Money-laundering and terrorism-financing compliance – unsolved issues

Date08 January 2020
Publication Date08 January 2020
AuthorFabian Maximilian Johannes Teichmann
SubjectAccounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime
Money-laundering and
compliance unsolved issues
Fabian Maximilian Johannes Teichmann
Teichmann International AG, St. Gallen, Switzerland
Purpose This paper aims to focus on developingprevention mechanisms for banks, this paper showsthe
ongoing feasibility of laundering money and nancing terrorism undetected. It, thereby highlights that the
current anti-money-launderingand anti-terrorism-nancingmechanisms can be easily circumvented.
Design/methodology/approach A three-step research process, including both qualitative and
quantitative methods, was used. The empirical ndings are based on qualitative content analysis of 35
informal interviews with illegal nancial services providers and 35 formal interviews with compliance
expertsand law enforcementofcers.
Findings During those interviews, concrete and specic methods of nancingterrorismandlimitingtherisks
of being prosecuted were discussed. To assess compliance ofcersawareness of those methods, a quantitative
survey of 190 compliance ofcers was subsequently conducted to determine what leads to investigations.
Research limitations/implications The ndings onlyconvey the perspectives of the 70 interviewees
and 190 survey participants.
Practical implications The practical implications include suggestions for nancial regulators,
nancial institutions and compliance ofcers on how to more effectively combat money laundering and
Originality/value While the empirical ndings are based in Europe, the results could be applied
Keywords Money laundering, Compliance, Terrorism nancing, 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-nancing mechanisms. Hence, the nance industry has hired
an army of compliance professionals to fulll those legal requirements. However, it has not
yet been assessed in sufcient depth whether the current anti-money-laundering and anti-
terrorism-nancing mechanisms are effective in practice. If easily circumvented, the
compliance mechanisms established by nancial institutions could be considered a rather
expensive alibi. Therefore, this article assesses how easily the current anti-money-
laundering and anti-terrorism-nancing mechanisms can be circumvented and emphasizes
how such mechanisms should be adjusted to be more effective. In concluding, suggestions
for nancial regulators,nancial institutions and compliance ofcers 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
Journalof Money Laundering
Vol.23 No. 1, 2020
pp. 90-95
© Emerald Publishing Limited
DOI 10.1108/JMLC-02-2018-0014
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