Natural disasters and money laundering risks
| Pages | 198-202 |
| Published date | 01 April 2006 |
| Date | 01 April 2006 |
| DOI | https://doi.org/10.1108/13685200610661005 |
| Author | Mark McKenzie,Kenneth L. Bryant |
| Subject Matter | Accounting & finance |
Natural disasters and money
laundering risks
Mark McKenzie
British Virgin Islands Financial Services Commission,
British Virgin Islands, UK, and
Kenneth L. Bryant
Bryant & Associates, Hayesville, North Carolina, USA
Abstract
Purpose – Sets out to examine the dangers of money laundering as a consequence of natural
disasters.
Design/methodology/approach – Lists the potential abuses and scans to which unscrupulous
manipulators will resort in order to profit from natural disasters.
Findings – Finds that criminal groups have established networks and sophisticated technology to
effectively carry out their activities.
Originality/value – This is a detailed and eye-opening revelation of the various criminal
opportunities for money laundering spawned by natural disasters.
Keywords Money laundering,Natural disasters
Paper type Viewpoint
Hurricanes Charley, Frances and Ivan left a trail of death and destructio n across the
Caribbean and Florida in 2004. The tsunami on December 26, 2004 devastated Asia.
Hurricane Katrina destroyed New Orleans and Hurricane Rita has caused extensive
damage in Texas. In all of these cases many people have been displaced from their
homes and jobs. The damage and devastation to infrastructure including roads and
bridges, communication, health and education are indescribable. The long-term
economic impact caused by these natural disasters will be significant.
There are several private relief efforts to collect much-needed supplies to assist the
people displaced by these natural disasters. Many international agencies and other
charitable organizations have stepped forward to collaborate with a range of
community-based organizations to begin the process of renovating and rebuilding in
the affected regions. In the aftermath of such disasters, financial institutions are
usually encouraged to consider all reasonable and prudent steps to assist displaced
customers’ cash and financial needs in the affected areas. Financial institutions may
have to adjust or alter their know your customer/customer due diligence (KYC/CDD)
policies in the areas affected by the disasters. However, as the reconstruction and
recovery work get underway, policymakers and financial institutions in the affected
areas should remain vigilant in the fight against money laundering and terrorist
financing. There is no empirical evidence supporting this proposition. However,
intuition suggests that the risk of money laundering and terrorist financing may
increase in the aftermath of any natural disaster. Organized crime groups wishin g to
launder criminal proceeds and those wishing to finance terrorism may seek to take
advantage of the chaos caused by natural disasters.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
9,2
198
Journal of Money Laundering Control
Vol. 9 No. 2, 2006
pp. 198-202
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200610661005
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