money laundering and terrorist financing due to their technical characteristics. Crypto-assets are essentially applications of blockchain technology, which entails a public, encrypted, and secure ledger distributed across a network of validated computers. Each computer operates with common software that fosters consensus on new entries and prevents unauthorized alterations to the agreed-upon register. The Financial Action Task Force (FATF) has issued numerous guidelines on virtual assets, and in September 2020, the European Commission embraced the Digital Finance Package to bring the EU in line with the digital age. A pivotal component of this package is Regulation (EU) 2023/1114 of the European Parliament and of the Council, dated May 31, 2023, on markets in crypto-assets, known as MiCA Regulation. This regulation signifies the EU’s endeavor to standardize the legal framework for crypto assets while actively contributing to the prevention of money laundering and terrorist financing. The challenge for regulatory authorities lies in the seizure, confiscation, and forfeiture of crypto-assets as proceeds of crime, given their inherent characteristics that impede traceability. Court decisions outlined in this article underscore the difficulties faced by law enforcement authorities when handling crypto-assets as proceeds of crime. The article examines how European legal authorities and the FATF utilize various legal tools, such as Directives, Regulations, and Guidelines, to adapt to the evolving landscape of virtual assets. To mitigate the risk of forum shopping, where individuals seek the most favorable legal regime, alignment of the legal frameworks of Member States is crucial. The ongoing evolution of the legal framework reflects the persistent challenges posed by virtual assets in the context of criminal activities, prompting a continuous adaptation of regulations by European legal authorities and the FATF.

Diffusion of International Anti-Money Laundering Standards into Ethiopian Laws: Issues of Adequacy and Effectiveness

Ethiopia has signed and ratified several international and regional instruments adopted to combat and prevent money laundering (ML) and other forms of organized crime. To express the country’s commitment to implement these instruments and combat the threat of ML and associated predicate offenses to the country’s financial stability and national security, the government of Ethiopia has enacted various anti-money laundering (AML) laws. This article examines the diffusion of the international AML standards into Ethiopia’s legal system and the adequacy of the country's AML legal norms in addressing the structural causes of ML and its predicate offenses. A socio-legal research approach was utilized to conduct the study. It uncovers that Ethiopia’s AML legal norms have evolved primarily because of external pressure. Ethiopia was pressurized to comply with the international AML standards, specifically with the Financial Action Task Force on Money Laundering (FATF) 40 Recommendations. Eventually, the country’s AML norms comply with FATF recommendations. This saved the country from being labeled as a country with strategic AML deficiencies or being blacklisted as a non-cooperative country and territory. It is unlikely, however, to alter the structural causes of ML and its predicate offenses. To curb the peril of ML to Ethiopia’s economy and security, it is necessary to either transform the country’s economy from cash-intensive to cashless or enact comprehensive AML legal norms that reflect the country’s social, political, and economic settings.

Legalization of criminal income using DeFi: typical schemes and risk indicators

Objective: to increase the effectiveness of countering the use of typical criminal money laundering schemes by identifying the technological and legal vulnerabilities of the DeFi infrastructure: decentralized exchanges, blockchain bridges, decentralized wallets, and privacy-enhanced currencies.Methods: general scientific (analysis and synthesis, induction and deduction, theoretical modeling, legal interpretation) and special methods of scientific cognition (structural-functional, constructive, situational, innovative, target-oriented, program-target, and risk-oriented).Results: the main trends in the development of money laundering using decentralized finance were outlined; the determinative significance of DeFi technological characteristics in the genesis of money laundering was revealed; the main types of money laundering using decentralized finance were identified; the schemes of committing crimes were studied and the criminogenic potential of DeFi infrastructure (decentralized exchanges, blockchain bridges, mixers, privacy-enhanced tokens, etc.) was assessed.Scientific novelty: it is proposed to consider money laundering using DeFi as a special type of digital financial crime. The article proposes the author’s typology of money laundering, substantiates the idea that the matrix of traditional financial regulation and AML standards cannot be applied to decentralized finance. It is argued that prevention of money laundering using decentralized finance should be carried out in close connection with the identification of risk indicators and the development of effective control measures at the points of entry of criminal incomes to centralized exchanges.Practical significance: the analysis of typical mechanisms of money laundering using DeFi allows a systematic approach to the organization of early crime prevention and can potentially become the basis to develop recommendations for financial intelligence and monitoring services.

Parallel path detection for fraudulent accounts in banks based on graph analysis.

This article presents a novel parallel path detection algorithm for identifying suspicious fraudulent accounts in large-scale banking transaction graphs. The proposed algorithm is based on a three-step approach that involves constructing a directed graph, shrinking strongly connected components, and using a parallel depth-first search algorithm to mark potentially fraudulent accounts. The algorithm is designed to fully exploit CPU resources and handle large-scale graphs with exponential growth. The performance of the algorithm is evaluated on various datasets and compared with serial time baselines. The results demonstrate that our approach achieves high performance and scalability on multi-core processors, making it a promising solution for detecting suspicious accounts and preventing money laundering schemes in the banking industry. Overall, our work contributes to the ongoing efforts to combat financial fraud and promote financial stability in the banking sector.

ANALISIS PENEGAKAN HUKUM TINDAK PIDANA PENCUCIAN UANG TANPA PUTUSAN PIDANA ASAL KORUPSI

This research aims to analyze the process of law enforcement and prevention of money laundering crimes originating from corruption based on Law Number 8 of 2010 on the Prevention and Eradication of Money Laundering Crimes and the efforts made by third parties acting in good faith to recover their assets if the money laundering crime is not proven in the corruption offense. The research method used in this study is a normative legal research method. From the analysis conducted, the legal enforcement mechanism for money laundering crimes originating from corruption as the underlying offense is essentially bound by the Criminal Procedure Code (KUHAP), the Money Laundering Act, and the Corruption Criminal Act. In the law enforcement process for money laundering crimes, there are still obstacles, both in terms of substantive law (substantive law) and procedural law (formal law). Additionally, the efforts that can be made by third parties to recover their assets are not sufficiently regulated in Law Number 8 of 2010, which means that it may not fully satisfy the principles of justice and legal certainty. To combat and prevent money laundering crimes, especially those derived from corruption, it is not only necessary to have law enforcement agencies with competent human resources for investigation and prosecution, but it is also essential to build synergy among stakeholders to prevent and combat money laundering crimes. Given that combating money laundering crimes involves multiple institutions such as financial institutions, law enforcement agencies, the Financial Transaction Reports and Analysis Center (PPATK), and other relevant agencies as subsystems, including Bank Indonesia, financial service providers, goods and services providers, the Capital Market Supervisory Agency (BAPEPAM-LK), the Ministry of Communication and Information Technology, the Directorate General of Customs and Excise (DJBC), and law enforcement authorities.

Anti-Money Laundering by Group-Aware Deep Graph Learning

Anti-money laundering (AML) is a classical data mining problem in finance applications. As well known, money laundering (ML) is critical to the effective operation of transnational and organized crime, which affects a country's economy, government, and social wellbeings. Financial services organizations facilitate the movement of money and have been enlisted by governments to assist with the detection and prevention of money laundering, which is a key tool in the fight to reduce crime and create sustainable economic development. In the application of AML, user identity and financial behavior data are widely used to detect laundering transactions. In recent years, an increasing number of money laundering activities have been conducted by organized criminal gangs while most existing works still treat the actions of each account as independent identity behavior without considering the group-level conspired interactions. Therefore, in this paper, we propose a group-aware deep graph learning-based approach for organized money-laundering detection. In particular, we design a community-centric encoder to represent the nodes and attributes in user transaction graphs and derive the adjacent gang behaviors. Then, we devise a scheme of local enhancement to accommodate nodes with similar transaction features, which are aggregated into gangs for downstream detection. Extensive experiments on the real-world dataset from one of the largest bank card alliances worldwide show that our proposed method outperforms state-of-the-art methods in both offline and online modes, showing the effectiveness of money laundering detection with group-aware deep graph learning.

Shell Companies

The term ‘shell company’ has been heard quite often in recent years. Though most of the people have heard this term, not many people know the exact meaning behind it. In our country, there is no specific definition for this term. No legal definition is mentioned in The Companies Act or any other Act. Efforts to define it have been going on. However, it can be said that a shell company is a company that has no or few significant assets or operations. The main objective behind establishing such companies would include money laundering, tax evasion, converting black money into white money, etc., These shell companies affect the economy of a country by making the poor into poorer and rich into richer. In order to curtail these companies there is no specific provision, Act, or law related solely to shell companies. Issues related to these companies are generally dealt with under The Prevention of Money Laundering Act, 2002; Benami Transactions Prohibition (Amendment) Act, 2016; Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015; The Income Tax Act, 1961; Indian Penal Code; and The companies Rules 2017. Hence the Author is going to discuss what is a shell company, how to identify it, the reason behind the creation of shell companies, laws that are violated, the effects of shell companies, and the challenges faced while curtailing shell companies. Finally, the author will end the discussion with probable suggestions.

Prevention of Money Laundering Act, 2002 (PMLA) Critical Review of Key Provisions

The Prevention of Money Laundering Act, 2002 (PMLA) stands as a pivotal legislative tool in India, designed to combat money laundering and allied financial crimes, having a fundamental objective to thwart money laundering and facilitate the confiscation of property derived from or implicated in money laundering. Money laundering, as per the act, is expansively defined to encompass any process or activity attempting to legitimize illegally obtained proceeds, such as those arising from criminal activities. The act criminalizes money laundering activities, imposing stringent penalties that include imprisonment and fines for individuals found guilty of such offenses. Enforcement of the PMLA is orchestrated by various authorities, with the Enforcement Directorate (ED) at the forefront. The ED is entrusted with investigating and prosecuting offenses under the act. Embarking on an exploration of the intricate domain outlined by the Prevention of Money Laundering Act (PMLA) leads us to a realm where the intersections of financial regulations, criminal justice principles, and ethical considerations converge. By examining a series of pertinent adjudications related to the PMLA, we enter a reservoir of legal knowledge that significantly shapes the understanding and application of this crucial legislation. These legal determinations not only clarify the intricacies surrounding money laundering and its consequences but also offer invaluable guidance for legal practitioners, scholars, and policymakers striving to strike a balance between prosecuting financial offenses and safeguarding individual liberties. Within this compilation, we engage in an intellectual journey, mapping the continually evolving terrain of PMLA legal interpretations and presenting a comprehensive perspective on its development and significance within the framework of precedent law in the pursuit of justice. While serving as a significant tool in the battle against money laundering, the PMLA has faced criticisms, particularly concerning certain provisions such as the broad definition of "proceeds of crime", about the burden of proof placed on the accused, usual overreach, bail provisions etc. which become issues for critical analysis specially in preview of latest judgements of Hon. Supreme Court of India. Pending the review of the controversial judgment in 2022, specifically in the cases of Vijay Madanlal Choudhary v. Union of India, the Directorate of Enforcement (ED) seems to have gained significant momentum. The Supreme Court's scrutiny and criticism of the ED's actions, particularly in the unlawful arrest of two individuals in a money laundering case, have underscored the imperative for a comprehensive re-evaluation of the key provisions of the Prevention of Money Laundering Act (PMLA), while in Pankaj Bansal v. Union of India, in which it came down heavily on the ED for the illegal arrest of two accused in a money laundering case has necessitated the critical review of key provisions of PMLA. The methodology of study of Critical review of key provisions of Prevention of Money Laundering Act, 2002 involves librarian research in which books, articles and recent case laws of Hon. Supreme Court of India are referred.

Unternehmen werden durch dasselbe EU-Recht in den Mitgliedstaaten sehr unterschiedlich belastet – hier am Beispiel des Transparenzregisters

Abstract In order to prevent money laundering and terrorist financing, the European Union has issued the so-called Anti-Money Laundering Directive, on the basis of which a transparency register has been set up in every EU member state. This register is identifying the beneficial owners of legal entities. This article is looking into the costs and bureaucratic burdens associated with registration for company requirements in France, Italy, Austria and Germany and the reasons for the sometimes considerable differences.

Vai trò của ngành Ngân hàng trong hoạt động phòng, chống rửa tiền tại Việt Nam

In recent years, money laundering has become a serious problem in many countries and has always received the attention of international organizations and policymakers. As professional financial institutions, banks are not only a place to conduct financial transactions but also undertake their social responsibilities in protecting the national financial system from illegal and criminal activities. One of the most important tasks of the banking industry is anti-money laundering (AML). Using methods of synthesizing and analyzing documents, this article conducts an overview of AML in Vietnam; highlight the role of the banking industry in AML. Research results show that the current situation of money laundering risks in Vietnam is very complex, spanning many groups of source criminals as well as different sectors of the economy. and the role of the banking industry in AML is very important. From there, the article proposes a number of solutions to increase the effectiveness of detecting and preventing money laundering crimes in the banking industry.

Money Laundering Prevention through Regulatory Technology and Internal Audit Function in Indonesia Banking Sector

Money laundering poses a significant challenge globally, involving using cash to conceal the origins of funds. With the rise of digitalisation and the adoption of financial technology (FinTech), the financial sector has been compelled to adapt to these changes. The COVID-19 pandemic has further accelerated the use of FinTech services, including digital banking, to address social distancing concerns and enhance customer convenience. Despite having an index of risk considered moderate for money laundering, Indonesia continues to be a destination for these types of illegal activities. Anti-money laundering (AML) and counter-terrorism financing (CFT) programs must be implemented, especially in all financial service providers that Bank Indonesia oversees.Additionally, the internal audit function is crucial in identifying money-laundering activities within banks. However, there needs to be more research regarding integrating RegTech and evaluating internal audit functions in preventing money laundering in Indonesian banks. This paper aims to address this gap by examining the benefits of RegTech solutions and the role of internal audit functions in preventing money laundering. The findings can be used to enhance regulations and implement effective measurement to combat money laundering and illicit activitivities. Furthermore, the study highlights the importance of Indonesia's membership in the Financial Action Task Force (FATF) to strengthen the country's AML framework and contribute to global policies on AML and countering the financing of terrorism.

Applicability of Legislations Criminalizing Economic Offences to the Cases of Trafficking in Persons for Commercial Sexual Exploitation.

The paper analyses the current legislation regarding Economic Offences in Maharashtra, namely Maharashtra Control of Organized Crime Act, 1999, Prevention of Money Laundering (Amendment) Act, 2012 and the possibility of charging the accused for Commercial Sexual Exploitation of trafficked under economic offences. The paper establishes the scope of applicability of Economic Offences to plug the gap of prosecution and smooth functioning of the Criminal Justice System.

The Role of Legal Education in Raising Awareness of Financial Institutions on the Prevention of Money Laundering Crime in Property Transactions

Money laundering is an illegal activity that has a serious impact on the global economy. It involves the process of concealing or covering up traces of the origins of illegal funds by channelling them through legitimate financial transactions. One sector that is vulnerable to money laundering is property transactions, where criminals often use investments in property to launder their dirty money. This research will explain the role of legal education in raising awareness of financial institutions on the prevention of money laundering in property transactions. This research is a literature review that uses a qualitative approach, which implies that data will be analysed and interpreted using information and text obtained from various sources. The results of the study show that legal education plays a crucial role in raising the awareness of financial institutions on the prevention of money laundering in property transactions. This awareness is needed especially in property transactions that have a high risk of abuse and money laundering, given that they involve large sums of money and high asset values. The importance of legal education is seen through several key aspects, including understanding of the law, risk identification, legal compliance, business ethics, employee training, co-operation with authorities, and internal policy development.

Major International Competition Funding and Money Laundering Risks

The sports sector is often liable for illegal activities, such as money laundering. Football, the most popular sport in the world, is one of several places where illegal money might enter, with the UNODC estimating that the sport facilitates the laundering of roughly USD 140 billion annually. The aim of this paper is to identify the main money laundering schemes used in the sports industry and to provide a complete plan for mitigating these risks. Key methods of money laundering in the sports sector, such as football example, are considered. Key cases of illicit activities in football are considered in the context of money laundering and other criminal offences. A comprehensive strategy is proposed to prevent money laundering in professional sports, including anti-money laundering (AML) and counter-terrorism funding (CTF) legislation and regulations, due diligence, transparency, sanctions, whistleblower protection, international collaboration, training and education, and the use of cutting-edge technology such as AI and machine learning. These preventative measures require constant awareness and innovation to be successful and include establishing a regulatory organization with responsibility for regulating money dealings in the sports industry, due diligence, transparency, sanctions, whistleblower protection, international collaboration, training and education, and the use of cutting-edge technology. This paper’s results may be used by researchers and analysts, professional associations, non-governmental organizations, legislators, and the general public.

New Cryptocurrency Regulation in Lithuania and the European Union

The paper examines the major threats and related legal challenges posed by activities based on blockchain technology, such as cryptocurrencies, smart contracts, Decentralised Autonomous Organisations (DAOs), the Decentralised Finance System (DeFi), and Non-Fungible Tokens (NFTs). In the light of practical findings, the provisions of the Lithuanian Law on prevention of money laundering and terrorist financing and MiCA regulation are being analysed. The paper arrives at the conclusion that the new national law should effectively contribute to the prevention of cybercrimes, money laundering, terrorist financing, and violation of international sanctions. Nevertheless, a number of other issues typical for cryptocurrencies and other forms of utilisation of the blockchain technology remain unaddressed. Certain loopholes will be partly filled in by MiCA regulation. However, it will not create the required scope of legal certainty for other than cryptocurrencies forms of technology utilisation. On the basis of these findings, the paper puts forward proposals for the further development of the regulation of activities based on the blockchain technology.