The effect of corruption factor in harnessing global anti‐money laundering regimes
| Date | 20 July 2010 |
| DOI | https://doi.org/10.1108/13685201011057145 |
| Published date | 20 July 2010 |
| Pages | 272-281 |
| Author | Norman Mugarura |
| Subject Matter | Accounting & finance |
The effect of corruption factor
in harnessing global anti-money
laundering regimes
Norman Mugarura
Bristol School of Law, University of the West of England, Bristol, UK
Abstract
Purpose – The purpose of this paper is to examine the effect of corruption on the transposition of
global anti-money laundering regimes (AML), such as customer due diligence (CDD) locally.
Design/methodology/approach – The global AML framework for purposes of this paper is
underscored by the 40þ9 recommendations of the Financial Action Task Force (FATF) and the
principles of the Basle Committee on Banking Supervision. These standards are contained in FATF
recommendations 2003; and the FATF nine special recommendations against Financing of Terrorism
2001 (updated in February 2008). The paper examines some aspects of the current anti-money
laundering and combating financing of terrorism (AML/CFT) framework such as CDD and know your
customer to highlight the challenges of harnessing the global AML/CFT regimes locally in some
jurisdictions.
Findings – The paper establishes that money laundering (ML) and corruption are embedded in each
other. By way of examples, cases of ML are rampant in highly corrupt countries.
Research limitations/implications – The dichotomy of corruption and its effect negates the
global efforts on fighting ML/financing of terrorism.
Social implications – Corruption in its various manifestations undermines a country’s capacity to
harness the global framework against ML and financing of terrorism. Thus, the twin offences of
corruption and ML should be accorded the same level of attention as serious financial crimes at a global
level.
Originality/value – The paper iswritten based onthe challenges ofharnessing the globalAML/CFT
regimes in inherently corrupt governments. It draws particularly on experiences of corruption and ML
in some countries in Africa.
Keywords Corruption, Moneylaundering
Paper type Research paper
1. Global AML/CFT regimes
The global AML framework is under scored by the 40 þ9 recommendations of the
Financial Action Task Force (FATF) and the principles of the Basle Committee on
Banking Supervision. These bodies have pioneered recommendations and supervision
guidelines for banks to follow in designing an effective global anti-money laundering
and combating financing of terrorism (AML/CFT) framework. These standards are
contained in FATF recommendations 2003; and the FATF nine special
recommendations on Terrorist Financing 2001 (updated in February 2008)[1]. FATF
also provides a framework for identifying legal, regulatory and financial mechanisms
adopted by a country to implement a robust AML/CFT system[2].This paper argues that
corruption in its various dimensions undermines a country’s capacity to harness the
global framework on money laundering (ML) and financing of terrorism. In my
contention, the envisaged global AML/CFT regimes cannot succeed in enhancing
the fight on ML in inherently corrupt system. The paper will in particular draw on the
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
13,3
272
Journal of Money Laundering Control
Vol. 13 No. 3, 2010
pp. 272-281
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685201011057145
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