Anti-money laundering/trade-based money laundering risk assessment strategies – action or re-action focused?
Abstract
Purpose
This paper aims to discuss whether most anti-money laundering (AML) risk assessment strategies within the banking and financial services sector are reactionary focused and/or whether it should be possible to predict where increased costs and resources need to be targeted in future AML risk processes.
Design/methodology/approach
The paper reviewed research findings from the researchers own study on trade-based money laundering (TBML) and also survey results from the KPMG Global Anti-Money Laundering Survey (2014), along with academic discussion papers.
Findings
The paper concluded that risk assessment strategies were still largely responsive, and this left banks exposed to two factors – not recognising risk that they were not assessing for and, second, being challenged legally as new cases emerged in the court systems from victims of ML and terrorism crimes.
Practical implications
The practical implications affect the resources and costs assigned to risk assessment strategies and called for a more holistic approach that was forward thinking from the bank’s perspective rather than reactionary focused and working from the regulators’s agenda.
Social implications
Any improvements in detection of AML and counter-terrorism financing has broader social outcomes.
Originality/value
The originality is the subject matter of AML risk assessment strategies and the input from TBML/AML experts from across the globe that contributed to the author’s research survey and interviews. These results have been analysed along with other research and the current academic discussion on this topic.
Keywords
Acknowledgements
The author acknowledges being the recipient of a research grant awarded by Princess Ālae as part of Seven Foundation’s “2020 Banking Vision – building banks of the future”, and he thanks her for the continued support and motivation both to himself and other students who benefit through her generosity. The author also thanks Professor Muhammad Jum’ah (a leading economist of this era based in Damascus), who has continued to provide valuable input both through his teaching of the science of economics and for his continued guidance.
Please note that this paper was composed and submitted for review to this journal in January 2016 – all the content was current at that point in time. The banking, compliance and regulation industries alongside governmental policy making have evolved greatly since January 2016, with new material from academic research emerging. These points need to be taken into consideration when reading this paper.
The author is a specialist researcher and practitioner in the fields of Trade-Based Money Laundering and Crypto Currencies contracted to Mayfair Compliance (www.mayfaircompliance.com).
Citation
Naheem, M.A. (2019), "Anti-money laundering/trade-based money laundering risk assessment strategies – action or re-action focused?", Journal of Money Laundering Control, Vol. 22 No. 4, pp. 721-733. https://doi.org/10.1108/JMLC-01-2016-0006
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited