Journal of Money Laundering Control

Publisher:: Emerald Group Publishing Limited
Publication date:: 2011-12-21

ISBN:: 1368-5201

Issue Number

No. 27-7, September - August - July - February - February 2024

Latest documents

Financial monitoring with humanitarian assistance: improving transparency and effectiveness in relief efforts
Purpose: This study aims to critically analyse the current state of implementing financial monitoring of humanitarian aid in the context of the challenges of martial law and Ukraine’s European integration aspirations. Design/methodology/approach: In this article, a comprehensive approach to research methodology is widely used when the methods complement each other, allowing one to consider the investigated processes and phenomena in their unity and diversity. Findings: This article proves the necessity of applying the latest approaches and adapting the existing financial monitoring mechanisms to wartime challenges. Special attention is focused on digitalisation processes and transparency of financial monitoring of humanitarian aid provided to Ukraine from various sources. Originality/value: This article critically analyses modern legislative changes, new tools for transparent and effective financial monitoring in martial law conditions and Ukraine’s European integration aspirations.
The potential of interprovincial money laundering in Indonesia: investigation on the attractiveness and destination choice
Purpose: The purpose of this study is to ascertain the level of attractiveness of each province in Indonesia as a potential destination for money laundering activities originating from Jakarta. Design/methodology/approach: Adopting a quantitative approach, this study uses the Walker Gravity Model, which has been modified in two key components: the attractiveness and distance variables. The first modification is achieved by using proxy economic variables, for which data is available at the provincial level within a country. The utilization of proxy data serves to circumvent certain data limitations inherent to the original model, which is only accessible at the country level. The second modification is introduced to the distance component, wherein this study develops a distance index that is deemed to be more representative than physical distance used in the original model. Findings: The research findings indicate a notable correlation between economic activity and the risk of money laundering, with provinces in closer proximity to Jakarta exhibiting a higher likelihood of being targeted for money laundering activities. However, there are exceptions for some provinces that, despite their distance from Jakarta, also demonstrate a high potential for money laundering due to their strong economic ties to the capital city. Originality/value: The existing studies on money laundering attractiveness, extent and flow at the provincial level in Indonesia using quantitative approaches are limited. This paper provides new insights into the economic and governance landscapes of Indonesian provinces, highlighting the need for tailored anti-money laundering strategies.
Harnessing machine learning for money laundering detection: a criminological theory-centric approach
Purpose: The purpose of this study is to develop and evaluate the effectiveness of the criminology-centric machine learning (CCTML) framework in detecting money laundering activities by integrating criminological theories with machine learning techniques. Design/methodology/approach: This study uses a mixed-methods approach, this research synthesizes qualitative insights from expert interviews and literature reviews with quantitative analysis using machine learning models. Criminology-centric features are engineered based on established theories to capture behaviors indicative of money laundering. Various machine learning algorithms, including Voting Ensemble, XGBoost, Random Forest and LightGBM, are evaluated for their effectiveness in detecting financial crimes. Findings: The findings of the study demonstrate that the CCTML approach consistently outperforms common machine learning models in detecting money laundering activities across various evaluation metrics, including area under the curve, log loss, Matthews correlation coefficient, precision, recall and balanced accuracy. The integration of criminological insights into machine learning models significantly enhances their predictive accuracy and reliability. Originality/value: This research synthesizes diverse criminological insights into a cohesive framework known as CCTML. This approach goes beyond common feature engineering by incorporating complex behavioral patterns and social dynamics, thereby enhancing the accuracy and transparency of money laundering detection systems. By leveraging state-of-the-art machine learning algorithms and explainable artificial intelligence (AI) techniques, CCTML not only improves predictive capabilities but also ensures that model decisions are interpretable and fair. Explainable AI helps CCTML reveal why certain transactions are flagged, aiding investigators in identifying key suspects. Furthermore, this study contributes a comprehensive anti-money laundering framework that integrates ethical considerations, promoting a more robust and just approach to combating financial crimes.
From overlap to distinction: disentangling the concepts of terrorism financing and money laundering
Purpose: This paper aims to address the existing gap in the anti-money laundering/counter-financing of terrorism (AML/CFT) regime and explore the possibility and effectiveness of disentangling the nexus between the two concepts. Design/methodology/approach: The approach undertaken is doctrinal legal research by employing rigorous analysis of the legal terms of terrorism financing and money laundering. Findings: Upon analysis, the study confirms that the two concepts are distinct; there is a slight overlap in the methods of acquisition of funds for both terrorists and money laundering; however, the purpose and intention of the two are totally separate and therefore creates a need for singular approach in tackling the two concepts. Enhanced collaboration between states and increased financial technologies will aid in better tackling of the two menaces. Research limitations/implications: The research is limited to a desk review approach. Practical implications: The study confirms the argument that the AML/CFT approach is ineffective in tackling money laundering and terrorism financing. Originality/value: This paper delves into a deeper analysis of money laundering and terrorism financing and provides a nuanced understanding of the differences between the two terms.
Editorial: Prison is not a viable pursue strategy in financial crime; the “serious violence duty” can help improve prevent strategies
Money laundering and the automobile industry: a comparative study between the laws of Mauritius and UK
Purpose: Motor vehicles play a vital role in the economic and social growth of any country. However, they have recently become instruments and a source of illegally obtained financial gains for criminal bodies and individuals. This study aims to assess the laws of Mauritius on AML procedures to prevent money laundering through vehicles transactions. Design/methodology/approach: To achieve the research objective, the black letter research method was used by analysing laws, regulations and case laws on the subject matter. A desk-based and doctrinal approach was also used by examining policy papers, scholarly articles and newspaper materials on the researched topic. Additionally, the research adopted a comparative analysis by assessing how the laws of another country address the issue of money laundering through vehicle transaction and the selected country is the UK. Findings: The research concluded that Mauritius AML laws are lagging behind of the UK laws and accordingly, some measures were suggested to deal with the issue of money laundering through vehicles transactions. Accordingly, this research recommended that motor vehicle dealers who are high value dealers engaged in cash transactions above certain threshold, must also be categorised as reporting persons under the FIAMLA such that the prescribed AML measures apply to them. Additionally, it is convenient for the FCC to be embodied with some additional punitive and corrective powers to assist the Commission in its fight for the prevention and elimination of financial crimes in Mauritius. Originality/value: At present, this study will be among the first academic writings on the intersection between money laundering and the automobile industry and on the effectiveness of the legal and regulatory measures undertaken by the Mauritian authorities to prevent money laundering through vehicles transactions. The study is carried out with the aim of combining a large amount of empirical, theoretical and factual information that can be of use to various stakeholders and not only to academics.
Corruption prevention in organizational clustering in Indonesia: through the role of the HU-model in detecting corruption
Purpose: This paper aims to test the effectiveness of the Haryono Umar (HU)-model used in corruption prevention strategies through corruption detection as a tool for detecting corruption because the mode of corruption is increasingly dynamic and complex by focusing on the causes of corruption: pressure, opportunity, rationalization, capability and lack of integrity. Design/methodology/approach: The research uses multiple regression methods, classification and regression trees and the HU-model application system developed by researchers. The research sample uses secondary data from financial reports on the Indonesia stock exchange according to organizational clustering (such as red, grey and green areas). Findings: The research result showed that of the 470 sample companies, there were 445 companies, or 98.9%, in the red cluster (indicated corruption), 19 companies, or 4.04, in the green clusters or not indicated corruption and six companies, or 1.28%, were included in the grey cluster or potential corruption. By knowing the cluster of an organization, efforts to prevent corruption can be made effective and efficient. Implementing the HU-model proves that the amount of pressure, the abundance of opportunities, the ease of rationalization and the high level of position and authority strengthen the drive for corruption if there is a lack of integrity. Research limitations/implications: Each internal organization can use this model independently and find conditions related to corruption so that they can immediately take action to prevent it. Originality/value: The application of the HU-model is a discovery in preventing corruption by focusing on the possibility of corruption occurring in each organization through organizational clustering.
Facets of drug trafficking in Manipur, a border state of India: volumes, ethnicity and value
Purpose: Drug trafficking in the tiny state of Manipur, located in the northeastern part of India bordering Myanmar, has drawn attention from all over the globe looking at the scale and varieties of drugs trafficked, ranging from plant-based opiates to synthetic-based amphetamine-type stimulants (ATS). Moreover, drug trafficking in the region also comes with many socio-political dynamics such as high per-capita drug consumption, local drug manufacturing units, terror funding from drug money, politician–drug lord nexus, police–peddler nexus. Design/methodology/approach: The study is based on data from the years 2007 to 2023 accessed from the Narcotics and Affairs of Borders, a specialized branch of Manipur Police, Government of Manipur. The study also tries to estimate the state’s drug economy using the Financial Action Task Force and the United Nations Office on Drugs and Crime methodology. Findings: The study finds seizure of a massive cache of heroin/brown sugar, and ATS in the past 4–5 years. The study also finds large-scale destruction of poppy plants in the state. The study also finds a high percentage of ethnic minority communities involved in drug trafficking. The study found the value amounting to US$62m in 2022. The study also comes across low conviction rates of drug traffickers in the state. Originality/value: The study emphasizes the need for expediting the War on Drugs campaign in the state curtailing poppy cultivation and conviction of drug lords so that the nerve center of terror funding in India’s eastern front is kept under control.
Evolution of the whistleblowing regime: the UAE model
Purpose: This study aims to conceptualize the UAE’s whistleblowing model by reviewing recent legislative updates directed toward removing potential legal deterrents, introducing legal protection and establishing numerous external whistleblowing channels. The study surveys these initiatives through the prism of the country’s unique socio-economic and judicial environments. Design/methodology/approach: The study applies a conceptual approach to probe the potential impact of the UAE’s legislative initiatives on the country’s whistleblowing regime by connecting the demographic data, the UAE’s legal and regulatory frameworks, academic literature and media reports. Findings: Recent legislative updates to the UAE whistleblowing regime are geared toward removal of potential legal deterrents, introduction of legal protection and establishment of external whistleblowing channels for reporting. These constitute the conceptual model of the UAE’s whistleblowing strategy, which is broad in scope and application yet may appear fragmented. Originality/value: The study merges a comprehensive review of legislative initiatives and regulatory framework with academic literature to conceptualize the UAE’s whistleblowing model.
Navigating the shadows: exports and money laundering dynamics in Bangladesh
Purpose: This study aims to analyze the complex dynamics of money laundering (ML) in the export sector of developing countries, with a special focus on Bangladesh. It aims to uncover the strategies and tactics money launderers use to exploit export transactions and understand the vulnerabilities that exist in economies where enforcement agencies neglect the export industry. Design/methodology/approach: This study examines Bangladesh’s export sector ML using qualitative methods. Customs officers, central bank officers, port authorities and selected exporters were interviewed semi-structured. Document analysis of Bangladesh Bank orders, media and Customs Intelligence and Investigation Directorate reports was also done. Qualitative data patterns were identified using theme analysis. Findings: The study identifies the most vulnerable export commodities – readymade garments, agricultural items and processed foods – as prime targets for ML. Key methods of laundering include under-invoicing, over-invoicing, misdeclaration and fake documentation. The research highlights the significant risk posed by the improper use of government financial incentives and introduces the “sample shipment” method as a novel laundering tactic. The findings underscore the need for stronger oversight and controls to mitigate these risks. Research limitations/implications: This research is limited by single-point data because ML is a continual activity. The reliance on case studies from newspaper reports and online platforms introduces a degree of selection bias and the chosen instances may not comprehensively represent the broader landscape of trade-based ML. Practical implications: The study provides several practical recommendations for policymakers and law enforcement agencies to fortify the export sector against exploitation by money launderers, ensuring greater transparency and accountability in international trade operations. Social implications: By closing loopholes in the export sector, the research supports the Sustainable Development Goals, particularly Goal 16.4, which aims to reduce illicit financial flows, thereby contributing to poverty eradication and economic stability in developing countries. Originality/value: Original research results supported by technical analysis are presented in this work. It contributes to the body of knowledge by detailing the adaptive strategies of money launderers and proposing targeted recommendations for enhancing the integrity of the export sector.