The viability of international anti-criminal finance frameworks. The effect of mass refugee migration and the growth of the informal financial sector
Published date | 02 July 2019 |
Pages | 576-590 |
DOI | https://doi.org/10.1108/JMLC-09-2018-0059 |
Date | 02 July 2019 |
Author | Nurhannani Fazlur Rahman |
Subject Matter | Financial risk/company failure,Financial compliance/regulation,Financial crime |
The viability of international
anti-criminal finance frameworks
The effect of mass refugee migration and the
growth of the informal financial sector
Nurhannani Fazlur Rahman
Centre of Development Studies, University of Cambridge Department of Politics
and International Studies, Cambridge, UK
Abstract
Purpose –The purpose of this paper is to draw attention to the effect of thegrowing informal financial
sector (IFS) on the effectiveness of anti-criminal finance laws. Specifically, the growth of the IFS has been
brought on by the unprecedented rise in refugeeand migrant movement around the world. This paper will
focus on how refugee smuggling in the Eastern Mediterranean and Western Balkan region –and the
consequent rise of the IFS –has affected the suitabilityof apply anti-money laundering and financial action
task force frameworksin these countries.
Design/methodology/approach –It assesses the effectiveness of national and international legal
documents on anti-criminal finance. It also uses data sets and analyses secondary and primary sources to
estimatethe size and importance of the IFS.
Findings –The exponentialand rapid growth of the IFS has undermined efforts to preventthe financing of
trafficking, terrorism, corruption and money-laundering. The present legal devices to address criminal
finance has been whollyinadequate and counter-productive.
Research limitations/implications –There are limited reliable or accuratedata available on the IFS,
how much money goes through it or how important it is to criminalactivities such as money laundering or
terroristfinance. Without field-research, this study remainsexploratory.
Practical implications –The growth of the IFS and migratory movement is a complex dilemma that
must be accountedfor when seeking to truly improve anti-criminal finance laws, especiallyin developing and
transitioncountries.
Originality/value –This paper demonstrates the importance of considering the IFS and migratory and
refugee movements in creating legal instruments to combat financial crime. It also suggestsa direction for
future research.
Keywords Anti-money laundering, Anti-criminal finance frameworks,
Developing and transition economies, Hawala system, Informal financial system, Refugee migration
Paper type Research paper
Introduction
The legal devices and laws associated with anti-criminal finance have been found to be
inadequate because of the presenceof informal financial systems (IFSs). This is particularly
evident in developingand transition economies where much of its labour force are emigrants
remitting money to their familiesthrough hawala (Rider, 1996, p. 12). This essay will expand
upon this critique by drawing attentionto the unprecedented rise of refugee smuggling into
Europe as the start of the “Arab Spring”, several civil wars and insurgencies in the Levant
and North African regions. This mass migration for asylum and opportunity has
necessitated an exponential growth of IFSs –a growth that the criminal finance system in
Europe is wholly inadequate to monitorand police. This inadequacy is compounded by the
JMLC
22,3
576
Journalof Money Laundering
Control
Vol.22 No. 3, 2019
pp. 576-590
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-09-2018-0059
The current issue and full text archive of this journal is available on Emerald Insight at:
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