Mitigating financial leakages through effective money laundering investigation

Abstract

Purpose This paper aims to conduct a comparison on the effectiveness of the law enforcement agencies (LEAs) of Australia and Malaysia in investigating money laundering cases by looking into the legal system and operational issues faced in conducting the investigation. Design/methodology/approach The purpose of this paper is to review and analyze the data collected from the Financial Action Task Force (FATF) Mutual Evaluation Report, focusing on the information outlined in the third chapter. The legal system and operational issues cover the area of technical compliance and effectiveness compliance, which were introduced in the latest FATF Evaluation Methodology issued in 2013. Findings The results show that both countries have the power needed to investigate money laundering and terrorism financing under their respective Anti-Money Laundering Act. However, Australia is seen to have a better investigative support system to assist LEAs during the investigation process. This explains the reason for difficulties in increasing the number of prosecutions for money laundering and terrorism financing cases. Hence, improvement actions are needed in curbing this issue. Practical implications The result suggests that Malaysia should strengthen the cooperation, coordination and capacity among LEAs to ensure effective targeting, investigation and prosecution of money laundering. The government should also revise the money laundering investigation time frame and broaden the power of LEAs in retrieving information during the investigation process. Malaysia should also enhance the investigative support system, which will be helpful for LEAs in gathering sufficient evidence to support their money laundering charges. Unlimited power in gathering evidence is prominent to charge money launders as it helps to gather information required for prosecution. Originality/value Prior literature focuses on the prevention mechanism, where this paper aims to focus on detection and investigation mechanism focusing on money laundering investigation conducted by LEAs. Lack of study on money laundering investigation calls for this research to be done to understand the strengths and weaknesses to improve its effectiveness in the future.

Asset recovery practices in combating money laundering: evidence from FATF mutual evaluation report of FATF member countries of Asia pacific region

“…This study compared the technical compliance of FATF Recommendation (Recommendation 4 and 38) and effectiveness assessment (Immediate Outcome 8) between these countries. The methodology used by Omar et al (2014) and Syed Mustapha Nazri et al (2019) was replicated in this study. The study investigated member countries’ compliance characteristics on FATF in understanding the AML practices in respective countries.…”

Efficiency of Money Laundering Countermeasures: Case Studies from European Union Member States

“…The money laundering process has a long history, but has evolved and adapted to modern society, globalization, and digital transformation, causing major damage to citizens, companies, and states, becoming a catalyst for illegal activities (terrorism, fraud, and corruption) that lead to decreasing integrity and transparency, and creating a widespread lack of confidence in markets (Dobrowolski and Sulkowski 2019). The money laundering operation involves the illegal act of hiding money from illicit activities and turning it into legitimate money (Le-Khac et al 2016;Nazri et al 2019), thus changing the clandestine nature of money (Qureshi 2017). ML is the transforming process through which dirty, illegal money appears to be white and clean (Hetemi et al 2018).…”

Anti-money laundering systems: a systematic literature review

“…The objectives of the Financial Action Task Force (FATF) group are to provide standards and enhance legal, regulatory and operational measures to fight ML, terrorist financing and any other threats that would affect the probity of the international financial system [About -Financial Action Task Force (FATF), 2020]. Generally, most governments keep looking to improve processes to minimize or prevent illegal activities that affect capital (Syed Mustapha Nazri et al, 2019). In addition, governments around the world have issued regulations and recommendations to combat ML.…”

“…ML has a negative impact on the global economy, and it is considered a serious problem discussed by countries around the world (Syed Mustapha Nazri et al, 2019). Indeed, ML is the third largest business around the world, accounting for about 2.7% of global gross domestic product (GDP) after the currency exchange and auto industries (Le- Khac et al, 2016;Soltani et al, 2016).…”

“…Indeed, ML is the third largest business around the world, accounting for about 2.7% of global gross domestic product (GDP) after the currency exchange and auto industries (Le- Khac et al, 2016;Soltani et al, 2016). The International Monetary Fund estimated that ML proceeds are between 2% and 5% of global GDP (Syed Mustapha Nazri et al, 2019). Also, as stated by the United Nations Office on Drug and Crime, the laundered money in one year amounts to between $500bn and $1tn across the world and of this money about $400bn-$450bn comes from drug trafficking (Le- Khac et al, 2016).…”