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Article
Publication date: 11 August 2023

Sisira Dharmasri Jayasekara, K.L. Wasantha Perera and Roshan Ajward

The purpose of this paper is to discuss how agency conflicts between people and main government organs affect the combatting ability of white-collar money laundering in an…

150

Abstract

Purpose

The purpose of this paper is to discuss how agency conflicts between people and main government organs affect the combatting ability of white-collar money laundering in an emerging economy.

Design/methodology/approach

This paper uses a qualitative design under the philosophy of interpretivism. The case study research strategy is used inductively to investigate how structural limitations affect white-collar money laundering.

Findings

This study reveals that serious agency conflicts exist between public and main government organs which are detrimental to the rights of people to enjoy a crime-free society. First agency conflict of people and legislature intensifies as a result of limited understanding of the legislature and failure to take precautionary actions to develop an anti-money laundering and countering the financing of terrorism (AML/CFT) regime with evolving global standards. This delay has resulted in identifying Sri Lanka as a deficient AML/CFT regime twice. The second conflicts arise between people and the executive which is a serious conflict due to misuse of statutory power and failure to perform duties. The independence and integrity of administrative authorities who perform executive functions were inherent problems of implementing a sound AML/CFT regime. Lack of monitoring, nonavailability of an independent audit and inappropriate reporting channels were other encouraging factors of administrative organs to misuse statutory power. The third conflict between people and the judiciary was not intensified because the function was not so exposed to create agency conflicts. After all, an adequate number of cases had not proceeded to the judiciary due to inherent limitations as a result of intensified first two agency conflicts. The agency conflicts have intensified over the years and AML/CFT regime has been ineffective as a result of limited influence and understanding of the principal, people. Therefore, the principal has to influence the agents to make reforms in the AML/CFT regime to make the country a white-collar crime-free country.

Research limitations/implications

This study uses a case study strategy to assess the context of Sri Lanka as an emerging economy. It is recommended to take into consideration the contextual facts when the findings are applied to other jurisdictions.

Originality/value

This paper is an original work of the authors which discusses how agency conflicts arise between people and three main government organs in implementing a sound AML/CFT regime in Sri Lanka as an emerging economy.

Details

Journal of Money Laundering Control, vol. 27 no. 4
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 11 August 2021

K.L. Wasantha Perera, Roshan Ajward and Sisira Dharmasri Jayasekara

The purpose of this paper is to discuss the possible money laundering threats in fair value accounting practices giving particular attention to the list of predicate offences…

518

Abstract

Purpose

The purpose of this paper is to discuss the possible money laundering threats in fair value accounting practices giving particular attention to the list of predicate offences under recommendations of Financial Action Task Force (FATF).

Design/methodology/approach

This paper discusses case studies related to global accounting scandals and link outcomes of those scandals with the list of predicate offences given in FATF recommendations to build propositions.

Findings

The analysis reveals that legal proceedings on major accounting scandals show that legal proceedings have been restricted owing to a lack of evidence because of the technicality of frauds. Often the authorities have failed to prove cases under the list of current predicate offences which can be linked to accounting malpractices, i.e. fraud. Therefore, policymakers are required to revisit the list of predicate offences and the feasibility of considering accounting malpractices as a predicate offence to strengthen the corporate governance practices in regulated institutions. The adoption of fair value accounting practices provides opportunities to managers to adopt earnings management practices under a fair value accounting regime to maintain stable performance. The fair value practice recognizes unrealized gains which are not based on transactions giving bank managers an opportunity to repeat the outcomes of the discussed accounting scandals. Therefore, it is essential to criminalize accounting malpractices to strengthen the corporate governance practices in the banking industry and prevent possible accounting scandals.

Research limitations/implications

This study was designed to discuss the implications of fair value accounting practices on possible opportunities of money laundering. This paper provides only a viewpoint based on the analysis. Therefore, an empirical analysis is required to establish the authors’ views in a fair value accounting regime.

Originality/value

This paper is an original work done by the authors which discuss the implications of fair value accounting practices on possible money laundering. The views are original ideas of the authors in this context.

Details

Journal of Money Laundering Control, vol. 25 no. 4
Type: Research Article
ISSN: 1368-5201

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Book part
Publication date: 17 October 2023

S. Janaka Biyanwila

Abstract

Details

Debt Crisis and Popular Social Protest in Sri Lanka: Citizenship, Development and Democracy Within Global North–South Dynamics
Type: Book
ISBN: 978-1-83797-022-3

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Book part
Publication date: 6 March 2025

Tyrone De Alwis, Wasantha Athukorala and Narayanage Jayantha Dewasiri

Purpose: This chapter uses the annual time series data to investigate how currency depreciation impacts inflation in Sri Lanka.Design/methodology/approach: We utilized the…

Abstract

Purpose: This chapter uses the annual time series data to investigate how currency depreciation impacts inflation in Sri Lanka.

Design/methodology/approach: We utilized the autoregressive distributed lag (ARDL) test to evaluate the long-term correlation between the variables. Additionally, the Granger causality test was used to examine the short-term relationships.

Findings: The ARDL test findings indicate an elevated relationship between currency depreciation and long-term inflation in Sri Lanka. The coefficient value of the error correction term indicates that 1.19% of the discrepancy error is rectified each year, directing the inflation response variable toward the long-term equilibrium.

Policy Implication: The Central Bank of Sri Lanka (CBSL) should adopt a policy to tighten and lessen currency pressure and fend off inflationary pressure. To design appropriate policies, they must quantify the country’s exchange rate (ER) pass-through to inflation. The pass-through to inflation is most prominent when monetary policy action triggers or amplifies currency movements. However, this pass-through to inflation can be kept smaller provided central banks follow a credible inflation-targeting framework, operate in a flexible ER period, and are accessible from influences from fiscal authorities in the country.

Originality/value: This study uses the recently established ARDL limits cointegration approaches to investigate the enduring association between currency devaluation and price stability in Sri Lanka.

Details

Financial Landscape Transformation: Technological Disruptions
Type: Book
ISBN: 978-1-83753-751-8

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Article
Publication date: 13 December 2022

S.G. Sisira Dharmasri Jayasekara, Wasantha Perera and Roshan Ajward

The purpose of this paper is to discuss how the failed finance companies in Sri Lanka used fair value accounting practices as an opportunistic earnings management practice to…

390

Abstract

Purpose

The purpose of this paper is to discuss how the failed finance companies in Sri Lanka used fair value accounting practices as an opportunistic earnings management practice to launder money under weak corporate governance structures.

Design/methodology/approach

This paper uses a qualitative design under the philosophy of interpretivism. The case study research strategy is used inductively to investigate how fair value accounting had been used for money laundering.

Findings

The dishonest intention of major shareholders and board of directors had forced failed companies to misuse fair value accounting to manipulate performance and use them for personal benefits which were detrimental to the depositors and stability of the companies. The weak corporate governance structures which were developed because of regulatory forbearance were influential for manipulations. The concentrated ownership had reduced agency conflicts between shareholders and managers because major shareholders were the members of the board of directors. The appointed committees were not effective because of an inadequate number of independent directors with sufficient expertise. The reduced agency conflict between shareholders and managers has exaggerated the agency conflict with depositors. Therefore, it is recommended to dilute ownership concentration to establish good corporate governance structures and make stable institutions.

Research limitations/implications

This study does not discuss the dishonest fair value accounting practices of all licensed finance companies because of the sensitivity of the matter for surviving companies.

Originality/value

This paper is an original work of the authors which discusses how fair value accounting practices had been used to launder money in failed finance companies in Sri Lanka as an emerging market context.

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Book part
Publication date: 2 September 2024

Hiranya Dissanayake, Hareendra Dissabandara, Roshan Ajward, Wasantha Perera, Catalin Popescu and Irina Gabriela Radulescu

This bibliometric analysis underscores the increasing importance of corporate sustainability in the post-COVID-19 era. Despite existing confusion and a dearth of studies on…

Abstract

This bibliometric analysis underscores the increasing importance of corporate sustainability in the post-COVID-19 era. Despite existing confusion and a dearth of studies on measuring corporate sustainability, the study identifies a significant methodological gap and endeavors to address it by proposing a comprehensive measure. The primary goal is to bridge this gap by conducting a bibliometric analysis on the scale of corporate sustainability, examining 126 documents spanning from 2001 to 2022. The study employs an expert opinion survey to identify and finalize dimensions and sub-dimensions of corporate sustainability, followed by a literature mapping process to formulate questionnaire items. A pilot survey is then conducted to ensure the reliability of the questionnaire. The study proposes utilizing the Organisation for Economic Co-operation and Development (OECD) index construction methodology to establish the Corporate Sustainability Index (CSI). The key findings reveal that corporate sustainability comprises economic, environmental, and social sustainability. Environmental sustainability encompasses aspects such as air, water, land, biodiversity, ocean preservation, waste prevention, and environmental management. Social sustainability involves the satisfaction of various stakeholders, including employees, shareholders, customers, community, government, nongovernmental organizations (NGOs), and suppliers. Economic sustainability is characterized by long-term profits, cost efficiency, trade-offs, sustainable investments, and spin-offs. Rooted in stakeholder theory, the proposed scale holds theoretical significance for researchers and is pertinent to policymakers striving to achieve sustainable development goals (SDGs) by 2030. Additionally, it serves as a crucial tool for practitioners and companies to assess their level of corporate sustainability.

Details

Emerging Patterns and Behaviors in a Green Resilient Economy
Type: Book
ISBN: 978-1-83549-781-4

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Article
Publication date: 5 February 2024

Neelam Setia, Subhash Abhayawansa, Mahesh Joshi and Nandana Wasantha Pathiranage

Integrated reporting enhances the meaningfulness of non-financial information, but whether this enhancement is progressive or regressive from a sustainability perspective is…

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Abstract

Purpose

Integrated reporting enhances the meaningfulness of non-financial information, but whether this enhancement is progressive or regressive from a sustainability perspective is unknown. This study aims to examine the influence of the Integrated Reporting (<IR>) Framework on the disclosure of financial- and impact-material sustainability-related information in integrated reports.

Design/methodology/approach

Using a disclosure index constructed from the Global Reporting Initiative’s G4 Guidelines and UN Sustainable Development Goals, the authors content analysed integrated reports of 40 companies from the International Integrated Reporting Council’s Pilot Programme Business Network published between 2015 and 2017. The content analysis distinguished between financial- and impact-material sustainability-related information.

Findings

The extent of sustainability-related disclosures in integrated reports remained more or less constant over the study period. Impact-material disclosures were more prominent than financial material ones. Impact-material disclosures mainly related to environmental aspects, while labour practices-related disclosures were predominantly financially material. The balance between financially- and impact-material sustainability-related disclosures varied based on factors such as industry environmental sensitivity and country-specific characteristics, such as the country’s legal system and development status.

Research limitations/implications

The paper presents a unique disclosure index to distinguish between financially- and impact-material sustainability-related disclosures. Researchers can use this disclosure index to critically examine the nature of sustainability-related disclosure in corporate reports.

Practical implications

This study offers an in-depth understanding of the influence of non-financial reporting frameworks, such as the <IR> Framework that uses a financial materiality perspective, on sustainability reporting. The findings reveal that the practical implementation of the <IR> Framework resulted in sustainability reporting outcomes that deviated from theoretical expectations. Exploring the materiality concept that underscores sustainability-related disclosures by companies using the <IR> Framework is useful for predicting the effects of adopting the Sustainability Disclosure Standards issued by the International Sustainability Standards Board, which also emphasises financial materiality.

Social implications

Despite an emphasis on financial materiality in the <IR> Framework, companies continue to offer substantial impact-material information, implying the potential for companies to balance both financial and broader societal concerns in their reporting.

Originality/value

While prior research has delved into the practices of regulated integrated reporting, especially in the unique context of South Africa, this study focuses on voluntary adoption, attributing observed practices to intrinsic company motivations. To the best of the authors’ knowledge, it is the first study to explicitly explore the nature of materiality in sustainability-related disclosure. The research also introduces a nuanced understanding of contextual factors influencing sustainability reporting.

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