Introduction
Financing entities are entrusted with the responsibility of eradicating misconduct by withholding support. They strive to institute measures that prevent them from processing corrupt payments. However, financial systems are vulnerable to crisis, especially when they are unable to absorb shocks. Anti-money laundering compliance requirements increase complexity and costs for banks globally. Despite the regulatory changes being the basis to increase financial system resilience and intervention of financial crimes, they increase pressure on the correspondent, interfering with their functioning. Also, they act as a barrier to cross-border financial networks and banking relationships. There is a need for a compelling business case to upgrade a bank’s anti-money laundering capabilities. Leading banks in emerging markets can be supported since they hold strong positions in maintaining and growing cross-border banking networks. Expectations for continuous improvement in anti-money laundering compliance pervade the international financing systems. Financing institutions must fathom the business implications of money laundering alongside implications for criminality and security. They should focus on identifying additional and efficient compliance requirements and formulate ways to excel in anti-money laundering. Different countries and institutions provide different support regarding regulatory guidance towards anti-money laundering. This literature review attempts to discuss financial system alignment to address anti-money laundering.
Mekpor, E.S. (2019) “Anti-money laundering and combating the financing of terrorism compliance,” Journal of Money Laundering Control, 22(3), pp. 451–471. Available at: https://doi.org/10.1108/jmlc-09-2018-0057.
Emmanue Senanu Mekpor, a Doctoral researcher in the department of finance at Brunel University London, investigates the country’s practices to comply with anti-money laundering regulations. He recommends adoption and compliance with Financial Action Task Force (FATF). He argues that money laundering can be reduced or mitigated by using these guidelines and recommendations. These recommendations are critical for Canada to utilize in fighting anti-money laundering, which has prevailed in many parts of Canada. It is an obstacle to Canadians’ quality of life, safety as well as security. FATF recommendations process access to information on compliance and adoption of the correct measures. This can help Canada reorient its anti-money laundering policies and regulations and focus its efforts on the parts lacking approaches to AML. Canada acquires guidelines on how to make alterations to AML frameworks and thus ensure the effectiveness of regulatory practice. These changes to anti-money laundering impact CPAs concerned with activities protected by the Proceeds of Crime (Money Laundering).
Wheeler, J. (2021) AML technology: Where companies should invest, Jumio. Available at: https://www.jumio.com/aml-technology/
Jackie Wheeler, a Fiscal Analyst in the greater Seattle region, pursues her research interests in developing AML technology that she believes would boost compliance. She perceives money laundering as a financial crime that is currently common, and businesses can be manipulated to finance criminal enterprises without their knowledge. She suggests technologies such as automatic AML screening since financial institutions serve widely diverse clients whose intentions are unknown. Transaction monitoring tools are useful in identifying suspicious activities. An increased amount of illicit funds is observed to be laundered in the Canadian economy yearly. This is due lack of proper ways of identifying money launderers. Automatic screening ensures that the country keeps track of all the customers against international and national checklists. It minimizes risks and helps a country to undertake its due diligence, especially when it encounters new clients. Thus, customers’ identities should be verified, as risks of associating with them. Canada should incorporate advanced software that monitors individual transactions. It identifies high-risk transactions as well as their patterns, thus the follow-up for money laundering. Financial institutions detect financial crimes and determine how to end them effectively. Also, artificial intelligence can be applied in the financial ecosystem to reduce money laundering risks.
Faccia, A. (2021) Electronic money laundering, the dark side of Fintech: An overview of …, Researchgate. Available at: https://www.researchgate.net/publication/347312080_Electronic_Money_Laundering_The_Dark_Side_of_Fintech_An_Overview_of_the_Most_Recent_Cases (Accessed: February 16, 2023).
Alessio Faccia currently works at Coventry university in the department of finance and accounting and Economics. Her research interest extends to technology and innovation; thus, she explains the contribution of the rapidly growing fintech sector to money laundering. She focuses on the most critical issues regarding transactions’ reliability, legality, and security. It is a research primarily addressed to economic players offering payment services, for example, cryptocurrencies or financial services, especially those managed by the use of technology advanced ways. Canada continues to embrace digital technologies and the internet. This can expose it to risks and threats of advancement in technology. Financial institutions and most businesses in Canada rely on digital technologies hence cyber security risks. The country has several fintech such as the multiplatform banking firm Wealthsimple and Bitcoin miner Blockstream.
Labib, N.M. (2021) Survey of machine learning approaches of anti-money laundering …, research gate. Available at: https://www.researchgate.net/profile/Nevine-Labib/publication/340424014_Survey_of_Machine_Learning_Approaches_of_Anti-money_Laundering_Techniques_to_Counter_Terrorism_Finance/links/625d9db4709c5c2adb84ed2f/Survey-of-Machine-Learning-Approaches-of-Anti-money-Laundering-Techniques-to-Counter-Terrorism-Finance.pdf
Dr. Nevine Makram Labib is the computer and information systems department leader in Sadat Academy’s faculty of management sciences. He analyzes machine learning approaches to anti-money laundering and discovers that money laundered in a year across the globe is approximately 5% of global GDP. He points out that criminal money launderers use financial institutions to exploit weak global financial systems to disguise their illicit funds. Financial institutions are obliged by law to monitor and provide reports of suspicious transactions. RCMP in Canada is less involved in money laundering and lacks the expected expertise to manage proceeds of crime investigations. This gap has a negative impact as it is the basis upon which money laundering has increased in Canada. Moreover, currently, there is nobody in Canada responsible for performing money laundering investigations. This has contributed to the intensification of money laundering in various sectors, such as the gaming sector.
Tarmizi, M.A. (2019) (PDF) compliance determinants of anti-money laundering regime among …, research gate. Available at: https://www.researchgate.net/publication/361716083_Compliance_determinants_of_anti-money_laundering_regime_among_professional_accountants_in_Malaysia (Accessed: February 16, 2023).
Masetah Ahmad Tarmizi is a senior lecturer in the faculty of Accountancy at the University of MARA. He investigates the extent of data content, internal control, and compliance of accounting professionals to the anti-money laundering regime. Professional accounts are presumed responsible for implementing compliance programs and informing the authorities of illegal practices. They are expected to keep track of their clients as well as the due diligence of the customers. The complexity of money laundering poses a challenge due to the lack of adequate evidence to support money laundering practices in Canada. Despite the federal government enforcing complex legislation to address money laundering, the regime has been ineffective, thus increasing illicit funds activities. The failure is attributed to agencies such as FINTRAC, whose role is to receive and evaluate information about money laundering threats and risks and later communicate them for analysis and law enforcement.
Cassella, S. (2019) Bulk cash smuggling and the globalization of crime: Semantic scholar, Berkeley Journal of International Law. Available at: https://www.semanticscholar.org/paper/Bulk-Cash-Smuggling-and-the-Globalization-of-Crime-Cassella/5427c9be8e2dc06a409107c14637ef7956799c86 (Accessed: February 16, 2023).
Stefan Cassella specialized in money laundering and asset forfeiture and worked in the field for over thirty years. He explains the globalization of crime by highlighting that money laundering criminals travel from one country to another. He relates this to how tourists freely move from one place to another. Money launderers move intending to cover their proceeds from one residence to another. Further, he elaborates on tools used to initiate international fraud schemes, such as; internet connection and internet devices such as computers. Law enforcement is based on a country’s laws and traditions; for example, what is unlawful in Canada may be unlawful in another state, thus the increased rates of transnational money laundering. Canada presents itself as a liberal democracy and allows people across the globe to use its financial institutions. However, it has a regime to counter transnational organized money laundering.
Conclusion
In Conclusion, this literature review has provided various sources that address the alignment of financial systems to anti-money laundering. These sources are the foundation for the detection of money laundering practices as well as the guidance to curb illegal practices. For example, the first source reveals that adopting the Financial Action Task Force (FATF) by all countries across the globe helps them share in managing money laundering. A manager should be aware of three major observations regarding this topic. First, technology plays a key role in money laundering. In the modern world, despite the wide advantages of technological advancements, people misuse this power and develop unlawful and illegal practices supporting money laundering, such as cybersecurity. Second, financial institutions are the central feature of money laundering practices. They are widely distributed across the globe, and people perform illegal transactions to disguise illicit funds. A nation can secure its security and integrity of financial systems by strengthening the global chain. Third, money laundering requires a holistic approach to combat those practices and monitor tax evasion. Anti-money institutions’ collaboration with law enforcement can have a positive impact on the control of the issue. This cooperation helps in setting standards and requirements that promote the effective implementation of operational, regulatory, and legal measures for preventing money laundering. Additionally, it leads to the development of common international policies, helping a country stay ahead of criminals.
Bibliography
Cassella, S. (2019) Bulk cash smuggling and the globalization of crime: Semantic scholar, Berkeley Journal of International Law. Available at: https://www.semanticscholar.org/paper/Bulk-Cash-Smuggling-and-the-Globalization-of-Crime-Cassella/5427c9be8e2dc06a409107c14637ef7956799c86
Faccia, A. (2021) Electronic money laundering, the dark side of Fintech: An overview of …, Researchgate. Available at: https://www.researchgate.net/publication/347312080_Electronic_Money_Laundering_The_Dark_Side_of_Fintech_An_Overview_of_the_Most_Recent_
Labib, N.M. (2021) Survey of machine learning approaches of anti-money laundering …, research gate. Available at: https://www.researchgate.net/profile/Nevine-Labib/publication/340424014_Survey_of_Machine_Learning_Approaches_of_Anti-money_Laundering_Techniques_to_Counter_Terrorism_Finance/links/625d9db4709c5c2adb84ed2f/Survey-of-Machine-Learning-Approaches-of-Anti-money-Laundering-Techniques-to-Counter-Terrorism-Finance.pdf
Mekpor, E.S. (2019) “Anti-money laundering and combating the financing of terrorism compliance,” Journal of Money Laundering Control, 22(3), pp. 451–471. Available at: https://doi.org/10.1108/jmlc-09-2018-0057.
Tarmizi, M.A. (2019) (PDF) compliance determinants of anti-money laundering regime among …, research gate. Available at: https://www.researchgate.net/publication/361716083_Compliance_determinants_of_anti-money_laundering_regime_among_professional_accountants_in_Malaysia
Wheeler, J. (2021) AML technology: Where companies should invest, Jumio. Available at: https://www.jumio.com/aml-technology/
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