Journal of Money Laundering Control

Prevention of money laundering in Dutch casinos : Table of Contents

Lilith C. Waterman, Jasper J. van der Kemp — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to assess the possibilities of formulating risk behavior characteristics to determine a guest's risk category on money laundering in casinos. Design/methodology/approach – A total of 148 guests (27 women and 121 men) and their registered events (1,184 events) are analyzed by using a form of canonical correlation analysis: OVERALS. Out of the 148, 37 guests have been excluded from financial services on suspicion of criminal behavior; this group appears to show an unacceptable risk. Another 37 guests are supposed to cause a low risk and 74 guests a medium/high risk. Findings – The results suggest that the three groups are very distinct in gambling and behavioral characteristics. It seems remarkable that the variables resembling “keeping an eye on the guests” are mainly in the risk category medium/high. Research limitations/implications – A large part of the research group was deliberately composed of those who brought a high risk to Holland Casino. For that reason, the research group is not representative for the population of the visitors to Holland Casino. Practical implications – On the basis of this paper, casinos are able to validate and improve their safety policy concerning money laundering. Also other financial institutions can analogically apply the used research method. Originality/value – This topic has hardly ever been researched, although the need is apparent. Casinos are obliged to their guests and society as a whole to provide a safe environment. Besides that, it is illegal to facilitate money laundering.

Data growth, the new order of information manipulation and consequences for the AML/ATF domains : Table of Contents

Dionysios S. Demetis — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to deconstruct the problem of data growth as a complex contemporary phenomenon and discuss its implications for the domains of anti-money laundering (AML) and anti-terrorist financing (ATF). Design/methodology/approach – The theoretical approach of the paper is based upon an examination of the fundamental ideas around information growth, along with the tradition of systems theory and is based upon many of the theoretical concepts discussed by Niklas Luhmann. The concept of distinction is used throughout the paper to discuss technological consequences. Findings – The volume of data for manipulation and its implications on profiling AML and ATF are discussed while the issue data growth are presented as an elemental and core issue within the paper. Practical implications – The practical implications of this paper relate to how technology should be appropriated within financial and other institutions and how the decision-making processes of traditional bureaucracies surrounding AML/ATF should reflect on their utilization of technology. Originality/value – The originality of this paper lies in its unique dealing of the problem of data growth through its implications and a new theoretical concept is introduced, the concept of electreaucracy to denote the systemic technological interference in bureaucratic conditions and how these influence AML/ATF.

Supply and demand: anti-money laundering by the compliance industry : Table of Contents

Antoinette Verhage — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to discuss rise and growth of the “compliance industry” in Belgium by looking at the reasons why this industry became such an important element in the battle against money laundering. The “compliance industry” represents the commercial market that surrounds the battle against money laundering. We aim to map this industry and want to explore how this industry fits in the battle against money laundering. Design/methodology/approach – This paper represents the final phase of a PhD research, studying the origins of battle against money laundering and the private actors within this battle, the compliance officers. The research starts from a criminological point of view. This paper is based on a survey of compliance officers and interviews with both compliance officers and members of the “compliance industry”. Findings – The compliance industry is a booming industry on the market on anti-money laundering. Their services are mainly focused on software packages, advice, training and consultancy. Although this industry has grown as a result of legislation and regulation, there are some problems, mainly related to privacy issues. Research limitations/implications – For this paper, only a limited amount of corporations within the compliance industry were interviewed, which may result in an incomplete picture of this industry. Originality/value – Belgium implemented a regulatory framework in 2001, obliging the installment of a compliance function within banks. The value of this research lies in the fact that neither this booming professional group, nor the surrounding market (including the compliance industry) has never been subject of research before.

The war against corruption in Nigeria: a new role for the FIRS? : Table of Contents

Ige Omotayo Bolodeoku — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to examine the implications which the recent Federal Inland Revenue Service (Establishment) Act (FIRS Act), 2007 have for the ongoing war against corruption in Nigeria. Design/methodology/approach – The paper examines the relevant provisions of the Act, which confers on the Federal Inland Revenue Service (FIRS) some anti-corruption-related powers. It discusses how the FIRS may benefit from the existing third-party information regime under the Money Laundering (Prohibition) Act (MLA), 2004, and the amendments that should be made to the MLA to make the information regime under it serve the FIRS' purposes. Findings – The paper points out that the main anti-corruption-related power conferred on the FIRS, to investigate the symmetry between taxpayers' lifestyles and their declared incomes, is similar to that conferred on the Economic and Financial Crimes Commission. It notes that declarations by certain categories of public officers to the Code of Conduct Bureau, which the Constitution (1999) contemplates, can provide the necessary base information for the FIRS in the discharge of its anti-corruption-related duties. Practical implications – The paper discusses the desirable amendments to the MLA, 2004 that could make the third-party information regime under the Act useful for the FIRS in the discharge of its anti-corruption responsibilities. It also discusses how the taxpayer identification number, which the FIRS Act empowers the FIRS to issue, may be used as income tracker and thus play the type of role which the social insurance number or the social security number plays in Canada and the USA, respectively. Originality/value – The paper explores the possibility of alternative, and equally potent, institution to prosecute the anti-corruption war in Nigeria. It is the first to examine how the FIRS, which the newly enacted FIRS Act, 2007 creates, may serve as that alternative. It argues that the power to investigate the symmetry between taxpayers' lifestyles and incomes, which the FIRS Act confers on the FIRS, reinforces a claim that the Act concedes to the FIRS some anti-corruption-related responsibilities.

Payback time? To what extent has the new policing of assets provided new assets for policing? : Table of Contents

Peter A. Sproat — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to identify the extent to which the “new policing of assets” has produced new assets for policing in the UK. Design/methodology/approach – This is achieved by producing an estimate of both the financial benefits and costs to the public purse based upon official documentation where possible. Findings – Asset recovery and anti-money laundering work has produced some assets to be used for policing, but even using a conservative methodology it is unlikely to have produced a financial benefit which is much more than its costs, indeed the costs are likely to have been greater. Research limitations/implications – Many parts of the cost are estimates; therefore, researchers are encouraged to ascertain the exact costs. Practical implications – Of interest to those interested in the costs of government policies and regulations, especially the regulated sector burdened by the costs of complying with the money laundering legislation. Originality/value – The paper attempts to fulfill the government's desire to improve the quality of the cost-benefit analyses of the money laundering regime.

The money laundering risk posed by low-risk financial products in South Africa: Findings and guidelines : Table of Contents

Louis de Koker — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to investigate the level and nature of criminal abuse of financial products that are classified as posing a low anti-money laundering/combating of financing of terrorists (AML/CFT) risk in South Africa to determine the effectiveness of the simplified due diligence measures that apply to these products. Design/methodology/approach – The paper presents empirical research on the views of bank officials and law enforcement officials regarding the criminal abuse of South African financial products that are subject to simplified customer due diligence controls. Findings – South Africa's AML/CFT laws allow certain deposit-taking institutions and money remitters to implement simplified customer due diligence measures in relation to specific low-risk products that are mainly designed to allow previously unbanked persons to access financial services. The paper finds that the products have been abused by criminals but that the incidence of such abuse and the amounts involved are low. The paper investigates possible weaknesses in the current system that allow limited criminal abuse to occur. It concludes with a number of guidelines that emerge from the study and are of value to regulators that wish to implement a similar system. Originality/value – The South African AML/CFT scheme in relation to low-risk products is of interest to many international regulators that are grappling with the interplay between effective AML/CFT controls and the impact of strict controls on the ability of socially and economically excluded persons to access appropriate financial services. This paper provides evidence that appropriately designed controls can facilitate financial inclusion while limiting the risk of criminal abuse.

The international standards of customer due diligence and Chinese practice : Table of Contents

Tang Jun, Lishan Ai — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to systematically introduce the latest documents of customer due diligence (CDD) issued by international organizations and developed countries, and to examine practice of CDD in China. Design/methodology/approach – This paper reviews the latest regulations and guidelines of CDD at international level, and critically examines the practice on CDD compliance in China. Findings – Although China has developed series of provisions concerning CDD since 2007 to response the international requirement set by Financial Action Task Force, the practical compliance still has long way to improve. Originality/value – This paper usefully highlights the difference between Chinese practice and international standards, and proposes institutional reforms on CDD compliance in Chinese financial sectors.