Beyond placement, layering and integration – the perception of trade-based money laundering risk in UK financial services

2019 ◽  
Vol 22 (4) ◽  
pp. 614-625 ◽  
Author(s):  
Mario Menz
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Design Methodology ◽  
Banking Sector ◽  
Trade Finance ◽  
Content Type ◽  
Proceeds Of Crime ◽  
The Uk ◽  
Practical Implications ◽  
Insight Into

Purpose The purpose of this study was to investigate the perception of trade-based money laundering in Letters of Credit (“L/C”) transactions among trade finance practitioners in the UK banking sector and to compare it to the perception of the same risk by the Financial Conduct Authority (“FCA”), the regulator of the UK’s banking sector. Design/methodology A survey was used to carry out research among financial services professionals engaged in trade finance in the UK. Findings This paper contributes to the existing literature in a number of ways. First, it investigates the perception of trade-based money laundering risk from the perspective of financial services professionals, which has not previously been done. Second, it argues that the perception of trade-based money laundering in financial services is overly focussed on placement, layering and integration, and that the full extent of the offence under the Proceeds of Crime Act 2002 is less well known. It further found that financial services firms need to improve their understanding of the nature of trade-based money laundering under UK law. Practical implications This study argues that the financial services sector’s perception of trade-based money laundering risk in trade finance is underdeveloped and makes suggestions on how to improve it. Originality/value It provided unique insight into the perception of trade-based money laundering risk among financial services professionals.

Lifting the veil on beneficial ownership

2020 ◽  
Vol 23 (4) ◽  
pp. 717-734
Author(s):  
Paul Michael Gilmour
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Developing Economies ◽  
Content Type ◽  
Intergovernmental Cooperation ◽  
Beneficial Ownership ◽  
The Veil ◽  
The Uk ◽  
Practical Implications ◽  
Insight Into

Purpose This paper aims to critically explore the challenges facing the UK in implementing registers of beneficial owners, a measure mandated by the EU’s anti-money laundering (AML) directive to enhance beneficial ownership transparency. Design/methodology/approach This study systematically reviews the literature surrounding beneficial ownership transparency to critically analyse the extent to which challenges facing the UK, impact upon its ability to successfully implement registers of beneficial owners. Findings This study demonstrates that a lack of beneficial ownership transparency facilitates money laundering by concealing corrupt wealth and frustrating authorities’ efforts to trace illicit finance. It demonstrates that implementing registers of beneficial owners may be a superficial approach to tackling the multifaceted problem of money laundering. Better intergovernmental cooperation is required to improve beneficial ownership transparency and to ensure measures to curb offshore money laundering are successful. Research limitations/implications This research focuses on one aspect of AML control from the UK’s perspective. Further work is needed to investigate the concerns from the perspective of offshore jurisdictions and how global AML rule affects developing economies. Practical implications The study informs policymakers and other professionals implementing the UK’s registers of beneficial owners to enhance future strategies and better combat offshore money laundering. Originality/value This is the only study to explore the challenges facing the UK in implementing registers of beneficial owners, thus providing novel insight into the moral, legal and practical dilemmas to imposing AML control.

In the shadow of the dark twin – proving criminality in money laundering cases

2016 ◽  
Vol 19 (4) ◽  
pp. 447-458 ◽  
Author(s):  
Kenneth Murray
Keyword(s):  
Law Enforcement ◽  
Supreme Court ◽  
Money Laundering ◽  
Design Methodology ◽  
Content Type ◽  
Fit For Purpose ◽  
Proceeds Of Crime ◽  
Uk Supreme Court ◽  
The Uk ◽  
Practical Implications

Purpose This paper aims to highlight the persistent influence of the concept of “predicate offence” in respect of how the crime of money laundering is conceived and discussed, and to discuss how this inhibits the ability to prosecute the crime even where, as is the case in the UK, “predicate offence” is not a requirement of the relevant legislation. Design/methodology/approach Discussion of a recent UK Supreme Court judgment, R v GH, in particular, how the import of it appears to contrast with perceptions offered by the experience of two recent money laundering convictions on Scotland, where no evidence was led on establishing the money was criminal before the criminal act was libelled as money laundering. Design of modern money laundering schemes are illustrated and assessed in terms of how they can be prosecuted in the context of prevailing interpretations of the law. Findings The effectiveness of the UK money laundering offences as set out in the Proceeds of Crime Act of 2002 requires revaluation. Clarification is required in respect of how criminality in such cases can be proved. Consideration should be given to introducing new legislation targeted at the transmission of money or value under the cover of false documentation. Research limitations/implications Clarification is required on how the concept of “irresistible inference” as established by R v Anwoir can be applied to money laundering cases in light of the R v GH judgement of the UK Supreme Court. Practical implications Upgrade of law enforcement knowledge base and investigation skills is required to prosecute existing money laundering offences more effectively, but the lack of clarity as to what will suffice as proof of criminality serves to inhibit the investigation of these crimes as well as their prosecution. Social implications Protection of democracies, democratic institutions and the communities they serve from the corrupting influence of laundered criminal money through more effective prosecution of money laundering offences. Originality/value To encourage discussion on whether the relevant legislation remains fit for purpose and what practical measures can be taken to improve it.

“Give it a Try”: experiences of black, Asian and minority ethnic young men in a prison-based offender personality disorder service

2019 ◽  
Vol 21 (1) ◽  
pp. 14-26
Author(s):  
Stephanie Hunter ◽  
Eleanor Craig ◽  
Jake Shaw
Keyword(s):  
Personality Disorder ◽  
Thematic Analysis ◽  
Design Methodology ◽  
Policy Implications ◽  
Future Research ◽  
Content Type ◽  
The Uk ◽  
Minority Ethnic ◽  
Practical Implications ◽  
Insight Into

Purpose Within the current offender personality disorder (OPD) pathway in the UK, black, Asian and minority ethnic (BAME) populations are underrepresented. Fewer BAME offenders are engaging with services despite being proportionately identified for inclusion and referred on to the pathway. The paper aims to discuss this issue. Design/methodology/approach This qualitative study explored the experiences of 11 BAME men engaged in a prison-based OPD service for young offenders to identify the highlights and challenges of engagement within the service and to what extent they experienced a sense of inclusion/belonging. Findings Thematic analysis was used to identify three overarching themes and sub-themes. Why am I going to be an Outcast? describes the barriers to engagement encountered by the participants; and Give it a Try and Nothing but Respect describe the process of overcoming these barriers. Barriers revolved around the experiences of judgement, alienation and hopelessness. These were overcome through peer encouragement, developing relationships with staff and freedom to regulate levels of engagement. Practical implications Practice and policy implications are considered to support similar services in addressing the barriers to engagement faced by BAME individuals. Areas for future research are also recommended. Originality/value Currently, no research has directly explored the under-representation of young BAME offenders with emerging personality disorder in the OPD pathway. The findings provided an insight into some of the difficulties these young BAME offenders faced when accessing this service, alongside aspects which maintained their engagement.

Money laundering through exchange offices

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fabian Maximilian Johannes Teichmann ◽  
Marie-Christin Falker
Keyword(s):  
Qualitative Study ◽  
Money Laundering ◽  
Quantitative Research ◽  
Design Methodology ◽  
Prevention Measures ◽  
Content Type ◽  
Compliance Officers ◽  
Research Gap ◽  
Practical Implications ◽  
Insight Into

Purpose The purpose of this paper is to illustrate how money launderers circumvent compliance measures by using exchange offices to launder incriminated funds. Design/methodology/approach The three-step process entailed carrying out unofficial interviews with money launderers, which gave first insight into the issue, followed by expert interviews that were reviewed by means of a qualitative study. The findings of the qualitative study were processed during the subsequent quantitative research. Findings Although exchange offices are a known threat to anti-money laundering efforts, they continue to be highly applicable. As exchange offices are responsible for their own compliance measures, compliance officers employed by other institutions do not encounter money laundering through exchange offices regularly. Research limitations/implications The findings of the study are limited to the experiences of the interviewed experts, which, naturally, are highly subjective. Further, they are geographically limited, as certain areas were not represented in the study. Practical implications During the literature review, a research gap was identified. The present study attempts to partially fill the same. The illustrated findings aimed at facilitating an improvement of anti-money laundering measures. The insights into the minds of money launderers provide valuable information for legislators, compliance officers and authorities. Originality/value Presently, the majority of the literature focuses on the issue of money laundering from a compliance perspective. However, accurately understanding how money launderers circumvent the existing prevention measures requires an exploration of their approaches. To effectively inhibit money laundering, it is necessary to gain a holistic overview of the issue, which entails the observation of both perspectives.

ESMA issues Brexit opinions to EU regulators: a warning shot not only to the UK but also to the EU27

2017 ◽  
Vol 18 (4) ◽  
pp. 50-52
Author(s):  
William Yonge ◽  
Simon Currie
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Content Type ◽  
Regulatory Response ◽  
Market Participants ◽  
Financial Firms ◽  
Practical Guidance ◽  
The Uk ◽  
Practical Implications ◽  
The Eu

Purpose To summarize and analyse four opinions issued in May and July 2017 by the European Securities and Markets Authority (“ESMA”) concerning regulatory and supervisory arbitrage risks that arise as a result of increased requests from financial market participants to relocate activities and functions in the EU27 following the UK’s decision to withdraw from the EU, and the expected regulatory response to those risks. Design/methodology/approach Discusses the possible relocation of financial firms, activities and functions following the UK’s decision to withdraw from EU; the resulting cross-sectoral regulatory and supervisory arbitrage risks that ESMA foresees; nine principles that ESMA enumerates to guide its regulatory response to those risks; some common themes that emerge from ESMA’s July Opinions; and the implications for UK firms and trading venues seeking to establish a presence in the EU 27. Findings ESMA foresees regulatory and arbitrage risks in Brexit and a potential “race to the bottom” as certain national regulators jostle for and grab UK market share. Practical implications UK firms and trading venues seeking to establish a presence in the EU27 from which to operate will need to give detailed consideration and focus to the resources and operational substance which will need to be located in the jurisdiction in which that presence is established. Originality/value Practical guidance from experienced financial services, securities and fund management lawyers.

Managing money laundering risks in commercial letters of credit

2016 ◽  
Vol 19 (2) ◽  
pp. 158-168
Author(s):  
Ramandeep Kaur Chhina
Keyword(s):  
Money Laundering ◽  
Regulatory Requirements ◽  
Trade Finance ◽  
Content Type ◽  
Letter Of Credit ◽  
Commercial World ◽  
Proceeds Of Crime ◽  
Letters Of Credit ◽  
The Uk

Purpose The purpose of this paper is to critically examine the role of banks in detecting and mitigating money laundering risks in trade finance activities, especially in commercial letters of credit, and to answer the central question: do banks comply with regulations that are inadequate (if so, is more stringent regulation compatible with the commercial world of trade finance?), or are banks are in danger of non-compliance? Design/methodology/approach The relevant principles promulgated by international organisations as well as the law enacted in UK to prevent money laundering risks in commercial letters of credit was examined to assess banks’ compliance with their anti-money laundering (AML) obligations. The key provisions of the Money Laundering Regulations 2007, Proceeds of Crime Act 2002 and the Wolfsberg Trade Finance Principles were discussed, and the extent of banks’ compliance with these provisions was highlighted by carefully analysing the steps a bank might take at various stages of the operation of a commercial letter of credit and what the banks in fact do. The paper relies heavily on the findings of the recent study conducted by the Financial Conduct Authority (UK) to analyse the actual practice followed by UK banks in controlling money laundering risks in transactions involving commercial letters of credit. Findings The paper establishes that considering the formal nature of commercial letters of credit (which makes them independent from the underlying transaction), any stringent measures to regulate trade finance activities of a bank may destroy the effectiveness of commercial letters of credit as a tool for promoting international trade. The current law and regulations together with the Joint Money Laundering Steering Group Sectoral Guidance and the Wolfsberg Principles provide the requisite legal and regulatory framework to control money laundering risks in commercial letters of credit. The paper however establishes that the majority of banks in UK currently appear to be in danger of non-compliance with the UK AML regime and certainly need to meet their AML obligations in a more serious way. Practical implications The findings may influence banks to adopt a more vigilant approach in their trade finance activities and to undertake more responsibility in ensuring compliance with the current AML law and regulations, while highlighting that their current practice may put them in danger of non-compliance. Originality/value The paper demonstrates in an exceptional way the legal and regulatory requirements for banks to prevent money laundering risks in their trade finance activities and where, in practice, the banks are falling short of compliance with these requirements. By adopting a step-by-step approach in evaluating banks’ “current-and-must have” approach to controlling money laundering risks at various stages of a commercial letter, the paper makes a valuable contribution to the study of combating money laundering in commercial letter of credit transactions.

Service excellence in UK retail banking: customers’ perspectives of the important antecedents

2015 ◽  
Vol 33 (7) ◽  
pp. 904-921 ◽  
Author(s):  
Harjit Singh Sekhon ◽  
Dima Al-Eisawi ◽  
Sanjit Kumar Roy ◽  
Adrian Pritchard
Keyword(s):  
Financial Services ◽  
Service Sector ◽  
Banking Sector ◽  
Retail Banking ◽  
Banking Services ◽  
Content Type ◽  
Service Excellence ◽  
The Uk ◽  
Retail Banks ◽  
Practical Implications

Purpose – The purpose of this paper is to develop and tests a service excellence model, thus providing a detailed understanding of the key antecedents of service excellence, from a customer ' s perspective. The model presented in this paper is rooted in cross-disciplinary literature and tested amongst customers of UK retail banking services. Design/methodology/approach – Following a systematic approach to scale development, the paper draws on survey data from 260 consumers of retail banking products, with the data collected on national basis in the UK. Findings – The theoretical framework was evaluated using a structural approach. Of the hypothesised antecedents, innovation has the greatest impact on service excellence while reputation the least, as far as customers are concerned. Research limitations/implications – The research was limited to one research domain, i.e. UK retail banking, and thus it is reasonable to hypothesise that other aspects of service excellence will be more or less relevant for other types of financial services or in other geographic regions. Practical implications – Given the challenges faced by the retail banking sector, there are implications for practitioners because the authors identified the key antecedents of service excellence. The antecedents can be used by practitioners to help demonstrate excellence on their part and they could differentiate what are homogenous services at a time when the retail banks are going through a period of recovery following the crisis within the sector. Originality/value – This work complements the understanding of service excellence and provides insight for scholars and practitioners by modelling services for a specific service sector.

Slipping through the net

2018 ◽  
Vol 21 (2) ◽  
pp. 203-214
Author(s):  
Adebola Adeyemi
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Current Approach ◽  
Content Type ◽  
Services Sector ◽  
Secondary Sources ◽  
Financial Services Sector ◽  
The Uk ◽  
Practical Implications

Purpose The purpose of this paper is to highlight the activities of the FCA with respect to the incidence of money laundering and highlight regulatory gaps. The financial services sector provides a crucial infrastructure for the promotion of wealth and innovation in the UK. This attractive infrastructure also appeals to criminals looking to launder the gains of their illicit activities. Design/methodology/approach The paper analyses the UK money laundering regime, highlighting specific challenging areas. The paper investigates the role of politically exposed persons and the use of corporate structures in promoting money laundering. In this context, it also becomes crucial to investigate the role of financial institutions and the sufficiency of their governance approach in lessening the incidence of money laundering. The paper investigates secondary sources and relies on their findings. It compares these findings to the regulatory outcomes. Findings The paper recommends steps that can be used to lessen the incidence of money laundering in the UK. From the reports evaluated, it is clear that the Financial Conduct Authority is working towards reducing the incidence of money laundering, but this could be further strengthened with the adoption of additional enforcement tools. Practical implications The paper suggests that different approaches should be used based on firm size, the type of business and the risk that a financial services firm presents to the financial sector. A large firm will need to bear more regulatory burden compared to a smaller firm. Originality/value The paper investigates the current approach to minimising the incidence of money laundering in the UK. It suggests that the regulator can guide financial services firms to meet the regulatory objectives by relying on an approach that discerns the regulatory risks presented by different firms depending on their size.

Cryptocurrencies: an unconventional challenge to the AML/CFT regulators?

2014 ◽  
Vol 21 (3) ◽  
pp. 249-263 ◽  
Author(s):  
Victor Dostov ◽  
Pavel Shust
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Financial System ◽  
Content Type ◽  
Payment Instruments ◽  
Informal Communities ◽  
Financing Of Terrorism ◽  
Practical Implications ◽  
Insight Into

Purpose – The purpose of the article is to look closely at the phenomenon of the cryptocurrencies such as and bitcoin to identify their potential vulnerabilities to money laundering and financing of terrorism. It also explores their specific characteristics relevant to ML/FT risks. Design/methodology/approach – Using digicash and bitcoin protocols as primary cases for centralized and decentralized cryptocurrencies we analyse their characteristics against cash and cashless payments. We also draw on “bundle of attributes” that may define their attractiveness for common public or criminals. Findings – Our research shows that characteristics of the cryptocurrencies are unlikely to make them popular among the consumers, as demand for anonymity seems to be overrated. Cryptocurrencies can also be classified as payment instrument rather than private currencies; therefore their embededdness in the financial system minimizes the ML/FT risks. Research limitations/implications – Some decentralized cryptocurrencies operate within informal communities. Therefore, relations within these communities are constantly evolving and need to be monitored further. Practical implications – The paper provides an insight into the mechanics and classification of cryptocurrencies as payment instruments. Place of cryptocurrencies within the broader payment ecosystem defines their potential vulnerabilities to being abused by the criminals. Originality/value – The paper fills the gap in research on cryptocurrencies as payment instruments rather than private currencies and also provides an overview of their relevance for the Anti-money laundering and combating financing of terrorism (AML/CFT) regime.

Money laundering: further clarity provided by the Court of Appeal on the operation of the consent regime

2017 ◽  
Vol 18 (3) ◽  
pp. 72-74
Author(s):  
Daren Allen
Keyword(s):  
Money Laundering ◽  
Regulatory Enforcement ◽  
Bank Account ◽  
Content Type ◽  
Key Issues ◽  
Proceeds Of Crime ◽  
Working Day ◽  
The Uk ◽  
Court Of Appeal ◽  
Practical Implications

Purpose To summarise a key development that provides clarity for banks on the operation of the money laundering provisions in the UK Proceeds of Crime Act 2002. Design/methodology/approach The article provides the background leading up to the UK Court of Appeal hearing, the key issues in the appeal, the decision of the court and what this means for banks in the UK. Findings The Court of Appeal held that (i) where a bank suspects that money in its customer’s account is criminal property, freezes the account and seeks consent to deal with the money, the court should not intervene during the course of the seven-working-day notice period and 31-day Moratorium Period and (ii) in most cases the discretion to grant an interim declaration is unlikely to be exercised. Practical implications This decision is important for banks and brings much-needed clarity. Prior to the Court of Appeal decision, it was open to customers to challenge a bank’s decision to freeze an account (pending a response from the NCA to a consent request) on the basis that, on a balance of convenience, payments from a bank account should be permitted to be made. Originality/value Practical guidance from an experienced lawyer specialising in complex investigations, litigation dispute resolution and regulatory enforcement proceedings for financial institutions and large corporations.

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