Is there a commendable regime for combatting money laundering in international business transactions?
| DOI | https://doi.org/10.1108/JMLC-05-2020-0057 |
| Pages | 163-176 |
| Published date | 17 July 2020 |
| Date | 17 July 2020 |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Andrew Emerson Clarke |
Is there a commendable regime for
combatting money laundering in
international business
transactions?
Andrew Emerson Clarke
Faculty of Social Sciences, Kent Law School, Canterbury, UK
Abstract
Purpose –Money laundering and grand business corruption continue to plague the global economy,
accountingfor 2%-5% of the global gross domestic product. Illicit funds, producedthrough grand corruption,
are laundered using complex layering schemes that cloak them in legitimacy by concealing their origins.
Lamentably, weak anti-money laundering (AML) frameworks promote economic instability, unjust
commercial advantagesand organized crimes. This study aims to highlightthe need for comprehensive anti-
corruption and AML frameworks by critiquing the exploitable gaps in the global AML regime created by
heterogeneousstate-level AML regimes to date.
Design/methodology/approach –This study welcomes the United Nations Convention against
Corruption (UNCAC) and the financial action task force (FATF) recommendations but underscores the
limitations of their effectiveness by investigating state-level enforcement mechanisms to determine these
instruments’trueimpact or lack thereof. The mutual evaluation reports(MERs) and state-level AML regimes
in the UK, the USA and Canada are analyzedto illustrate the distinct implementation of internationalsoft law
in domesticlegislation.
Findings –This study finds that UNCAC and the FATF recommendations are pivotalsteps towards the
establishment of a global AML regime for international business, albeit, one that remainsimperfect because
of the inconsistency of state-level AML frameworks. Consequently, international cooperation is needed to
navigateand improve the discrepancies in varied AML legislation.
Originality/value –The author provides an in-depth and balanced analysis of currentstate-level AML
developmentsand relies upon the recent 2016-2018 MERs to indicate the successes and flaws of various AML
legislation. Therefore, this critique may guide stakeholders to construct robust AML frameworks and
contributesto academic research in AML.
Keywords Corruption, International business, Money laundering, International law,
Mutual evaluation reports
Paper type Viewpoint
Introduction
In 2012, UK-based bank, HSBC, was revealed by US authorities as a “conduit to money
laundering”(“ML”)(
Department of Justice, 2012a); HSBC paid US$1.9bn in a settlement for
failing to prevent “drug kingpins and rogue nations”(BBC News,2012) from laundering
money through their systems. This payment represented one of the highest forfeits in ML
cases and HSBC responded by replacing senior staff and modifying internal anti-money
laundering (“AML”) structures for better AML compliance (Department of Justice, 2012b).
Unfortunately, HSBC’s case is one of many as United Nations (“UN”) estimated that ML
accounts for roughly 2%5% of the world’s grossdomestic product (United Nations Office
on Drugs and Crime, 2019a,2019b,2019c); approximately $800bn to $2tn pa is laundered,
Money
laundering
163
Journalof Money Laundering
Control
Vol.24 No. 1, 2021
pp. 163-176
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-05-2020-0057
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