Money-laundering and terrorism-financing compliance – unsolved issues
| DOI | https://doi.org/10.1108/JMLC-02-2018-0014 |
| Pages | 90-95 |
| Date | 21 January 2020 |
| Published date | 21 January 2020 |
| Author | Fabian Maximilian Johannes Teichmann |
| Subject Matter | Financial risk/company failure,Accounting & Finance |
Money-laundering and
terrorism-financing
compliance –unsolved issues
Fabian Maximilian Johannes Teichmann
Teichmann International AG, St. Gallen, Switzerland
Abstract
Purpose –This paper aims to focus on developingprevention mechanisms for banks, this paper showsthe
ongoing feasibility of laundering money and financing terrorism undetected. It, thereby highlights that the
current anti-money-launderingand anti-terrorism-financingmechanisms can be easily circumvented.
Design/methodology/approach –A three-step research process, including both qualitative and
quantitative methods, was used. The empirical findings are based on qualitative content analysis of 35
informal interviews with illegal financial services providers and 35 formal interviews with compliance
expertsand law enforcementofficers.
Findings –During those interviews, concrete and specific methods of financingterrorismandlimitingtherisks
of being prosecuted were discussed. To assess compliance officers’awareness of those methods, a quantitative
survey of 190 compliance officers was subsequently conducted to determine what leads to investigations.
Research limitations/implications –The findings onlyconvey the perspectives of the 70 interviewees
and 190 survey participants.
Practical implications –The practical implications include suggestions for financial regulators,
financial institutions and compliance officers on how to more effectively combat money laundering and
terrorismfinancing.
Originality/value –While the empirical findings are based in Europe, the results could be applied
globally.
Keywords Money laundering, Compliance, Terrorism financing, Terrorism, Financial services,
Money transfer services
Paper type Research paper
1. Introduction
Financial services providers are forced to comply with extraordinarily strict anti-money-
laundering and anti-terrorism-financing mechanisms. Hence, the finance industry has hired
an army of compliance professionals to fulfill those legal requirements. However, it has not
yet been assessed in sufficient depth whether the current anti-money-laundering and anti-
terrorism-financing mechanisms are effective in practice. If easily circumvented, the
compliance mechanisms established by financial institutions could be considered a rather
expensive alibi. Therefore, this article assesses how easily the current anti-money-
laundering and anti-terrorism-financing mechanisms can be circumvented and emphasizes
how such mechanisms should be adjusted to be more effective. In concluding, suggestions
for financial regulators,financial institutions and compliance officers are outlined.
2. Literature review
Current anti-money-laundering literature focuses on estimating the amount of money
laundered and creating compliance mechanisms. In addition, the efforts of the Financial
JMLC
23,1
90
Journalof Money Laundering
Control
Vol.23 No. 1, 2020
pp. 90-95
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-02-2018-0014
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