Editorial
| DOI | https://doi.org/10.1108/JMLC-01-2021-0004 |
| Published date | 31 July 2021 |
| Date | 31 July 2021 |
| Pages | 213-214 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Peter German |
Editorial
Clipping your ticket at both ends
The raison d’etre for organized crime is money. It is a profit-driven exercisei n whichever ymove is
calculated to advance the pecuniary interests of the crime syndicate. If there are rivals, it is because
they are muscling in on “territory.”If there is violence, it is to settle scores because of incursions
into another gang’s market share or a failure by a member of the gang to perform according to
instructions. Losing the money or drugs can be a capital offence. But generally, organized crime
groups work well together for a reason; it increases everybody’sshareoftheprofits.
In our global village, organized crime syndicate work well across national borders.
Artificial political demarcations are simply that, invisible lines drawn over landscape.
Borders are mere impediments.Air, sea and vehicle, even foot, travel allow persons to move
product and money across borders, often with impunity. Just as we all must develop our
technological savvy to remaincurrent in business, so must crime groups. Use of e-mail and
social media are second natureto those growing up today, and that includes criminal actors.
The commercial benefitof the internet and all it has to offer comes when a business can harness
it for pecuniary benefit. The best website, the easiest e-access, a strong social media presence,
simple invoicing and payment systems differentiate winners and losers in today’s virtual business
world. The same applies to organized crime. Although they may not use websites and other
“traditional”forms of outreach, it is the ability to adapt old methodologies to this brave new world
that allows them to leverage their business model. Such is the case with money service businesses.
These businesses offer services to patrons which are not readily available elsewhere in
the financial industry in a particular location or can do it cheaper and more efficiently. The
global anti-money laundering scheme, largely driven by the FATF, requires that MSBs,
similar to other financial entities, comply with anti-money laundering rules, just as banks
and other mainstream financial organizations must do. This generally requires registering
with the national financial intelligence unit, establishing a compliance regime, reporting
large and/or suspicioustransactions and maintaining appropriate records.
There are however MSBs which do not comply with government requirements or carry-on
business where regulation is sparse or unenforced. These so-called underground bankers or
informal remittancers have existed since the earliest of tim e. They are referred to by various
designations, hawala being a term of specificity that has become synonymous with the
underground trade generally. These unregistered entities transact business from a distance,
within family or ethnic groups, within criminal organizations or through collegial connections.
Unregistered remittancersrely upon one foundational ingredient –trust. Thismust exist
between the sender and the receiver.Money deposited or left with one will not be sent to the
other party through electronic or other means. A virtual handshake over e-mail or other
electronic platform will suffice,and the correspondent banker will release the same funds to
a designated party. The entire transaction, for any amount of money, occurs without an
electronic or paper footprint, other than a notation in the books of the respective
underground bankerand a curt message from one to the other.
Being an unregistered banker comes with its risks, both legal and pecuniary. To
compensate for that risk, a fee is charged which tends to be higher than a standard transaction
fee in the mainstream financial industry. Both underground bankers will share the fee in
whatever way has been predetermined. A settling of acc ounts will take place over time and
may involve the use of third parties or the purchase of commodities for shipment. The methods
are endless. The pinnacle of success in the informal world is to clip your ticket at both ends, in
Editorial
Journalof Money Laundering
Control
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-01-2021-0004
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