Purpose
The purpose of this paper is to examine – using crime script analysis – the practical effectiveness of internationally endorsed and universally recognised counter-terrorism financing (CTF) ...standards in preventing the movement of money for the purposes of terrorism. The paper does not seek to examine the originating circumstances of terrorist finances or how laundered value is assigned.
Design/methodology/approach
Preliminary evaluation focuses on the discrepancies between the practices of money laundering and terrorist financing. Following an introduction to crime scripts, internationally endorsed anti money laundering (AML)/CTF practices are discussed to identify the process used to trace, prevent and limit money laundering and terrorist financing. Several terrorist financing case studies are then aligned to the process of crime script analysis to determine whether existing AML/CTF practices are effective in preventing terrorist financing.
Findings
The AML model “Placement, layering, integration” is only relevant to CTF in the comparatively rare cases when the origin of the money is crime. This creates a false sense of security through over reliance on AML/CTF for CTF purposes. A crime script approach can be applied to terrorist finance, but it is currently hindered by insufficient reporting of low level financing of terrorists, their addresses and associates. Law enforcement make insufficient use of financial intelligence – as a routine practice – in their crime and terrorist investigations; they have not adopted parallel investigation as a routine approach and consequently remain largely unconnected with the AML/CTF regime.
Practical implications
Utilising terrorist financing case studies, this paper identifies that existing AML/CTF international standards and practices are not adequate for controlling the movement of funds for financing terrorism because of the lack of focus on a specific script that aligns to known terrorist finance methodologies. While the paper identifies that existing AML/CTF international standards are thorough, the process underpinning the financing of terrorism is too dissimilar to the process of money laundering, namely, placement, layering, and integration, to support practices associated with terrorism prevention and detection.
Originality/value
This paper provides an examination of the practicalities behind the countering of terrorist financing from a compliance and investigative perspective. The paper is of interest to those involved in policy, compliance and investigations associated with terrorist financing.
Purpose
The purpose of this paper is to illustrate how cryptocurrencies are being used as a vehicle for financial crime (such as money laundering, terrorist financing and corruption) and propose a ...more effective international standard for regulation that uses the Liechtenstein blockchain act as a benchmark.
Design/methodology/approach
This paper investigates how cryptocurrencies facilitate financial crime through a qualitative study consisting of interviews with 10 presumed providers of illegal financial services and 18 international compliance experts.
Findings
This study shows that cryptocurrencies are a highly suitable vehicle for money laundering, terrorist financing and corruption and that current compliance efforts in the cryptocurrency sector are ineffective.
Research limitations/implications
The presented findings illustrate that for a more effective combat of financial crime via cryptocurrency, an international standard for blockchain and cryptocurrency regulation must be created. This paper suggests that Liechtenstein’s innovative and comprehensive blockchain act could be used as a basis for said standard. Practitioners should also consider cooperating transnationally when prosecuting financial crime via cryptocurrency.
Originality/value
The fact that cryptocurrencies facilitate financial crime is widely known. However, this study combines the perspectives of both compliance experts and presumed criminals to gain a comprehensive understanding of the techniques that money launderers, terrorist financiers and corrupt public officials use. This paper examines the potential for the innovative Liechtenstein blockchain act, which has, thus, far not received empirical attention, to set the benchmark for international regulations.
The article examines foreign and domestic experience in organizing financial monitoring systems, systematizes the requirements for its implementation in Ukraine. The basic legal norms, enshrined in ...the joint directives of the European Parliament and of the Council of the EU, and underlying the national financial monitoring systems of the EU countries and Ukraine have been also analyzed. Taking into account the fact that the risk-based approach is the main basis for the effective implementation of all FATF recommendations, the nature of the risk of money laundering / financing of terrorism and the criteria for their assessment have been investigated. A scheme of improving the process of financial monitoring in a bank has been developed, as well as a number of measures have been proposed to raise the level of adhering to the legislation in the field of anti-money laundering and counter-terrorist financing by the banking sector.
Purpose
In the aftermath of the 2021 Financial Action Task Force Mutual Evaluation Report, legislators, supervisory bodies, law enforcement and the like are focusing on preventing South Africa from ...being greylisted. This paper performs an analysis of the 2021 South African Financial Action Task Force (FATF) Mutual Evaluation, specifically Recommendation 8 and Immediate Outcome 10. The purpose of this paper is to address the concerns raised and assist those tasked with implementing remediation measures.
Design/methodology/approach
Secondary sources such as legislation, case law, textbooks and peer-reviewed publications are used in addressing the concerns. A major focus is placed on the evaluation itself, with an analysis of Recommendation 8 and Immediate Outcome 10.
Findings
Despite the non-compliance rating and a low level of effectiveness received regarding non-profit organisations, authorities might not place a large focus on remediating this, as more pertinent issues arise in the report. The lack of focus in this area adds to the likelihood of grey listing by FATF. However, with co-operation from the relevant stakeholders, these low ratings can be improved.
Originality/value
Since the Mutual Evaluation’s release in October 2021 there have not been any papers addressing the highlighted issues in the non-profit sector in South Africa, to the best of the authors’ knowledge. This paper will be the first of its kind and will be of use to authorities as regards mitigating the concerns raised by FATF.
Overseas diasporas have long been exploited by terrorist organisations seeking funding and support from areas beyond their operation. The Kurdistan Worker's Party (PKK), active in south-eastern ...Turkey, is no exception and maintains a significant international presence. This paper uses seventy-three survey responses and thirteen interviews amongst London's Turkish and Kurdish diaspora to provide an original and comprehensive insight into the PKK's overseas operations, including their offending patterns, methods, hotspots, offender/victim profiles and existing countermeasures. Respondents were also consulted on new community-based prevention measures designed to address limited law enforcement responses and the laissez-faire approaches of diaspora host countries. This strategy, which combines crime science and behavioural economic theories, consists of Clarke's "Situational Crime Prevention" theory and Thaler and Sunstein's "Nudge" theory (SCP+N). The results indicate that the PKK creates criminal opportunities by "legitimising" itself across diasporas by invoking ideological sympathy and social dependence (conceptualised as "constructed legitimisers"), ensuring minimal resistance to its activities. SCP+N is motivated as an effective counterstrategy, addressing both the rational and impulsive nature of offending. The overall theoretical contribution of this paper is to assess overseas terrorist financing through a prevention-oriented, situational and behavioural framework, and to propose a community-based strategy to effectively counter such activities.
In The Banker's
Blacklist , Julia C. Morse demonstrates how
the Financial Action Task Force (FATF) has enlisted global banks in
the effort to keep "bad money" out of the financial system, in the
...process drastically altering the domestic policy landscape and
transforming banking worldwide.
Trillions of dollars flow across borders through the banking
system every day. While bank-to-bank transfers facilitate trade and
investment, they also provide opportunities for criminals and
terrorists to move money around the globe. To address this
vulnerability, large economies work together through an
international standard-setting body, the FATF, to shift laws and
regulations on combating illicit financial flows. Morse examines
how this international organization has achieved such impact,
arguing that it relies on the power of unofficial market
enforcement-a process whereby market actors punish countries that
fail to meet international standards. The FATF produces a public
noncomplier list, which banks around the world use to shift
resources and services away from listed countries. As banks
restrict cross-border lending, the domestic banking sector in
listed countries advocates strongly for new laws and regulations,
ultimately leading to deep and significant compliance
improvements.
The Bankers' Blacklist offers lessons about the peril
and power of globalized finance, revealing new insights into how
some of today's most pressing international cooperation challenges
might be addressed.
Purpose
This study aims to highlight the risks and threats posed by crowdfunding. It also looks at the new European Union regulation on crowdfunding, which is intended to give participants confidence ...that there will be specific minimum regulatory standards to protect parties against mis-selling issues affecting some platforms.
Design/methodology/approach
This paper is based upon a thorough literature review.
Findings
Crowdfunding is an essential alternative for financing commercial and non-commercial projects. Although it is a fast-growing digital financial tool, it can also be considered extremely risky. It can be an ideal platform for money laundering and can facilitate the financing of terrorism and fraud.
Originality/value
Crowdfunding is still in its infancy, so the literature has not yet sufficiently addressed the compliance risks of crowdfunding. As a result, there is a significant research gap. Thus, this study aims to analyse and propose suggestions to mitigate the risks that all crowdfunding stakeholders may face when deciding to participate in a crowdfunding activity or when they want to set one up.
The COVID-19 (coronavirus) crisis was a reminder, if any were needed, that criminal creativity thrives in times of chaos, exploiting people’s fears. Unsafe face masks, counterfeit drugs, and suspect ...medical equipment flooded the market, touted as miracle cures against the coronavirus by unscrupulous actors wanting to turn a quick profit. Companies with no record in health won big government contracts and, as people’s situation deteriorated, organized crime stepped in to lend a “helping hand” to those suffering financial distress. Where most people saw a global public health and
economic crisis, criminals saw an opportunity. What this criminal behavior, indeed almost all financial economic crime, has in common is that the funds involved move through the formal financial system. The service providers that execute those transactions are in a good position to gather firsthand intelligence on what is happening. For this reason, banks and other financial institutions have anti-money-laundering and countering the financing of terrorism (AML/CFT) obligations to find out who is paying whom and why and, if necessary, to alert the authorities. Financial institutions are the first line of defense against this criminal behavior; they are the gatekeepers to the international financial system.
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