The Financial War on Crime and Terrorism
Opportunities and Challenges
- 2025
- Book
- Editors
- Doron Goldbarsht
- Louis de Koker
- Jamie Ferrill
- Book Series
- European Yearbook of International Economic Law
- Publisher
- Springer Nature Switzerland
About this book
The financial crime landscape is rapidly evolving, and so too have government responses over the past decade. This book, a product of the Financial Integrity Hub (FIH), critically examines global vulnerabilities and proposes innovative solutions to combat illicit activities. It addresses the rising sophistication of financial crimes, fuelled by technological advances, globalisation, human fallibility, and regulatory gaps.
The book highlights the systemic nature of financial crime, connecting areas such as AML leadership challenges, exploitation of the gaming sector, AI in crime detection, wildlife trafficking financing, and opportunities in public-private and private-private information sharing. It explores how criminal activity can shift to exploit weaknesses in global systems, from corruption and godfatherism to state capture, underscoring the need for proactivity, along with suitable legal frameworks and enforcement.
Chapters explore the ethical dimensions of financial crime, including the role of professional facilitators, and highlight gaps in current legal frameworks, advocating stronger whistleblower protections, transparency in beneficial ownership, and adaptable regulations.
Through case studies and analysis, this book equips practitioners, policymakers, and academics with the knowledge to better prevent, detect, and mitigate financial crime, contributing to a more secure, transparent global financial system. It is essential reading for professionals across finance, law enforcement, regulation, and academia seeking to understand and mitigate financial crime risks.
Chapter “Geopolitcal of State Capture: Systemic Corruption as a Professional Service” is available open access under a Creative Commons Attribution 4.0 International License via link.springer.com.
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Table of Contents
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Frontmatter
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Financial Crime Prevention in an Age of Paradox
Jamie Ferrill, Louis de Koker, Doron GoldbarshtThis chapter delves into the intricate world of financial crime prevention, highlighting the paradoxes that arise from global enforcement regimes and technological advancements. It explores the historical context of financial crime, tracing its evolution from the 1980s to the present day, and examines the role of the Financial Action Task Force (FATF) in setting global standards. The chapter also discusses the impact of technological innovations, such as regulatory technology (RegTech) and supervisory technology (SupTech), on financial crime prevention efforts. It highlights the unintended consequences of these measures, including the rise of financial exclusion and the challenges of implementing effective prevention strategies. The chapter concludes by emphasizing the need for a more nuanced and evidence-based approach to financial crime prevention, one that balances the opportunities and challenges presented by technological advancements and global enforcement regimes.AI Generated
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AbstractFinancial crimes such as fraud, corruption, and proceeds of crime are embedded in societies globally. These crimes—from money laundering to terrorist financing, sanctions evasion to proliferation financing, corruption to kleptocracy, fraud to tax evasion, and everything in between—manifests in various forms. While the implications of these financial crimes may vary across borders, one thing is true: we—our states, institutors, and indeed ourselves as individuals—are all vulnerable in some way to financial crime abuse. -
Leadership in the Evolving Landscape of Financial Crime: Navigating AML/CTF Risks and Controls
Jamie Ferrill, Rachel SouthworthThis chapter delves into the pivotal role of leadership in the effectiveness of Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) compliance programs. It explores the human and social-organisational dynamics that contribute to the success or failure of these programs, an area often overlooked in the industry. The text introduces a theoretical construct for effectiveness in AML/CTF compliance, emphasizing the importance of leadership in achieving desired outcomes. It also presents a case study of leadership and AML/CTF compliance program ineffectiveness, highlighting the underexplored role of leadership as a causal factor in compliance failures. Furthermore, the chapter discusses the challenges in measuring the effectiveness of AML/CTF compliance at global, national, and institutional levels, and the role of leadership in navigating these complexities. The conclusion underscores the necessity of effective leadership in the ever-evolving landscape of financial crime, paving the way for future research and practical applications in the field.AI Generated
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AbstractThe global Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) control landscape is characterised by continuous evolution, driven by diverse and shifting regulatory frameworks, societal expectations, emerging threats, and interpretations of risk. This chapter investigates the critical role of leadership in navigating this complex environment in an institutional setting, offering theoretical insights and practical outcomes for improving financial crime risk assessment and strategic response.Drawing on contemporary leadership scholarship and practice, the chapter explores how leadership can influence financial crime risk management practices, specifically in maintaining effective AML/CTF compliance programs. The authors present the need for a measure of “effectiveness” and propose a model to illustrate the tangible benefits of strategic leadership for financial crime prevention, including the implementation of risk assessment frameworks that enhance compliance capabilities.The chapter further explores the influence of organisational culture, arguing that a culture aligned with adaptive and ethical principles is essential for effective AML/CTF risk management initiatives. It highlights how leaders can cultivate such a culture to meet evolving regulatory demands and societal pressures. Additionally, the analysis offers practical guidance on fostering environments that are receptive to innovation as well as proactive regulatory compliance.To ground these insights in real-world challenges, the chapter examines a high-profile case, offering a critical analysis of leadership and cultural missteps that resulted in regulatory breaches, organisational fallout, and an increased risk of financial crime. This case study serves as a cautionary tale, providing lessons on what can go wrong and how ineffectiveness leading to such failures can be mitigated through improved leadership and cultural strategies.Ultimately, this chapter bridges academic literature with practical implications, proposing a framework for leaders and policymakers to enhance financial crime control and prevention efforts. It calls for a rethinking of traditional leadership models and a greater emphasis on the application of adaptive, culturally aware strategies to keep pace with the evolving AML/CTF risk and control landscape. -
FATF and the Conundrum of Public-Private Sector Intelligence and Information Sharing
Paula ChaddertonThe chapter delves into the critical role of the Financial Action Task Force (FATF) in promoting information sharing between public and private sectors to combat financial crimes such as money laundering, terrorism financing, and proliferation financing. It explores the current landscape of information sharing, highlighting the importance of data, information, and intelligence in the fight against financial crimes. The text identifies key barriers and risks in public-private sector information sharing, including legal, technological, political, and cultural barriers. It also examines the role of Financial Intelligence Units (FIUs) and the limitations of the FATF Standards in supporting two-way information sharing. The chapter concludes with practical recommendations for improving information sharing practices, emphasizing the need for clear, specific provisions in the FATF Standards to empower and facilitate effective collaboration between public and private sectors. By addressing these issues, the chapter aims to enhance the overall effectiveness of AML/CTF/CPF efforts and better equip professionals to mitigate financial crime risks.AI Generated
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AbstractConcerns at the international, regional, and national levels about the increasing sophistication of financial crime and the strategies transnational organised crime groups use to launder money have led to increased interest in exploring innovative initiatives that optimise available information and resources. Public-private sector information sharing initiatives have been seen as a useful mechanism for optimising resources, garnering new insights on financial information and intelligence and improving reporting on financial crimes and transnational organised crime activities. However, a tension exists between the international community’s encouragement of greater public-private sector information and intelligence sharing on financial crime issues, and the extent to which international instruments (including the Financial Action Task Force (FATF) Standards) actually support that sharing. This tension has caused some commentators to doubt the effectiveness of anti-money laundering, counter-terrorism financing, and counter-proliferation financing (AML/CTF/CPF) frameworks in enabling public and private sector entities to identify, mitigate, and prevent their financial crime risks.In its current form, the FATF Standards’ focus is on providing financial intelligence units and law enforcement agencies with the information they need to identify, investigate, and prosecute financial crimes. This focus, however, effectively discounts the private sector’s role need for information and intelligence from diverse sources to fruitfully contribute to AML/CTF/CPF efforts.The increasing complexity of the evolving criminal environment warrants that the FATF reconsider its position and provide a clear, demonstrable basis for public-private sector information sharing. Moreover, the FATF must also consider granting the private sector a more active position in FATF activities. Implementing these reforms would not only recognise the importance of public-private sector collaboration in combatting financial crime, they would also offer the prospect of optimising the financial intelligence and information holdings of both the public and private sectors to the benefit of those sectors and the broader community. -
Private to Private: The Next Frontier of Financial Intelligence Sharing
Doron Goldbarsht, Timothy GoodrickThis chapter delves into the transformative potential of private-to-private (P2P) information sharing in the fight against financial crime. It begins by outlining the evolution of public-private partnerships (PPPs) and their limitations in providing a complete picture of financial transactions. The text then argues for P2P information sharing as the next frontier, offering enhanced detection and disruption of financial crimes such as money laundering and terrorism financing. The chapter explores the benefits of P2P sharing, including improved risk assessments, operational efficiency, and reduced de-risking. It also discusses the challenges and legal considerations, highlighting the need for secure data-sharing channels and regulatory alignment. Case studies from the United States, Singapore, and the Netherlands illustrate different models of P2P information sharing, providing practical insights into implementation. The chapter concludes by emphasizing the need for further research and collaboration to overcome barriers to participation and enhance the effectiveness of P2P information sharing in combating financial crime.AI Generated
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AbstractEfforts to counter financial crime have increasingly relied on Public-Private Partnerships (PPPs) to facilitate intelligence sharing between law enforcement and the financial sector. While these arrangements have improved coordination and contributed to the disruption of illicit financial activity, they remain limited by their dependence on public-sector initiation and oversight. This chapter argues that Private-to-Private (P2P) information sharing represents a necessary next step in the evolution of financial crime prevention frameworks. Drawing on global regulatory developments and practical case studies, the chapter explores the potential for P2P mechanisms to close existing intelligence gaps, enabling earlier detection and disruption of criminal networks. It critically evaluates two dominant models of P2P information exchange, highlighting the legal, technical, and governance challenges they present. Ultimately, the chapter calls for the development of trust-based, accountable systems of intra-sector collaboration, capable of enhancing the effectiveness and efficiency of global anti-money laundering and counter-terrorism financing regimes. -
Network Analytics and Generative Artificial Intelligence: A Hybrid Approach to Money Laundering Detection
Milind TiwariThis chapter delves into the innovative approach of combining network analytics with generative artificial intelligence to bolster money laundering detection efforts. It begins by outlining the traditional methods of money laundering and the challenges faced by current detection systems. The text then introduces the concept of using graph databases to model and analyse complex financial networks, highlighting how this can reveal hidden relationships and patterns that are often obscured in traditional data formats. A significant portion of the chapter is dedicated to exploring the role of generative AI, particularly large language models (LLMs), in enhancing these investigations. It demonstrates how LLMs can be used to generate sophisticated queries, uncover new lines of inquiry, and make advanced data analysis more accessible to a broader range of users. The chapter also discusses the importance of data quality, ethical considerations, and the need for human oversight in ensuring the reliability of AI-driven insights. Practical examples and case studies are provided to illustrate the effectiveness of this hybrid approach, including the identification of suspicious activities such as lack of beneficial ownership disclosure, shared addresses among multiple companies, and directors holding numerous executive appointments. The chapter concludes by highlighting the potential of this integrated approach to significantly enhance the capabilities of financial institutions and regulatory bodies in detecting, investigating, and disrupting illicit financial flows. It also outlines future research directions, including the development of robust methodologies for LLM integration, exploring the scalability of the hybrid approach, and fostering interdisciplinary collaboration to ensure responsible deployment of these technologies.AI Generated
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AbstractThis chapter focuses on the potential integration of graph databases and generative artificial intelligence (GenAI), such as large language models (LLMs), for enhancement of anti-money laundering (AML) detection efforts. The explored methodology is primarily conceptual, outlining a framework for how these technological advancements could be combined, rather than detailing currently deployed systems. The methodology involves focusing on the growing role of LLMs in regulatory compliance and graph databases in uncovering money laundering schemes, thus paving the way for supporting an agile and proactive AML infrastructure. Graph databases facilitate investigators to identify hidden relationships within a network of illicit entities, exposing hidden relationships across entities. By leveraging the capabilities of GenAI, organisations could potentially map these complex relationships between entities in real-time and draw actionable insights. Moreover, such an integration would allow AML practitioners to visualise, interpret, and disrupt illicit networks with unprecedented precision. The integration, while offering enormous opportunity, underscores the importance of addressing challenges including data biases, ethical considerations, and the need for interdisciplinary collaboration to fully utilise capabilities of technological innovations in combatting financial crime. -
Illegal Wildlife Trade as a Method of Financing Terrorism
Cayle LuptonThis chapter explores the potential of illegal wildlife trade (IWT) as a method of financing terrorism, focusing on the African continent. It begins with an overview of the terrorism landscape in Africa, highlighting the activities of groups like Al-Shabaab and Boko Haram, and their known and suspected financing methods. The chapter then analyzes the factors that contribute to the appeal of IWT for terrorism financing, including profitability, proximity to poachers and wildlife, porous borders, reliance on cash and informal payment systems, and AML/CTF considerations. The discussion also covers the challenges in addressing the terrorism financing-IWT nexus, such as the lack of awareness and resources for financial investigations in wildlife cases. The chapter concludes by emphasizing the need for an integrated approach involving multiple stakeholders to effectively address this complex issue. Readers will gain insights into the evolving financing mechanisms of terrorist groups, the role of IWT in terrorism financing, and the importance of cross-discipline collaboration in combating this threat.AI Generated
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AbstractThe economic, societal, and environmental harm associated with the illegal wildlife trade (IWT) is well-documented and uncontroversial. The same, however, is not true of the connection between IWT and terrorism, since early claims in point were supported by weak, unverifiable evidence. In recent times, however, several authoritative sources have referred to a limited use of IWT in the financing of terrorism. Despite these pronouncements, there remains a notable gap in the academic literature on the terrorism financing-IWT nexus. This chapter seeks to illustrate the potential of IWT to develop into a prolific terrorism financing method. The chapter concludes that to effectively address the terrorism financing-IWT nexus and terrorism in general, an integrated approach, involving multiple stakeholders, is essential. -
Practice to Deceive: A Taxonomy of Money Laundering Deception Based on US and Australian Case Studies
Ben ScottThis chapter examines the role of deception in money laundering, focusing on the legal frameworks in the US and Australia. It introduces a taxonomy of deception developed by cybersecurity researchers Rothstein and Rowe, which is applied to two real-life case studies: the Australian Changjiang Financial case and the US Toronto Dominion Bank case. The chapter explores how deception is used in money laundering, distinguishing between primary deception practiced by criminal organizations and secondary deception practiced by financial service providers. It also discusses the challenges of detecting and preventing money laundering, highlighting the importance of understanding deception in this context. The chapter concludes with insights into how governments and the private sector can more effectively detect, disrupt, and prevent financial crime.AI Generated
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AbstractThe practice of deception is integral to financial crime in many of its forms. The criminal offence of money laundering involves knowingly conducting transactions, movements of funds or dealings in property that are derived from criminal activity. Concealing or disguising the criminal origins of crime-derived wealth is one of the acts which distinguishes money laundering from simply spending the proceeds of crime. Despite the centrality of deception to money laundering, there has been limited research into how money laundering deception operates and the forms it takes. The established three-stage conceptual model of the money laundering cycle provides a useful framework for understanding certain kinds of laundering activity. However, it does not support the granular analysis of deception practice which this chapter argues is fundamental to developing effective anti-money laundering control environments within advanced economies.The chapter aims to develop deception as a lens through which to facilitate applied research into the detection and prevention of money laundering by combining legal analysis with financial intelligence case studies. It draws on frameworks developed within cybersecurity and intelligence to support a deeper analysis of deception practice in money laundering. The chapter begins with a review of the element of deception in the criminal law of money laundering, focusing on the common law jurisdictions of Australia and the United States. The chapter then applies a taxonomy of deception developed by cybersecurity researchers Rothstein and Rowe to two case studies of complex money laundering: the Toronto Dominion Bank and Changjiang Financial cases. The chapter posits a distinction between primary deception, which focuses on concealing the criminal origin of transactions, funds and assets through various means, and secondary deception, which involves plausible denial of criminal knowledge, usually by third-party facilitators. -
Geopolitics of State Capture: Systemic Corruption as a Professional Service
- Open Access
Download PDF-versionThis chapter delves into the geopolitics of state capture, a systemic corruption phenomenon that has become embedded in global capital markets. It examines how elites instrumentalise state institutions to extract rents and launder proceeds through transnational professional enablers, notably financial institutions. The chapter also explores how state capture transcends self-serving corruption, with countries like China and Russia using it as a tool for hybrid warfare and grey-zone tactics. The text provides a proof-of-concept for a theoretically-driven comparative approach to state capture, drawing on case studies of the Eastern European Laundromat and the Zuma administration in South Africa. It also conceptualises the failures of legal and regulatory regimes through a global state capture lens and expands upon nascent research on state capture as a political modality. The chapter concludes that state capture is not merely an outcome but a dynamic and strategic mode of governance with significant geopolitical implications.AI Generated
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AbstractThis chapter explores the geopolitical implications of systemic corruption by way of state capture. No longer a mere byproduct of weak governance, illicit gains from state capture have become an instrument of geopolitical leverage that large authoritarian states such as Russia and China use to project power and influence. State capture characterises a system where private interests collude to shape laws, policies, and regulations for their personal benefit by subverting public institutions. State capture endures due to systemic failures in domestic and international legal regimes and is exacerbated by economic globalisation, which enables transnational illicit financial flows associated with state capture. Case studies of South Africa under Jacob Zuma and the Eastern European Laundromat illustrate how financial institutions, corporate service providers, and public relations firms broker illicit influence. These professional enablers exploit legal asymmetries and regulatory gaps to launder wealth, obscure ownership, and legitimise corrupt regimes. The chapter reframes state capture as a political modality: a dynamic, transnational instrument of geopolitical competition that capitalises on an architecture of global finance and governance whose inadequate and inconsistent regulatory frameworks, notably FATF’s gatekeeper model, foster rampant non-compliance. -
Corrupt Elites and Godfathers in Nigeria: Structural Impunity and the Undermining of Accountability
Jackie H. Harvey, Petrus C. van DuyneThis chapter examines the pervasive issue of political elitism and godfatherism in Nigeria, focusing on their historical context, characteristics, and consequences. It begins by exploring the concept of 'elite', its various definitions, and the challenges in delineating it. The chapter then delves into the phenomenon of godfatherism, its role in political decision-making, and its link to corruption. It also discusses the impact of these issues on Nigeria's democracy and economic development. The analysis is based on a review of literature, media sources, and NGO reports, providing a comprehensive overview of the subject. The chapter concludes by highlighting the need for further research and the importance of addressing these issues to strengthen Nigeria's democratic processes and promote economic growth.AI Generated
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AbstractCorruption would appear to be almost ‘hardwired’ into the fragile democracy of Nigeria. Well-endowed with natural resources, Nigeria should have been one of the wealthiest countries in West Africa. Instead, it has one of the highest levels of inequality with a large part of the population living below the poverty line in contrast to a small elite that has reserved access to the national wealth. Based on a review of literature on the subject that is supported by documentary analysis of media sources and of known cases, our chapter seeks to understand the social historical context of corruption of the ruling elite.Within many countries there is an inevitable tension between the ideals of equality across the wider population and the favourable position of a far smaller group of political elitist entrepreneurs. A small part of it manifest itself as ‘godfathers’, wealthy political patrons, who form the political elite class. Of interest is the position of this godfatherism in Nigerian society, whether that be within the political or economic sectors, and how they are able to influence decisions of social and economic importance by influencing the instalment into high positions of their nominees (godsons). But the godson remains dependent as he must pay back the investment. This can lead to rigged election outcomes and processes. When elitism becomes corrupted in this manner, we find that established norms and traditional hierarchical deference to authority actually protect those politically powerful elitist entrepreneurs, which would place them ‘above the law’. This position will only change when there is far greater transparency within the decision-making process as currently the case. -
Dangerous Play: AML/CTF/CPF Risks in the Gaming Sector
Jeffrey SimserThis chapter delves into the complex interplay between the gaming sector and money laundering, revealing how criminal organizations exploit vulnerabilities in both regulated and unregulated markets. It explores the three stages of money laundering—placement, layering, and integration—and how gaming platforms can be used to disguise illicit wealth. The chapter examines regulatory systems in Canada, highlighting the role of FINTRAC and provincial regulators in mitigating money laundering risks. It also discusses various money laundering typologies, including the Vancouver Method, junket operators, and the use of underground banking networks. Additionally, the chapter touches on the risks posed by match-fixing, proliferation financing, and the use of cryptocurrency in money laundering schemes. The conclusion emphasizes the need for increased political awareness, improved regulatory systems, and operational cooperation to combat the growing threat of money laundering in the gaming industry.AI Generated
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AbstractMoney laundering is a foundational function for transnational organized crime, back office activity moving illicit profits to the right place without interdiction by law enforcement or criminal rivals. Gaming is popular around the world, functioning in regulated, under-regulated and unregulated markets. The chapter explores the exploitation of gaming systems by money launderers, hiding illicit financial flows in the larger stream of gaming revenue.The chapter begins with a discussion of money laundering, gaming and the regulatory systems used to manage risk. The Canadian system is offered as an example. The chapter then explores money laundering typologies that have pierced the regulatory systems governing land-based casinos in Canada, the United States and Australia. Typologies that can penetrate the regulated online gaming system in Europe are then considered.The chapter then moves to the massive gaming grey market, where gaming is either unregulated or under-regulated. Junkets and an intense demand to evade Chinese restrictions on gaming and capital flight have created a perfect storm, opening up a massive informal value transfer system that has spread from Southeast Asia into all corners of the world. The resultant underground banking network has matched professional money launderers with transnational organized crime worldwide, including Central American drug cartels and European organized crime.The chapter briefly notes the challenges posed by match-fixing and corruption in sport. The links between gaming, cryptocurrency and terrorism/proliferation financing are considered. Finally, the chapter concludes with three examples that show the linkages between gaming, transnational organized crime and money laundering. The chapter concludes by observing that while there is ample literature discussing money laundering and research into gaming, more work needs to be done on the linkages between the two activities. -
International Arbitration and Money Laundering: Is There an Actual Issue?
Robert WaltersThis chapter examines the evolving landscape of international arbitration and its potential role in money laundering activities. It explores the challenges posed by the principle of confidentiality in detecting and reporting illicit financial transactions. The chapter delves into the use of advanced technologies such as blockchain, artificial intelligence, and quantum computing in arbitration processes and their implications for money laundering detection. It also compares arbitration rules and institutional frameworks across various jurisdictions, highlighting the complexities and inconsistencies in addressing money laundering within arbitration proceedings. The chapter concludes by discussing the ethical and legal obligations of arbitrators in reporting suspected money laundering activities, emphasizing the need for further research and regulatory clarity in this area.AI Generated
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AbstractInternational commercial arbitration (ICA) has long been considered an effective tool to resolve cross border trade and investment disputes. However, with technology and the potential for arbitrators to be exposed to, and placed in complex situations where, for instance, resolving financial transactions disputes that for part of an arbitral procedure could directly or indirectly be associated with Money Laundering (ML).ICA is a non-judicial mechanism for public and private disputes, where the parties agree (Redfern and Hunter, Law and practice of international commercial arbitration. Oxford University Press, 1986, p 23), through either a contract and/or arbitration agreement to resolve disputes. While arbitration is voluntary, the process itself provides a high level of confidentiality to the parties. It keeps the dispute out of the courts. One of the fundamental features of international arbitration is confidentiality. This well understood principle could be in conflict with ML activities that arise from arbitral proceedings. This chapter will compare the arbitral laws of the United National Commission on International Trade Law, and the national laws of Australia, India, United Kingdom, United States, European Union, and selected Arbitration Institutions from these economies, to confirm or otherwise whether they adequately address ML activities. The chapter will confirm or otherwise as to whether there is a need for the laws, standards and rules used by arbitrators in arbitral proceedings are in need of updating.Notwithstanding this, the above is based on the fact that from time to time, there could be contracts that parties have agreed upon, prior to a dispute, raise complex issues related to burden of proof, evidentiary requirements, applicable criminal laws, enforcement, and judicial review (Born, International commercial arbitration, vol I–III, 2nd edn. Kluwer Law International, 2014). The question arises, what are the obligations of an arbitrator under the rules of confidentiality and impartiality to the arbitral process, when having to deal with issues of ML? This chapter will look at whether there have been technology breakthroughs such as blockchain that could assist in managing these issues. It will look at the international and national definition of ML and contracts the definition/s with the arbitral rules and standards.Significantly, this chapter will address the rules of evidence as they pertain to the well founded and generally applied rules of the balance of probabilities for arbitration proceeding, versus the principle of beyond reasonable doubt for criminal offences such as ML. This alone will be complex to reconcile as arbitrators begin to use and apply technology to an arbitral proceeding. The technology itself may be able to mask or hide such activities; therefore an arbitrator will require new skills so as to ensure they are not compromised. That said, it will be argued how overcoming confidentiality in arbitration will be problematic, when compared to the current day laws and selected arbitration institutional rules. In concluding this chapter, the arbitrator will need to reconcile how they deal with a detection of ML, and how they manage the issue and/or whether there is an obligation to report the alleged criminal activity. This will need to be finely balanced between an arbitrator’s obligation to confidentiality, and the implementation of relevant rules and arbitration laws. -
The Impact of the Financial Action Task Force (FATF) Standards and Focus: From Effectiveness to Effect
Nicholas Morris, Louis de KokerThe chapter delves into the role and impact of the Financial Action Task Force (FATF) in setting and enforcing global standards for anti-money laundering and combating the financing of terrorism (AML/CFT). It explores the effectiveness of FATF's measures, focusing on the correlation between FATF activities, technical compliance, and governance outcomes. The chapter also examines the unintended consequences of FATF standards, such as financial exclusion and higher remittance costs. It provides a detailed analysis of FATF's impact on various countries, using a range of indicators and data sources. The chapter concludes that while FATF has achieved high levels of technical compliance, there is little evidence of a meaningful 'real-world' impact on governance or crime prevention outcomes. It suggests that the FATF's focus on larger economies in the fifth round of mutual evaluations may increase the overall effectiveness of the implementation of the FATF standards.AI Generated
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AbstractThe Financial Action Task Force (FATF) is the global intergovernmental standard-setting body for anti-money laundering and the combating of terrorist and proliferation financing (AML/CFT/CPF). More than 200 jurisdictions globally are committed to complying with its standards. They are subject to peer-based evaluation of the quality of their compliance and to black- and grey-listing, with accompanying negative economic impact, when their systems are found wanting. This has placed considerable burden on smaller, less-developed, countries. The FATF reformed its greylisting processes in 2024 to provide some protection for smaller economies in the fifth round of mutual evaluations, with increased focus on larger economies.This chapter considers the time and attention that the FATF has focused to date on smaller economies compared to larger economies and whether there is evidence of positive crime-combating and governance benefits resulting from the attention. Applying a FATF Activity Score, it finds that the FATF has focused extensively on lower-middle income countries while devoting the least time to the rich countries that generally hold and process the largest share of global illicit funds. The chapter also considers whether there are correlations between the FATF’s activity and focus and higher governance and crime-combating levels in a country. The study finds little correlation between FATF-related activities aimed at raising country compliance levels, the country’s FATF effectiveness scores, and positive governance and crime prevention outcomes of the country. The FATF activity and pressure to date has resulted mostly in higher levels of technical compliance with the FATF standards. This is out of proportion with other key indicators and development factors for smaller economies, resulting in a ‘rhino horn’ effect in spider diagrams of key indicators, with high technical compliance levels that are not proportionately reflected by achievements in the related indicators.The lack of impact may be due to incorrect assumptions that compliance with the FATF standards would lead to such positive outcomes. Poor implementation of laws and structures could, however, explain in part the lack of clear correlation with positive governance and crime prevention outcomes. Unfortunately, effective implementation may not improve for low-income countries during the new round of mutual evaluations. Lack of resources and capacity is often a key constraint in these economies and this is unlikely to change. A greater focus on effective implementation of the FATF standards by richer economies in FATF’s fifth round of mutual evaluations commencing in 2025 may in fact deliver better overall governance and crime prevention outcomes. Political will is, however, a key constraint in these economies, and this constraint may become more challenging in the current period of geopolitical fragmentation and repositioning. -
The Financial War on Crime and Terrorism—Important Research Questions
Louis de Koker, Doron Goldbarsht, Jamie FerrillThis chapter explores the critical research questions shaping the future of anti-money laundering (AML), counter-terrorism financing (CTF), and counter-proliferation financing (CPF) efforts. It delves into the optimal strategies for AML/CTF/CPF measures, the challenges in measuring their effectiveness, and the transition from reactive to proactive approaches. The role of Artificial Intelligence (AI) as both a risk vector and an opportunity for detection and prevention is also examined. Additionally, the chapter discusses the impact of shifting geopolitical realities and emerging technological risks on financial crime control measures. It provides a historical context, tracing the evolution of financial crime policy from the 1970s to the post-9/11 era, and highlights the complexities and urgencies of these questions in the ongoing financial war on crime and terrorism. The chapter concludes by emphasizing the need for improved alignment between researchers, policymakers, compliance officers, and law enforcement to build a resilient, effective, and efficient AML/CTF/CPF framework.AI Generated
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AbstractThe fight against financial crime is often framed in military terms, with compliance officers and law enforcement professionals portrayed as soldiers engaged in battles within a broader war on crime. This collection has examined several facets of that struggle, including the fundamental question of whether the war is, in fact, being won. Yet, in an era of growing geopolitical fragmentation and the increasing deployment of sanctions against nation-states, the boundaries between military conflict and financial crime are becoming increasingly blurred. The overarching strategy—and progress toward it—remains uncertain. Despite significant investment and mounting regulatory pressure, it is still difficult to determine whether current approaches are effectively disrupting criminal activity or merely enhancing compliance metrics. This chapter explores key research questions that emerge from this evolving and complex landscape. -
Correction to: Geopolitics of State Capture: Systemic Corruption as a Professional Service
- Open Access
Download PDF-versionThis chapter delves into the geopolitics of state capture, focusing on systemic corruption as a professional service. It presents corrected Venn diagrams that illustrate the overlapping roles and activities of corporate and legal service providers, financial institutions, and public relations firms. These diagrams highlight shared practices such as aggressive tax avoidance, money laundering, reputational laundering, and political lobbying, as well as strategic philanthropy and brokerage. The chapter also includes a bar and line chart showing FCPA enforcement data from 1977 to 2024, revealing fluctuations and notable peaks in enforcement actions involving intermediaries. Additionally, a bar chart breaks down FCPA enforcement actions by the type of intermediary involved, emphasizing the predominance of actions involving agents, consultants, and brokers. The chapter concludes with a comprehensive analysis of the data, providing insights into the patterns and prevalence of corruption in various sectors.AI Generated
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- Title
- The Financial War on Crime and Terrorism
- Editors
-
Doron Goldbarsht
Louis de Koker
Jamie Ferrill
- Copyright Year
- 2025
- Publisher
- Springer Nature Switzerland
- Electronic ISBN
- 978-3-032-06360-1
- Print ISBN
- 978-3-032-06359-5
- DOI
- https://doi.org/10.1007/978-3-032-06360-1
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