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The purpose of this study is to assess whether level of income of a particular country affects the level of effectiveness in anti-money laundering (AML)/ countering the financing of terrorism (CFT) supervision to identify the most important recommendations in achieving high level of effectiveness and critically discuss the findings of the fourth round evaluations with the outcome of first two objectives.

The level of effectiveness was rated in terms of a four-point Likert scale given 4 for high, 3 for substantial, 2 for moderate and 1 for low level of effectiveness. The countries were ranked using a four-point Likert scale given 4 for high income, 3 for upper middle income, 2 for lower middle income and 1 for low income countries as per the categorisation of World Bank list of economies (World Bank, 2017). For the purpose of estimation, level of effectiveness was rated in terms of a four-point Likert scale given 4 for high, 3 for substantial, 2 for moderate and 1 for low level of effectiveness. The level of technical compliance was ranked using a five-point Likert scale given 5 for compliant, 4 for largely compliant, 3 for partially compliant, 2 for non-compliant and 1 for not applicable as per the ratings given in FATF 2013 methodology (FATF, 2013).

It was observed that the level of income of a particular jurisdiction has a positive relationship with the level of effectiveness in AML/CFT supervision. Statistical analysis reveal that AML/CFT framework on regulation and supervision of financial institutions (Recommendation 26) and providing guidance and feed back to reporting entities (Recommendation 34) have significant impact on effectiveness level on AML/CFT supervision over the powers of supervisors (Recommendation 27), regulation and supervision of designated non-financial business and professions (Recommendation 28) and sanctions (Recommendation 35).

The research was limited to 36 fourth round mutual evaluation reports.

This paper is an original work done by the author as a result of the experience which the author received involving as an assessor in mutual evaluations.

Anti-money laundering (AML) obligations follow a risk-based approach, making their extent subject to the degree of AML risk. Money Laundering Reporting Officers (MLROs) must constantly assess risks, for example, by conducting annual risk assessments of the company. The purpose of this paper is to analyse whether MLROs’ risk assessments are biased in form of a better-than-average (BTA) effect, meaning whether they favourably assess their own company’s risk compared to that of the average competitor. Additionally, MLROs’ general risk assessment capabilities are researched.

A survey of MLROs of German companies was conducted (n = 228). It tests for a BTA effect in participants’ risk assessments of their own company as well as for errors in risk assessments of other industries.

MLROs’ risk assessments are biased by a BTA effect across all industries. They view their own company’s risk to be below that of the average competitor. Additionally, MLROs are not able to correctly assess industries’ AML risks compared to the national risk assessment. Risks were especially underestimated for high-risk industries. Biases were partially found to be higher among MLROs from the non-financial sector.

Risk-based AML measures are likely to be at least partially ineffective, calling the risk-based approach into question. Regular trainings of MLROs need to include awareness for biases in risk assessments. A more stringent and effective supervision, especially in the non-financial sector, is called for.

To the best of the author’s knowledge, this paper is the first to show that a BTA effect exists among MLROs.

This study aims to consider the anti-money laundering/combating of financing of terrorism (AML/CFT) regime that applies to microfinance institutions (MFIs) and microfinance programmes and projects (MFPs) in Vietnam to identify ways in which to improve the alignment between financial inclusion and financial integrity objectives in relation to this sector.

This doctrinal study is informed by the Financial Action Task Force mutual evaluation methodology.

The AML/CFT regulatory framework for MFIs/MFPs is inadequate but improving. The money laundering and terrorist financing risks posed by microfinance are low and so is the capacity of many providers to comply with AML/CFT obligations. Given the low risk, there is space to simplify AML/CFT requirements for this sector in a manner that will better align financial inclusion and financial integrity policy objectives.

This paper considers the implementation of AML/CFT obligations of MFIs/MFPs based on existing studies as well as own research relating to compliance and supervisory practices. Further empirical studies to determine for the whole microfinance sector could provide a more granular understanding of crime risks and compliance capacities in the sector.

AML/CFT regulators in Vietnam can take concrete steps to simplify the AML/CFT due diligence obligations of MFIs/MFPs and support these institutions to formalise and implement appropriate AML/CFT measures.

MFIs/MFPs play a vital socio-economic role by providing financial services to the poor. Appropriate AML/CFT control measures can enable these providers to continue providing these services while strengthening economic formalisation and integrity goals of the government.

The paper provides novel supervisory perspectives on the AML/CFT regime in relation to MFIs/MFPs.

Money Laundering Reporting Officers (MLROs) carry out day-to-day anti-money laundering (AML) tasks while directors ultimately remain responsible for AML compliance. Therefore, directors’ expectations of what their MLROs do should ideally coincide with what their actual tasks to minimise liability risk. This paper aims to test for gaps between MLROs and their directors in terms of knowledge, expectations and performance of AML tasks. Likewise, it is researched whether MLROs and directors communicate well with regard to MLROs’ tasks.

This paper first develops a model for analysing the dyadic relationship between MLROs and their directors, based on the audit expectation-performance gap. Second, a paired electronic survey of MLROs and directors of German companies was conducted in autumn 2020, testing for participants’ knowledge, expectations and performance of possible AML tasks (n = 136 pairs).

While there is no knowledge or performance gap among MLROs and directors, expectations among them are partially unreasonable and their communication needs to be improved. Additionally, this study suggests that MLROs of German non-financial businesses are less knowledgeable, perform AML duties more poorly, and communicate less effectively with their directors.

Training of MLROs and communication with their directors need to be improved. Especially in the non-financial sector, action is urgently required.

This paper reports the results of the first paired survey of MLROs and their directors, offering unique insights into their relationship and the status of private AML efforts.

This paper attempts to examine the practical condition of implementing risk‐based approach (RBA) in Chinese financial sectors.

This paper compares the differences between rule‐based approach and risk‐based approach (RBA), and provides different options to financial institutions considering their own circumstances.

This paper finds that capacity constraint is an issue for directly transplanting the RBA performed by developed countries to Chinese financial institutions.

This paper creatively proposes a rule‐based but risk‐oriented AML approach or partial RBA that fits Chinese financial institutions' reality underpinned by Chinese culture, and correspondingly, different assessment methods are presented as well.

This study aims to examine the direct and indirect effects of professional commitment, customer risk and independence pressure on money laundering risk judgment among bank analysts.

This study uses a within-subjects experimental research design and collects primary data via a questionnaire distributed to bank analysts in banking institutions in Malaysia.

Results show that professional commitment, customer risk and independence pressure significantly influence money laundering risk judgment (i.e. customer due diligence and money laundering reporting). The results also show significant interaction effects between customer risk and independence pressure in influencing money laundering risk judgment.

Professional commitment and situational factors are crucial in putting pressure on bank analysts responsible for performing a thorough check and due diligence to minimize money laundering risk to the bank.

As money laundering is lifeblood of crimes, understanding the factors influencing money laundering risk judgment would assist the affected institutions to manage the risk better and contribute towards the fight against crimes.

This study focuses on money laundering risk judgment. It contributes to understanding the competency of the gatekeepers, such as bank analysts, in practicing professional commitment and dealing with situational factors.

Designated non-financial businesses and professions (DNFBPs) are important actors both in the formal and informal sectors owing to the nature of services they offer. The DNFBPs are key players in financial and economic development and thus are highly vulnerable to money laundering (ML) and terrorist financing (TF) risks. Globally, and indeed, within the West African region, typologies studies have indicated several instances of misuse of DNFBPs for the laundering of proceeds of crime and to a lesser extent, TF. Factors that make DNFBPs vulnerable to ML and TF in the region, include limited understanding of ML/TF risk and anti-money laundering and combating the financing of terrorism (AML/CFT) obligations, and poor implementation of AML/CFT measures by the sector. As reporting institutions, DNFBPs are required to implement appropriate measures to mitigate the ML/TF risk facing them. Mutual evaluation reports (MERs) of countries in the region noted weak implementation of AML/CFT measures by DNFBPs compares to financial institutions. These coupled with the general poor monitoring and supervision of DNFBPs for compliance, make them a weak link in member states’ AML/CFT regime. This study examined how Economic Community of West African States member states can plug the loopholes in the DNFBPs to strengthen their AML/CFT regime and thus improve their performance during mutual evaluation. This study reviewed data from the publications of Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), Financial Action Task Force (FATF) and other credible sources.

This study is more of desk-review based on secondary data, including information obtained from GIABA, and FATF publications, and websites as well as information obtained from reliable sources on the internet. The authors reviewed the MERs of GIABA member states that have been assessed under the second round, especially that of Ghana, Senegal, Cape Verde, Mali and Burkina Faso, with particular focus on sections of the reports relating to preventive measures and supervision. In general, this paper adopts a policy approach with a view to explaining the importance and benefits of implementing AML/CFT preventive measures by reporting entities, especially the DNFBPs.

This study found that there is a general lack of information on the exact size of DNFBPs across member states, the risk of ML/TF associated with DNFBPs is generally identified as high across member states (albeit at different levels), the extent and level of monitoring/supervision of DNFBPs for AML/CFT compliance trails what is obtainable in financial institutions; the institutional and operational frameworks for regulating, supervising and monitoring DNFBPs are either weak or poorly defined in many member states; and the focus of AML/CFT technical assistance has been more on financial institutions than DNFBPs. Although the number of MERs reviewed for this work may be few, the findings and conclusions in the concluded MERs reflect regional peculiarities, including high informality of the economies, preponderance use of cash in transactions, diversity of DNFBPs and the general weak application of AML/CFT preventive measures by these entities, and the weak AML/CFT supervision or monitoring of DNFBPs which cut across all GIABA member states. Although efforts to address the weaknesses in the DNFBPs, including training and supervision, have commenced, in most member states, these are still at rudimentary levels.

However, this study is limited by the fact that it was desk-based review without direct inputs of industry players (DNFBPs and their supervisors).

In general, this paper adopts a policy approach with a view to explaining the importance and benefits of implementing AML/CFT preventive measures by reporting entities, especially the DNFBPs. It aims to bring to the fore the weaknesses of the DNFBPs in the implementation of AML/CFT preventive measures and therefore will be useful to national authorities who are striving toward strengthening their national AML/CT regimes and to DNFBPs who wish to protect the integrity and stability of their system.

It is imperative to mention that the weak compliance by DNFBPs, and indeed other challenges inhibiting effective implementation of preventive measures, is not peculiar to West Africa. A review of MERs of 17 African countries (eight countries in the Eastern and Southern Africa Anti Money Laundering Group region, five in GIABA region and three in the Middle East and North Africa region assessed under the current round as on October 2020, show a similar pattern of weak ratings under Immediate Outcome 4.

This paper aims to critically examine the European Union’s legislative initiative to establish an Anti-Money Laundering Authority (AMLA), which will introduce union-level supervision and provide support to national supervisors in the field of anti-money laundering and countering the financing of terrorism (AML/CFT), as well as to financial intelligence units (FIUs) in European Union (EU) member states. The paper discusses why this initiative was deemed necessary, which are the key objectives, rules and principles of AMLA and which challenges and opportunities will emerge as AMLA becomes operational.

This paper draws on reports, legislation, legal scholarship and other open-source data on the EU legislative initiative to establish a new AMLA.

AMLA will provide a comprehensive framework for EU-level AML/CFT supervision and for cooperation among FIUs. If all organisational challenges are properly addressed, the new authority will significantly enhance the EU’s ability to tackle money laundering and terrorism financing.

To the best of the author’s knowledge, this study is one of the first to examine the mission, governance and supervision mechanisms of the EU’s AMLA, as well as the challenges and opportunities associated with its functioning.

The purpose of this paper is to present an empirical assessment and outline issues in criminal regulation relating to international anti‐money laundering (AML) programs.

In the first part, this paper outlines the serious threats posed by transnational laundering operations in the context of economic globalization, and calls for highly co‐ordinated international responses to such a crime. The second part of the paper centres on elements of international criminal regulation of ML.

The focus is on the phenomenological aspect of ML and highlights that to a large extent it is an economic issue. Economic analysis calls for an accurate legal response, with typical trade‐offs: it should deter criminals from laundering by increasing the costs for such illicit operations, calling for enhanced regulatory and enforcement activities; however, stronger enforcement yields increased costs and reduces privacy. These features have lately inspired the recent paradigm shift from a rule‐based regulatory framework to a risk‐based approach which still represents an extremely delicate regulatory. Both at the international level and within the single domestic legal system, AML law is typically characterised by a multidisciplinary approach combining the repressive profile with preventive mechanisms: an empirical evaluation of the International Monetary Fund‐World Bank AML program is presented, where these two aspects are assessed. The non‐criminal measures recently implemented under the auspices of the main inter‐governmental public organisations with competence in these fields seem to be consistent with the insights of economic analysis. However, some key criminal issues need to be better addressed.

The paper offers insights into international AML programs, focusing on criminal regulation.

The purpose of this paper is to open a theoretical discussion on the preventive anti‐money laundering (AML) regime, both international and domestic in Russia, building theoretical assumptions on the role of epistemic community in the AML network in Russia.

The discussion is based on the analysis of the preventive pillar of the AML regime in Russia. Cognitive (or knowledge‐based) approach is used to study domestic AML regime and to reveal the main reason of the network deficiencies in Russia.

The paper argues that the representatives of banking community in Russia should play the role of epistemic community to foster better understanding of the context and purposes of the AML regime, thus, decreasing uncertainty, facilitating cooperation between the stakeholders, and eventually having a great influence on the quality of the AML regulations elaborated by the policy makers.

The paper limits its scope to the study of money laundering (ML) prevention focusing on the financial institutions – banks – which play the most important role in Russian AML network.

The paper reveals the roles of the main actors of Russian AML regime play. The ineffectiveness of the regime could be eased by increasing communication and cooperation between the stakeholders. The formal compliance approach used by the regulator in the financial sector supervision has not been effective and should be reviewed with the shift to the reasonable judgment approach used by both supervisor and financial institutions to prevent ML in Russia.

Studies of the peculiarities of the AML legislation implementation in different countries is one of the helpful tools to measure the efficiency of the global AML regime.