Raising Awareness and Sensibility in the Anti-Money Laundering and Countering the Financing of ...

155 Pages·2017·1.51 MB·English

Raising Awareness and Sensibility in the Anti-Money Laundering and Countering
the Financing of Terrorism Network

by
Sharipov Mirzosharif
Student ID: 51215600
September, 2017

Thesis submitted to the Higher Degree Committee
of Ritsumeikan Asia Pacific University
in Partial Fulfillment of the Requirements for the Degree of
Master of Science in International Cooperation Policy
To
My beloved Father, Mother,
Spouse and Children
ACKNOWLEDGEMENTS
I would first like to thank my thesis adviser, Professor Shunso Tsukada, for his
invaluable insights and support in the process of writing this research paper. The door of
his office was always open whenever I ran into an obstacle or had questions about my
research or writing. Prof. Tsukada consistently allowed this paper to be my own work,
yet he also continued to correct and guide me whenever he thought I needed it. Prof.
Tsukada made great contributions not only with regard to my research, but also in
keeping my character positive.
I would also like to thank the Government of Japan and the Government of the
Republic of Tajikistan for providing me with the opportunity to study in such a
wonderful and prosperous country as Japan. I would like to express my warmest
gratitude to the Japan International Cooperation Agency (JICA) and Japan International
Cooperation Center (JICE) for their immense contributions to the flow of the Japanese
Grant Aid for Human Resource Development Scholarship (JDS), which provided me
and other JDS fellows with opportunities to study at Ritsumeikan Asia Pacific
University (APU) toward receiving the degree of Master of Science in International
Cooperation Policy.
Additionally, I wish to express my highest appreciation to the National Bank of
Tajikistan; specifically, to Chairman Nurmahmadzoda Jamshed, First Deputy Chairman
Nuraliev Jamoliddin Kamolovich and other members of the Board of Managers for their
emotional and technical support. I would also like to thank Bilolov Farkhod, former
head of the Financial Monitoring Department of the National Bank of Tajikistan, for
similar support. Finally, I wish to thank Zakirova Takhmina and Salimova Takhmina
for their assistance in providing technical support when dealing with relevant
documents.
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In addition to the above, I would like to thank my teachers and friends at APU,
in particular, Professors Philip Pardo, Davila Gilder, and my friends Ian Bisset, Joseph
Aduba Junior for their invaluable insights and great help in the process and after the
process of writing this paper.
Finally, I would like to sincerely thank my family members, my dear mother, my
wife, and my two adorable sons, Mirzokhakim Sharipov and Abdurrahmon Sharipov,
for being with me in Japan and for their mental support when I was studying and
writing this paper.

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CERTIFICATION PAGE
I, Sharipov Mirzosharif (student ID: 51215600) hereby declare that the contents
of this Master‟s Thesis/Research Report are original and true, and have not been
submitted at any other university or educational institution for the award of degree or
diploma. All the information derived from other published or unpublished sources has
been cited and acknowledged appropriately.

SHARIPOV Mirzosharif, September 1, 2017

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TABLE OF CONTENTS

ACKNOWLEDGEMENTS……………………………………………………….. iii-iv
CERTIFICATION PAGE……………………………………………………...............v
TABLE OF CONTENTS…………………………………………………............... vi-ix
LIST OF TABLES……………………………………………………………………... x
LIST OF FIGURES…………………………………………………………................xi
LIST OF ABBREVIATIONS…………………………………………………… xii-xiv
ABSTRACT…………………………………………………………………............... xv
CHAPTER 1. INTRODUCTION……………………………………………............... 1
1.1. Introduction………………………………………………………………..1-3
1.1.1. Concept of money laundering……………………………...........3-4
1.1.2. Financial Action Task Force……………………………………. 4-5
1.1.3. Financial Intelligence Unit and FIs………………...…………....5-7
1.1.4. History of the FIU……………………………………………... 7-10
1.1.5. Dilemma inside the AML/CFT network……………………...10-12
1.2. Statement of the problem……………………………………….............12- 13
1.3. Background and need………………………………………………….. 13-14
1.4. Objectives and methodology……………………………………………….15
1.4.1. Objectives……………………………………….......................... 15
1.4.2. Methodology…………………………………………………. 15-17
1.5. Summary of the chapter………………………………………………...18- 19
CHAPTER 2. LITERATURE REVIEW……………………………………………. 20
2.1. Introduction……………………………………………………………. 20-21
2.2. Review of the AML/CFT literature……………………………………. 21-22
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2.2.1. A Comparative Guide to Anti-Money Laundering: A Critical
Analysis of Systems in Singapore, Switzerland, the UK and the
USA………………………………………………………………….….22
2.2.2. Dirty Dealing: The Untold Truth about Global Money Laundering,
International Crime and Terrorism…………………………………22-23
2.2.3. Russian Federation in the International Framework of Combating
Legalization (Laundering) of Criminal Proceeds and Financing of
Terrorism………………………………………………………………..23
2.2.4. Technology and Anti-Money Laundering: A Systems Theory and
Risk-Based Approach………………………………………………..23-24
2.2.5. Money Laundering Law and Regulation: A Practical Guide... 24-25
2.2.6. Money laundering: An endless cycle? A comparative analysis of
Anti-Money Laundering policies in the United States of America, the
United Kingdom, Australia and Canada…………………………….25-26
2.3. The birth of money laundering………………………………………… 26-31
2.4. International AML/CFT initiatives…………………………………….. 31-34
2.5. History of the FATF……………………………………………............ 34-35
2.5.1. Objectives, functions and tasks of the FATF……………........35-36
2.5.2. Structure of the FATF………………………………………... 36-37
2.5.3. FATF‟s 40 Recommendations……………………………….. 37-42
2.6. Summary of the chapter………………………………………………...42-43
CHAPTER 3. OVERVIEW OF AML/CFT REGIMES IN THE US AND UK…...44
3.1. Introduction………………………………………………………………... 44
3.2. US in a global fight against money laundering………………............... 44-45
3.2.1. US AML/CFT regulations…………………………………… 45-47
3.2.2. Implementation of AML/CFT standards……………………..47-49
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3.2.3. Competent authorities in the US……………………………... 49-53
3.2.4. Financial sector and DNFBPs………………………………... 53-56
3.2.5. Concluding remarks…………………………………………. 56-57
3.3. UK in the international AML/CFT framework………………………... 57-59
3.3.1. AML/CFT regulations in the UK….………………………… 59-60
3.3.2. Implementation of AML/CFT standards…………………….. 60-61
3.3.3. Competent authorities in the UK…………………………….. 61-65
3.3.4. Concluding remarks…………………………………………. 65-68
3.4. Summary of the chapter…………………………………………………… 68
CHAPTER 4. ANALYTICAL FRAMEWORK……………………………………. 69
4.1. Introduction………………………………………………………………... 69
4.2. Analytical framework……………………………………………………... 69
4.2.1. Walker Gravity Model………………………………….......... 69-71
4.2.2. Theory of Crying Wolf………………………………………. 71-74
4.2.3. Systems theory……………………………………………….. 75-76
4.3. Agency theory…………………………………………………………. 76-77
4.3.1. History of agency theory….…………………………………. 77-81
4.3.2. Two perspectives within agency theory….………………….. 81-84
4.3.3. Contribution and criticism of agency theory………..……….. 84-85
4.3.4. Agency theory‟s applicability to the research topic…………. 85-87
4.4. Summary of the chapter…………………………………………………… 87
CHAPTER 5. FINDINGS AND DISCUSSION…………………………………….. 88
5.1. Introduction……………………………………………………………….. 88
5.2. Sensing the other: The cause célèbre of the research problem………. 89-101
5.3. Discussion of AML/CFT regimes in the US and UK………………......... 101
5.3.1. US in a global fight against money laundering…………… 102-105
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5.3.2. UK in the international AML/CFT framework…………… 105-109
5.3.3. Concluding remarks……………………………………….. 109-111
5.4. Raising awareness and sensibility in the AML/CFT network............. 111-117
5.5. Summary of the chapter……………………………………………... 117-118
CHAPTER 6. CONCLUSION……………………………………………………… 119
6.1. Concluding remarks…………………………………………............. 119-123
6.2. Suggested recommendations………………………………………... 123-125
6.3. Suggestions for further research…………………………………............. 125
6.4. Limitations of the study………………………………………………….. 125
LIST OF REFERENCES……………………………………………………….126-131
APPENDIXES………………………………………………………….............. 132-140
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LIST OF TABLES
Table 1. A few of the most important initiatives targeting money laundering;
Table 2. Egmont FIU Information Sharing Statistics-seeking/receiving;
Table 3. Egmont FIU Information Sharing Statistics;
Table 4. Reach of the U.S. liaison network to facilitate cooperation;
Table 5. Incoming Mutual Legal Assistance (MLA) and Extradition Requests
(2009-2014);
Table 6. Top Five (5) FinCEN query Users in Fiscal Year (FY) 2015;
Table 7. Reports received by FinCEN annually;
Table 8. Number of SAR filings by financial institution (2010-2015*);
Table 9. Money laundering investigations initiated by IRS-CI, ICE-HSI and the
FBI (2011-2014);
Table 10. Number of ML charges, convictions and conviction rate (2010-2014);
Table 11. Number of depository institutions;
Table 12. Requests received from foreign FIUs;
Table 13. Total number of SARs reported by sector and year;
Table 14. Defendants proceeded against for money laundering related offences.

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