International commercial arbitrator addressing money laundering sua sponte
| DOI | https://doi.org/10.1108/JMLC-05-2021-0052 |
| Published date | 17 August 2021 |
| Date | 17 August 2021 |
| Pages | 637-644 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Todor Kolarov |
International commercial
arbitrator addressing money
laundering sua sponte
Todor Kolarov
Department of Law, New Bulgarian University, Sofia, Bulgaria
Abstract
Purpose –The purpose of this paper is to evaluatethe existing legal basis, and its practical application,of
an arbitrator’scompetence to raise on her own initiativemoney laundering issues.
Design/methodology/approach –The research focusses on presenting the essence of the problem
through evaluation of the legal basis for the arbitrators to raise money laundering concerns on their own
initiativeand the examples of so being done in international commercialarbitration.
Findings –This paper concludes that arbitrators do not presently have a solid legal basis that authorises
them to act sua sponte againstmoney laundering.
Originality/value –The originalityand value of this paper lies in its emphasis on theoretical and practical
issues related to money launderingin international commercial arbitration. It argues in favour of an explicit
recommendationto be incorporated in the 2012 Recommendationsof the Financial Action Task Force (FATF)
that internationalcommercial arbitrators address money launderingon their own initiative.
Keywords Money laundering, International commercial arbitration,
2012 Recommendations of the Financial Action Task Force
Paper type Research paper
Single sentence summary
This paper discusses the question whether an international commercial arbitrator may
raise money launderingconcerns on her own initiative.
Introduction
Laundering of proceeds from illicit enrichment and organised crime is a negative
phenomenon of which world society has become increasingly concerned. On both
international and national levels, there are constant efforts to tackle it. Trade-based money
laundering is a complexyet effective method to integrate assets derivedfrom corruption and
criminal enterprises into the formal economy and is one of the primary means of money
laundering. It comes as no surprise that arbitration practitioners and researchers are often
required to consider their role, competence and obligations to address money laundering
issues in international commercial arbitration. Their consideration falls into two distinct
categories –where a party raisesmoney laundering defence and where the parties make no
such claims, yet there are moneylaundering red flags.
This article focusses on the situations in which parties do not raise money laundering
issues. It also addresses the situation where parties deliberately seek to give an air of
legitimacy to their transactionby channelling the dispute through international commercial
arbitration.
In its first part, the paper seeks to outline examples of existing trade-based money
laundering schemes that could lead to international commercial arbitration. In the second
Money
laundering
637
Journalof Money Laundering
Control
Vol.25 No. 3, 2022
pp. 637-644
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-05-2021-0052
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