The evolution of trade-based money laundering schemes: a regulatory dialectic perspective
| Date | 09 February 2023 |
| Pages | 1279-1290 |
| DOI | https://doi.org/10.1108/JFC-09-2022-0212 |
| Published date | 09 February 2023 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial crime |
| Author | Roy Majed Sinno,Graham Baldock,Kimberly Gleason |
The evolution of trade-based
money laundering schemes: a
regulatory dialectic perspective
Roy Majed Sinno
American University of Sharjah, Sharjah, United Arab Emirates
Graham Baldock
University of Portsmouth, Portsmouth, UK, and
Kimberly Gleason
American University of Sharjah, Sharjah, United Arab Emirates
Abstract
Purpose –The purpose of this study is to applythe regulatory dialectic to describe the evolution of trade-
based money laundering (TBML)schemes, to describe three recent TBML innovations uncovered by a large
bank in the important global trade jurisdiction of the United Arab Emirates (UAE), and to provide
recommendationsfor an effective regulatory response.
Design/methodology/approach –The methodology used is a caselet approach with three examples of
TBML schemes recently foiled in the UAE as well as an application of the regulatory dialectic literatureto TBML.
Findings –The implications of the regulatory dialectic for research regarding TBML and associated
regulation and compliance will enableregulators, the financial services sector and academics to understand
TBML and the ever-evolving steps criminalsare taking to circumvent the changing landscape of regulation
and controls implemented by the financial services sector and customs tasked with mitigating such
behaviour. Thispaper will bring awareness of the evolution of TBML, the controlsand frameworks that may
be used to prevent,detect and investigate some of the complex schemesof TBML.
Research limitations/implications –The regulatory dialectic theory provides insights into the evolution
of TBML schemes as well as why compliance activities tend to be reactive, rather than proactive. The cases covered
in this paper provide insights into the nature of this circular process between financial crime and regulation, which
is useful for anti-financial crime professionals and regulators focusing on deterrence.
Practical implications –The UAE is a small, rapidly developing trade and finance center in the Middle East,
surrounded by nations that are sanctioned, in active conflicts, politically u nstable and/or highly corrupt. TBLM
undermines the security of the UAE; the authors provide insights into c riminal innovations and regulatory responses.
Social implications –To promote the safety and stabilityof the ten million residents of the UAE, and
others in the Middle East and North Africa (MENA) region, it is important to understand the process of
innovationin TBML schemes and regulatory response.
Originality/value –To the best of the authors’knowledge, this paper is the first to apply the regulatory
dialectic theory to TBML to describe innovation in TBML schemes and to provide cases describing
contemporaryTBML innovations in the MENA region.
Keywords Ports, Trade, Regulatory dialectic, Trade-based money laundering, Counter-terror finance
Paper type Research paper
1. Introduction
On January 17, 2022, Abu Dhabi, the capitalof the United Arab Emirates (UAE), was subject
to a terrorist attack by the Houthi (Ansarallah) rebel group with drones, ballistic missiles
Trade-based
money
laundering
schemes
1279
Journalof Financial Crime
Vol.30 No. 5, 2023
pp. 1279-1290
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-09-2022-0212
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
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