ABSTRACT
This study examines whether we can learn from the behavior of blockchain‐based transfers to predict the financing of terrorist attacks. We exploit blockchain transaction transparency to map ...millions of transfers for hundreds of large on‐chain service providers. The mapped data set permits us to empirically conduct several analyses. First, we analyze abnormal transfer volume in the vicinity of large‐scale highly visible terrorist attacks. We document evidence consistent with heightened activity in coin wallets belonging to unregulated exchanges and mixer services—central to laundering funds between terrorist groups and operatives on the ground. Next, we use forensic accounting techniques to follow the trails of funds associated with the Sri Lanka Easter bombing. Insights from this event corroborate our findings and aid in our construction of a blockchain‐based predictive model. Finally, using machine‐learning algorithms, we demonstrate that fund trails have predictive power in out‐of‐sample analysis. Our study is informative to researchers, regulators, and market players in providing methods for detecting the flow of terrorist funds on blockchain‐based systems using accounting knowledge and techniques.
Modern times are marked by the march of preventive theories of punishment. Prevention is a promise of benefit, of social utility, as accordingly the practices of punishment promise us an impact on ...future offending. Preventionism has often been understood as a problem and even as a threat, since setting such a vague goal on our criminal law and criminal justice, we might risk loosening all the limiting principles concerning what can be done by means of criminal law. It is precisely these concerns that have triggered a growing interest in the topic. In the following, we will first present some historical lines of development which have prepared us for a turn towards prevention. Interventionist policies of the state towards society are nothing new themselves. My own take on the subject will be exemplified in a discussion of two recent areas of intensive international regulation: money laundering and terrorist financing.
In recent years, the scale of criminal activity has reached alarming levels and the globalisation of the financial services industry and advances in technology have made the financial aspects of ...crime increasingly complex. Money laundering and terrorist financing are most often carried out by economic entities. Accounting professionals in general and financial auditors in particular occupy positions that enable them to fight criminal acts of this nature. The overall aim of the research is to assess the extent to which the financial auditor can contribute to the prevention or mitigation of money laundering and terrorist financing at the level of audited companies, following the adoption of legislative changes. More specifically, the first direction of this research consists in identifying and analyzing the variables that characterize the susceptibility of the involvement of companies, listed on the BSE on the regulated market, in acts of money laundering and terrorist financing in the period 2019-2020 by sector of activity. The second direction of the research aims to assess the extent to which the financial auditor can contribute to preventing and combating money laundering and terrorist financing by identifying and reporting the factors of occurrence of risks of this nature as key audit issues. Statistical methods of multivariate data analysis are used to test the research hypotheses.
Purpose
Money laundering and terrorism financing use the banking sector system illegally and result in enormous losses for the state and nation. Regulatory Technology (RegTech) is an important part ...of effectively preventing money laundering and terrorism financing. However, the implementation of RegTech related to the prevention of money laundering and terrorist financing, especially in the Indonesian banking sector, has not been widely studied and discussed. Therefore, this study aims to provide empirical testing evidence regarding the effectiveness of RegTech implementation in the Indonesian banking sector to prevent money laundering and terrorist financing.
Design/methodology/approach
This study uses primary data obtained through a survey distributed to 160 bankers who work in eight different banks in Indonesia with a 95% confidence level and a confidence interval of 7.75. The criteria needed to determine the sample in this study are individuals who actively work as staff whose work is directly related to banking; individuals who are actively working in banks registered with OJK; individuals who have been actively working in the banking sector in Indonesia for at least three years. The data that has been obtained were analyzed using the SmartPLS application to test the validity and reliability, descriptive statistics and structural models (inner model).
Findings
The results of this study indicate that electronic know your customer (eKYC), transaction monitoring (TM), cost and time efficiencies (CTE) influence the prevention of anti-money laundering (AML) and countering financing of terrorism (CFT) in the Indonesian banking sector. However, eKYC and CTE have little influence on AML-CFT in the Indonesian banking sector. Meanwhile, TM has a moderate influence on AML-CFT in the Indonesian banking sector. In addition, in general, most bankers agree that the bank they work for has followed the guidelines, policies and regulations that have been given.
Originality/value
This study uses the Indonesian banking sector as a research subject that raises the effectiveness of the implementation of the use of RegTech to prevent money laundering and terrorism financing.
Purpose
This paper aims to examine the current situation in Afghanistan after the rapid withdrawal of US troops and the Taliban takeover of the country, and how this has shed new light on the ...financing of terrorism.
Design/methodology/approach
Informal interviews were conducted with alleged perpetrators as well as formal interviews with compliance experts to further investigate the subject of terrorist financing in the wake of the latest changes in Afghanistan and terrorist financing through hawala banking. The interviewees were analysed through a qualitative analysis.
Findings
Based on the interviews, it was concluded that both illegal and legal sources of income could be used by terrorist financiers. This study also shows why hawala represents a significant challenge for counter-terrorist financing policies.
Originality/value
While existing literature sufficiently links parallel banking systems, such as hawala, to terrorist financing, this study shows the implications for Switzerland’s perceived commitment against financial crime in light of current changes in Afghanistan, and in addition, certain dogmatic weaknesses of Article 260quinquies of the Swiss Penal Code are critically analysed.
Purpose This study aims to evaluate the suspicious transaction reporting (STR) as a financial intelligence tool to identify the potential strengths and limitations of STR and to come up with the ...criteria, which will make this tool an effective one in early detection of terrorist financing activities. Design/methodology/approach Considering the research aim, this research uses the funnelling method for identifying effectiveness criteria. Funnelling is a method of literature review that helps find pertinent literature by refining the search through filtering the available research (Ridley, 2008). Using this method, the researcher first applied the criteria of actionable intelligence to filter the financial intelligence tools to select the most promising and important tool (suspicious transaction reporting) for early detection of terrorist financing activities. The funnelling method was also applied to derive the effectiveness criteria from the operational features, and corresponding limitations, of the suspicious transaction reporting system. The funnelling method was also used to identify those operational features and limitations of suspicious transaction reporting that have the most direct relevance to the early detection problem of suspicious transaction reporting. Findings There are some operational features of STR that give rise to certain limitations that undermine its effectiveness in terms of early detection of terrorist financing activities. The limitations of STR necessitate a search for criteria that will make STR effective in early detection of terrorist financing activities. Based on the operational features and their corresponding limitations, effectiveness criteria for STR have been derived in this study. It is shown how these effectiveness criteria can remove the limitations of STR. Research limitations/implications The list of operational features and the corresponding limitations based on which the effectiveness criteria have been derived may not be exhaustive. There may have other operational features, and corresponding limitations that also make STR largely ineffective in the early detection of terrorist financing activities, and for which more effectiveness criteria should also be derived. Practical implications The limitations and the effectiveness criteria will pave the way for redesigning STR in such a way that will make it highly useful for detecting financing activities relating to imminent terrorist attacks. Social implications The society will experience fewer terrorist attacks that will make the society peaceful, happy and vibrant. Originality/value In this study, the effectiveness criteria of STR for early detection of terrorist financing activities have been derived in an innovative way by deducing them from the operational features of STR and the corresponding limitations.
•Technology advances are creating new money laundering and terrorist financing risks•This Delphi study identifies these risks, relevant stakeholders and countermeasures•Weaknesses in current ...countermeasures and dissent across industries are explored•A new prevention standard (3P) and framework (DECODE) are devised as policy solutions•These solutions aim to pre-emptively counter new risks and address points of dissent
Financial innovation and technological advances are growing at a pace unrivalled by any other period in history. However, as more stakeholders enter these markets, criminals are exploiting their inadvertent security deficiencies to launder illicit funds or finance terrorism. This three-round policy Delphi study involved consultations with 52 experts from different industries and countries to understand future risk-prone technological developments, possible prevention measures and relevant stakeholders. Results highlight a range of money laundering and terrorist financing risks being enabled by advances in distributed ledger technologies (predominantly through cryptocurrencies), new payment methods and financial technology (FinTech). These threats include privacy-enhanced cryptoassets, transaction laundering, e-currencies and digital-only financial services. Findings also suggest that detection-based countermeasures (currently the primary preventative approach) can be coupled with more diverse countermeasures to increase effectiveness. However, the unique circumstances and constraints specific to different stakeholders will affect the nature, utility, and extent to which they can implement certain countermeasures. As such, a ‘one-size-fits-all’ approach to prevention is undesirable. Drawing on expert insight from the study, we propose a framework and a 3-point standard of implementation to motivate cost-effective, user-friendly, and innovation-friendly measures to improve suspicious activity detection and futureproof technologies before their criminal exploitation becomes mainstream.
After twenty years of global counterterrorist financing (CTF) policy and practice, there is little consensus on what these have achieved, and little empirical evidence to determine if, or how, CTF ...works to reduce the financing of terrorism or terrorism more broadly. In many cases, the lack of clarity on these issues is due to poor articulation of the specific approaches to countering the financing of terrorism (CTF). The main approaches considered in the literature are the criminalization of terrorist financing and the financial exclusion (sanctions) approach, but there are many other identifiable policy approaches to CTF. In order to clarify our understanding of CTF, I examined over 550 pieces of scholarly literature covering both terrorist financing and CTF to develop a typology of seven main approaches to CTF, some of which have been studied and evaluated far more than others, but all of which are part of the "bucket" of policy options available to states. These different CTF approaches need to be considered and evaluated individually in order to design better policies and practices.
Abstract Islamist terrorism poses a significant threat to global security. Current prevention measures focus largely on combating terrorist financing in order to hinder terrorist organizations’ ...ability to pay their fighters and orchestrate attacks, with the aim of weakening their structures. The banking sector in particular is subject to strict regulations that intend to increase transparency and identify suspicious transactions. However, the present study illustrates that the banking sector continues to offer opportunities for terrorist financing. Using a qualitative study of 15 presumed providers of illegal financial services and 15 compliance experts to detail how terrorist financiers abuse the financial system to fund terrorist organizations, this paper has implications for both compliance officers and regulating authorities. In particular, the perceived challenges facing those at the frontline of the banking sector in detecting and preventing terrorist financing are analyzed with the intention to establish avenues for future research and countering the financing of terrorism regulation.
