Preventing the use of financial institutions for money laundering and the implications for financial privacy
| Date | 02 January 2018 |
| Published date | 02 January 2018 |
| DOI | https://doi.org/10.1108/JMLC-01-2017-0004 |
| Pages | 47-58 |
| Author | Chat Le Nguyen |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Preventing the use of financial
institutions for money laundering
and the implications for
financial privacy
Chat Le Nguyen
Department of Law, Fiji National University, Nasinu, Fiji
Abstract
Purpose –This paper aims to discuss the implication of money laundering preventive measures for
financialprivacy, with the focus on banking secrecy.
Design/methodology/approach –This paper, first, sets out the principal measures imposed on
financial service providers to prevent money laundering. The interaction between the preventive measures
and the desire for financialprivacy is then discussed.
Findings –The adequate implementation of the preventive measures is highly important for financial
institutionsto be secure from money laundering. Nonetheless, the enforcementof these measures is becoming
much more intrusive into financial privacy. In practice, financial privacy should be weighted fairly against
the objectivesof preventive measures.
Originality/value –This paper would be a good guidance on how to deal with tension and potential
conflicts of interests between law enforcement authorities and financial service providers and between the
protectionof financial privacy and the objectives of the money laundering preventivemeasures.
Keywords Anti-money laundering, Customer due diligence, Financial institutions, Banking secrecy,
Record keeping, Suspicious transactions
Paper type General review
1. Introduction
A set of preventive measures imposed on financial institutions, which aims at uncovering
opportunities offered by the legitimate environment to facilitate money laundering, is an
important and indispensable part of the anti-money laundering (AML) regime. The key
measures include customerdue diligence (CDD), record keeping and reporting of suspicious
transactions. These measureshave the objectives of deterring and detecting criminals from
using financial institutions for laundering the proceeds of crime. The rationale behind the
implementationof these measures is as follows:
Criminals often make use of financial institutions, especially the banking system, as
the main intermediaries for money laundering operations;
the interaction with the legitimate environment is seen as a “weak point”in the
stages of money laundering, at which law enforcement agencies can intervene for
deterring and detecting money launderers;
the integrity of financial service providers, which contributes significantly to public
confidence, must be protected from money laundering involvement and;
nobody in the legitimate environment should profit from criminals.
Use of financial
institutions for
money
laundering
47
Journalof Money Laundering
Control
Vol.21 No. 1, 2018
pp. 47-58
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-01-2017-0004
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