Intricacies of anti-money laundering and cyber-crimes regulation in a fluid global system
| Pages | 10-28 |
| Published date | 13 April 2020 |
| Date | 13 April 2020 |
| DOI | https://doi.org/10.1108/JMLC-11-2019-0092 |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Norman Mugarura,Emma Ssali |
Intricacies of anti-money
laundering and cyber-crimes
regulation in a fluid global system
Norman Mugarura
Department of Law, Bishop Stuart University, Mbarara, Uganda and
Department of Law, Kampala International University, Kampala, Uganda, and
Emma Ssali
Department of Law, Kampala International University, Kampala, Uganda
Abstract
Purpose –The purpose of this paper is to decipher the law relating to cybercrimes regulation and
benchmarking best practicesthat could be adopted to address regulatory weaknesses in somecountries. In
many countries, cybercrimes regulation is undermined by a lack of robust regulatory regimes. The few
regimes that are availableare fragmented with no coherent global strategy to deal with these offences across
countriesand regions. There is a lot of scholarly literature to corroborate thefact that lack of requisite laws on
cyber and financial crimes has rendered states lame ducks when faced with well-organized and resourced
criminalorganizations.
Design/methodology/approach –This paper articulates intricacies of regulating money laundering
and cybercrimes using data from selected Africancountries and beyond. Generic issues on financial crimes,
cybercrimes,case law and policy documents drawn from differentjurisdictions have been examined basedon
the objectives of the study. Cybercrimeactivities and anti-money laundering (AML) regulatory models have
been evaluateddrawing on experiences of selected countries in Africa and othercountries. Questions whether
suspicious activity reports are appropriate as a model to counter incidences of cybercrime activities or
whether other options should be considered were also examined. Most notably, the risk-based assessment
model such as profiling of high-risk clients rather than reporting every transaction will be compared and
possibly suggested as a suitable alternativein financial crimes regulation. The authors have evaluated the
data and AML regulatory approaches and otherpolicy measures to curtail the foregoing threats. There is a
possibility that AML tools usedby financial institutionsand banking activities could be used to prevent the
growing threatof cybercrimes. The paper has also been enriched by case studies of tenuous legalsystems and
fragmentation of laws on cybercrimes and financial crimes and how these gaps have beenexploited to fuel
incidences of illicit criminal activities around the globe. The paper has also used empirical data including
visits to banks and financial institutions on the nexus between the threat of cybercrimes and money
laundering prevention. The authorshave been selective, evaluating cases from 2000s to date. This timeline
was particularly importantbecause of the increased incidences of computers and moneylaundering threats
globally. After analysingthe data, the authors were able to delineatethat there is a close connection between
the foregoing two crimes, how they operatein practice, differences and similarities in the counter-measures
used to mitigate their negative effectglobally. Thus, in the authors’contention, this is a novel study that is
likely to spur fartherresearch on law and policy against cyber and AML crimes not only in Uganda but also in
other jurisdictions.At the same time, the findings of the study could complement, and perhaps also complete,
the work of scholars who have written papers on cybercrimes to advocate for regulatory changes fight
againstthese offences. The study will also complementthe work of other researchers who havechallenged the
segregation of cybercrimes and financial crimes in local and international regulatory discourses. This
research aims to make a significant contribution to the study of cybercrimesand how they are regulated in
internationallaw.
Findings –The findings of the paper have confirmed that the high incidences of money laundering and
cybercrimes today are partly fuelled by inherent weaknesses in the global regulatory system and partly
fuelled by weaknessesat an individual state level. Many countrieshave enacted a raft of anti-cyber and AML
legislationbut this notwithstanding, these laws have notbeen used to stem cross-border crimes globally.This
JMLC
24,1
10
Journalof Money Laundering
Control
Vol.24 No. 1, 2021
pp. 10-28
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-11-2019-0092
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
is partly explained by the fact that many enforcement institutions lack the requisite capacity to institute
measures throughwhich to implement engendered laws and policieseasily. The regulatory capacity of many
countrieshas been eviscerated by deficiencies in infrastructureand systems.
Keywords Cybercrimes, Money laundering regulation
Paper type Research paper
1. Introduction
The paper examines anti-money laundering(AML) and cybercrimes (which involve dealing
with complex social and financial processes more or less similar to AML regulation) and
some of the inherent challenges to forestall them globally[1]. While cybercrime and money
laundering crimes are different in many ways, their differences have recently become
blurred and are not easy to disentangle. Both cyber and money laundering crimes are
characterized by multiple financiers with transactions that can be located across different
countries. As a result, they are complex for institutions to regulate. This also implies in
effect that each bank will only be presented with a small component of a much larger
problem leaving them prone to criminalexploitation.
Cybercrimes are computer-related crimes that in the parlance of financial crimes
regulation are relatively new and transnational in character. Cybercrimes include
information warfare, phishing, spams, denial of service attacks, hacktivism, hate crime,
identity thefts, and identity fraud, online gambling, unauthorized publication of
pornographic materialsonline, etc. Electronic and online business transactions have created
opportunities and challenges for development today. In 2011, at least 2.3bn people, the
equivalent of more than one-third of the world’s totalpopulation, had access to the internet.
Over 60 per cent of all internet users are in developing countries, with 45 per cent of all
internet users below the age of 25years (Murray, 2013). By 2017, it is estimated that mobile
broadband subscriptions will approach70 per cent of the world’s total population. By 2020,
the number of networked devices (the “internet of things”) will outnumber people by six to
one, transforming current conceptions of the internet. Beyond this, however, computer-
related acts for personal or financial gain or harm including computer content-related acts
(all of which fall within a wider meaning of the term “cybercrime”) do not lend themselves
easily to legal definitionsof the aggregate term[2].
This paper is significant in addressing gaps in the global regulatory systems against
cybercrimes and money laundering both within countries and beyond. Very few studies
have been conducted on cybercrimes and how they are regulated in many countries. This
has left countries vulnerable to the high possibility of cybercriminals. The purpose of the
paper is two-fold –analysis of generic issues relating to cybercrimes regulation and
benchmarking best practices that could be adopted to plus regulatory weaknesses in some
countries. In many countries, cybercrimes regulation is derailed by thefact that regulatory
regimes are fragmented with no coherent global strategy to deal withthem across different
countries and regions.Some criminals and their syndicates are good researchers; they would
have identified lapses in the mainstream regulatory systems and exploited them to launch
their attack on the regulatory system.There is a lot of scholarly literature to corroborate the
thesis that lack of requisite laws and enforcement mechanisms against cyber and financial
crimes has rendered states lame ducks when faced with well-organized and resourced
criminal organizations. The authors contend that regional integration of economies creates
synergies to foster interstate cooperation on transnational criminal activities, which
individual stateswould not normally be able to deal with singlehandedly.
Intricacies of
anti-money
laundering
11
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