Combating money laundering in transition countries: the inherent limitations and practical issues
| Date | 20 July 2010 |
| Published date | 20 July 2010 |
| Pages | 215-225 |
| DOI | https://doi.org/10.1108/13685201011057127 |
| Author | Jun Tang,Lishan Ai |
| Subject Matter | Accounting & finance |
Combating money laundering in
transition countries: the inherent
limitations and practical issues
Jun Tang
School of Information, Zhongnan University of Economics and Law,
Wuhan, People’s Republic of China and
China Centre for Anti-money Laundering Studies, Fudan University,
Shanghai, People’s Republic of China, and
Lishan Ai
Faculty of Law, Centre for Transnational Crime Prevention,
University of Wollongong, Wollongong, Australia
Abstract
Purpose – The purpose of this paper is to explain the operating background of combating money
laundering in transition countries, to demonstrate the unique phenomenon of “adopt but not enforce”
and “selective implementation,” to discuss the role of anti-money laundering (AML) system as a part of
political confrontation between transition countries and developed countries, and finally to criticize the
defensive reporting in transition countries’ financial institutions.
Design/methodology/approach – The paper analyzes the inherent limitations and practical issues
in combating money laundering in transition countries, and provides various cases as well as statistic
data to illustrate the AML difficulties faced by transition countries.
Findings – Many transition countries have taken AML actions during the past decade, however, the
AML systems in these jurisdictions are not effective yet. AML motivations in transition countries are
mainly surrounding international pressures and domestic political needs.
Originality/value – The paper highlights the unsound operating environment of fully implementing
AML legislations in transition countries, and critically demonstrated that the effectiveness of AML
systems in transition countries is heavily influenced by domestic and international political
considerations.
Keywords Money laundering,Georgia, Russia
Paper type Research paper
1. Introduction
The global anti-money laundering (AML) supervision and regulation system was first
designed as the product of the failure of “war on drugs” in European countries and the
USA in 1960-1970s. When direct arrest and seizure of the drug crimes stuck,
countermeasures are shifted to using the “follow the money” theory, and adopting the
strategy of “from street to financial institutions” to search the criminal proceeds
generated from drug crimes. Coupled with the enactment of the Bank Secrecy Act of
1970 in the USA, the hundred years’ custom of protecting client secrecy has been
completely changed in the whole Western countries, and the new era of re-regulation in
financial institutions and application of information disclosure policy has been launched
since then. The September 11 attacks, in addition, acted as milestone events in the
history of the international AML evolution. The tragedy taught a lesson that a universal
The current issue and full text archive of this journal is available at
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Combating
money
laundering
215
Journal of Money Laundering Control
Vol. 13 No. 3, 2010
pp. 215-225
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201011057127
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