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Anti-Money Laundering and the Proceeds of Crime: Operationalisation of Global Regulatory Frameworks

JUEST Network Research Statement

Professor Jackie Harvey, Newcastle Business School, and Sue Turner, Northumbria Law School, Northumbria University

This research statement outlines our combined knowledge and cross-disciplinary research activity in the field of anti-money laundering, the proceeds of crime and assets recovery.  It also sets out how our work can be applied to support and influence the development and implementation of a comprehensive, flexible post-Brexit EU–UK security and criminal justice treaty.

Knowledge and Research

Our research in the field of anti-money laundering and the proceeds of crime provides us with detailed knowledge of the anti-money laundering framework at a global, European and national level.  (See Turner and Bainbridge forthcoming).  Our research explores the motivation for the existence of this framework and the operational expectations upon which the success of the framework is predicated, including compliance with ensuing laws and regulations and the effective collection, use and sharing of knowledge, data and intelligence.  Specifically, Harvey (2008 and 2014) applied a cost benefit approach to evaluate the implications for the regulated sector of adoption of the updated FATF Recommendations[1] as translated into the EU Directives[2].  The latter paper together with Harvey and Lau (2008) looked in detail at the application of the Proceeds of Crime Act 2002 and the evidence gained from assets recovered about the activity of money launderers.

As former practitioners (Turner, law, and Harvey, banking) we are uniquely placed to understand the practical challenges faced by compliance departments within the regulated sector and on the value of effective working relationships between Money Laundering Reporting Officers and their contacts within the Financial Intelligence Units (FIU).  This relationship is critically underpinned by mutual trust when it comes to data sharing, transparency and co-operation.  More recent outputs, Van Duyne, Harvey and Gelemerova (2016, 2018) have considered in detail the role of mutual evaluation and the interrelationships between the regulated sectors and the FIU.  Bello and Harvey (2016) and Gelemerova, Harvey and van Duyne (2018) evaluated the impact on the compliance activity within financial institutions.

Our experience and research contribute to our knowledge and understanding of the national and international financial system, cross-border financial transactions and the flow of money around the globe, whether legitimate or the proceeds of crime, including the activity of the London financial markets and its role as a global financial centre and gateway to European financial markets.  Our research interests extend to topics closely related to anti-money laundering, such as terrorist financing, corruption, unexplained wealth orders, beneficial ownership, transparency and tax evasion (see, for example, van Duyne, Harvey and Gelemerova forthcoming).

Application of Knowledge and Research to the Development and Implementation of the Proposed EU-UK Security and Criminal Justice Treaty

The rapid expansion of tools and measures available to law enforcement agencies and the private sector under anti-money laundering regulation and legislation to enable the fight against money laundering is illustrative of the perceived significant threat of money laundering and terrorist financing to national security.  Furthermore, the UK’s Treasury and Home Office national risk assessment of October 2017 commits to strengthening the UK response in the future, in particular with respect to measures to identify and recover the proceeds of organised crime and corruption.  Therefore, in order to support national priorities relating to national security and cross-border threats, the successful development and implementation of the proposed EU-UK security and criminal justice treaty will require understanding and consideration of global financial and regulatory systems as outlined above.

Specific issues of interest and relevance include (amongst others):

  • the effective operation of the anti-money laundering (and counter-terrorist financing) framework, including the international expectation that the foundations of the system are functional;
  • the continuing ability of the UK to uncover and recover the proceeds of crime, including on a European and global basis, which may require access to and use of intelligence on a European and global basis;
  • the ability of the UK to gather, hold and share information with a view to the prevention of identified cross-border threats to national security, such as money laundering and terrorist financing, and with a view to the successful implementation of anti-money laundering and terrorist financing tools and measures, and those relating to unexplained wealth orders and tax evasion;
  • the ability to undertake effective international criminal investigations with a view to the prevention of such threats or the uncovering or recovery of the proceeds of crime;
  • the importance of the governance role of the UK, both for the UK and for European and global counterparts, in informing European and global strategy and direction in combating cross-border threats, taking into account the expertise, experience and intelligence within (and the economic importance of) the UK as a globally-significant financial hub;
  • the global upstream and downstream flows of information, including the internal structure of organisations within the regulated sector and their criminal interface, affecting the smooth operation of regulatory systems, and the competence and experience of those utilising such systems, both within and outside of the UK;
  • the co-operation of Financial Intelligence Units, including the sharing and monitoring of intelligence arising from Suspicious Activity Reports; and
  • the importance of ongoing practical co-operation and trust between law enforcement and the private sector in order to operate effectively and efficiently.

References

van Duyne, PC, Harvey J, and Gelemerova L (forthcoming) A critical review of money laundering research and legislative policy: concepts, analysis and myths, research monograph Palgrave Macmillan in production.

Turner, S, and Bainbridge, J (forthcoming) An Anti-Money Laundering Timeline and the Relentless Regulatory Response, Journal of Criminal Law, in production

Gelemerova L., Harvey J., and van Duyne PC. (2018) ‘Banks assessing corruption risk – a Risky undertaking’ in Campbell L and Lord, N Corruption (2018) Chapter 10, pp. 182-198 in Commercial Enterprise: Law, Theory and Practice, Oxford: Routledge.

Duyne, P.C. van, Harvey J., & Gelemerova, L., (2016)  ‘The Monty Python Flying Circus of Money Laundering and the Question of Proportionality’ Chapter 10 in ‘Illegal Entrepreneurship, Organized Crime and Social Control: Essays in Honour of Professor Dick Hobbs’ (ed) G. Antonopolous, Springer, Studies in Organized Crime 14.

Bello A and Harvey J (2016) “From a Risk-Based to an Uncertainty-Based Approach to Anti-Money Laundering Compliance” The Security Journal, 30 (1) pp. 24-38.

Harvey J (2014) “Asset Recovery Substantive or Symbolic” Chapter 9, pp. 183-202 in Dirty Assets: Emerging Issues in the Regulation of Criminal and Terrorist Assets, Dr Colin King and Professor Clive Walker Ashgate Publishing Ltd ISBN 9781409462538

Harvey J and Lau S F (2008) “Crime-money Records, Recovery and their Meaning” pp. 285-307 in van Duyne, P., Harvey, J., Maljevic, A., von Lampe, K., Miroslav, S (eds) (2008) “European crime-markets at cross-roads: Extended and extending criminal Europe”   Wolf Legal, Tilburg, The Netherlands,

Harvey J (2008) “Just How Effective Is Money Laundering Legislation?” The Security Journal, Vol. 21, pp 189 – 211 -  paper reproduced at chapter 10 in Beekarry N (Ed) (2013)Combating Money Laundering And Terrorism Finance: Past And Current Challenges, Edward Elgar 978 1 84980 751 7

 

Dr Jackie Harvey

Dr Jackie Harvey is Professor of Financial Management and Director of Business Research at Newcastle Business School.  Coming from the school of critical scholars, her evidence-based work challenges existing frameworks and approaches. The overall contribution to the discipline is around two main themes.  The primary focus is anti-money laundering policy and asset recovery; the second is the criminal interface with internal organisational structure.  This second area has produced work looking at the impact of morality within financial institutions and at the breakdown in interagency working in relation to child protection.

Jackie has been invited to speak at a number of very high profile academic and practitioner conferences in both the UK and Europe. She is on the Editorial Board for the European Cross-Border Crime Colloquium (www.cross-border-crime.net) that brings together researchers from across Europe. Her main teaching interests focus on financial crime, risk and financial market regulation. She undertakes a full range of academic duties including doctoral supervision and examination, external examining and peer review. Prior to becoming an academic, Jackie, whose PhD is in Taxation Policy, spent 10 years working for a major merchant bank, followed by a 3 year posting as fiscal policy adviser (under the auspices of the British Government) to the Ministry of Finance in Belize.

Sue Turner

Sue Turner is a senior lecturer and solicitor (non-practising) at Northumbria Law School.  Sue teaches a range of international finance and business law courses to postgraduates and has been approved by the Solicitors Regulation Authority to deliver the Professional Skills Course to trainee solicitors.  Sue’s research focuses on business and finance law, and she has a particular interest in anti-money laundering, including systems, policy and compliance, with particular relevance to the regulated sector.  Sue has recently collaborated with Francis FitzGibbon QC, the Chair of the Criminal Bar Association, Michael Gray and Jonathan Cousins of the Criminal Law Solicitors’ Association and Professor Tim J Wilson, Northumbria University Centre for Evidence and Criminal Justice Studies, undertaking research into the implications of Brexit for white collar crime, including anti-money laundering, to contribute to a submissions to a Justice Committee inquiry into the implications of Brexit for the legal system.  As a practising solicitor, prior to joining Northumbria University, Sue worked in the banking and finance team of an international law firm, specialising in cross-border finance transactions.

 


[1] Financial Action Task Force, International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation: The FATF Recommendations, February 2012; and the 2003 revision.

[2] Directives 2005/60/EC and 2001/97/EC