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Article
Publication date: 24 September 2024

Roy Majed Sinno, Graham Baldock, Kimberly Gleason and Zaher Zaher

The purpose of this paper is to describe the progression from trade-based money laundering to service-based money laundering using the Regulatory Dialectic Theory with an…

Abstract

Purpose

The purpose of this paper is to describe the progression from trade-based money laundering to service-based money laundering using the Regulatory Dialectic Theory with an explanation for the success of this progression arising from Agency Theory.

Design/methodology/approach

The authors provide a literature review regarding agency theory and the regulatory dialectic as the framework to examine service-based money laundering using three documented case studies. Using the caselet approach, this paper demonstrates that innovation in financial crime typologies is ongoing.

Findings

The short cases in this paper illustrate the factors related to the regulatory dialectic theory that have yielded innovation in service-based money laundering.

Research limitations/implications

This paper examines only three recent SBML innovations.

Practical implications

Service-based money laundering represents an incremental advancement in money laundering beyond trade-based money laundering, in part supported by agency conflicts between financial intermediaries and stakeholders.

Social implications

Managers and regulators should take into account that typologies will change as predicted by the regulatory dialectic and that the regulatory response can be burdensome to financial sector entities. This paper also provides recommendations for managers and regulators.

Originality/value

To the best of the authors’ knowledge, this paper is the first to uncover new innovations in SBML in a high-risk geographic region.

Details

Journal of Financial Crime, vol. 32 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

Article
Publication date: 9 February 2023

Roy Majed Sinno, Graham Baldock and Kimberly Gleason

The purpose of this study is to apply the regulatory dialectic to describe the evolution of trade-based money laundering (TBML) schemes, to describe three recent TBML innovations…

Abstract

Purpose

The purpose of this study is to apply the regulatory dialectic to describe the evolution of trade-based money laundering (TBML) schemes, to describe three recent TBML innovations uncovered by a large bank in the important global trade jurisdiction of the United Arab Emirates (UAE), and to provide recommendations for an effective regulatory response.

Design/methodology/approach

The methodology used is a caselet approach with three examples of TBML schemes recently foiled in the UAE as well as an application of the regulatory dialectic literature to TBML.

Findings

The implications of the regulatory dialectic for research regarding TBML and associated regulation and compliance will enable regulators, the financial services sector and academics to understand TBML and the ever-evolving steps criminals are taking to circumvent the changing landscape of regulation and controls implemented by the financial services sector and customs tasked with mitigating such behaviour. This paper will bring awareness of the evolution of TBML, the controls and frameworks that may be used to prevent, detect and investigate some of the complex schemes of TBML.

Research limitations/implications

The regulatory dialectic theory provides insights into the evolution of TBML schemes as well as why compliance activities tend to be reactive, rather than proactive. The cases covered in this paper provide insights into the nature of this circular process between financial crime and regulation, which is useful for anti-financial crime professionals and regulators focusing on deterrence.

Practical implications

The UAE is a small, rapidly developing trade and finance center in the Middle East, surrounded by nations that are sanctioned, in active conflicts, politically unstable and/or highly corrupt. TBLM undermines the security of the UAE; the authors provide insights into criminal innovations and regulatory responses.

Social implications

To promote the safety and stability of the ten million residents of the UAE, and others in the Middle East and North Africa (MENA) region, it is important to understand the process of innovation in TBML schemes and regulatory response.

Originality/value

To the best of the authors’ knowledge, this paper is the first to apply the regulatory dialectic theory to TBML to describe innovation in TBML schemes and to provide cases describing contemporary TBML innovations in the MENA region.

Details

Journal of Financial Crime, vol. 30 no. 5
Type: Research Article
ISSN: 1359-0790

Keywords

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