Title: International standards in anti-money laundering and combating the terrorist financing regulation: compliance and strategy changes

Authors: Concepcion Verdugo

Addresses: Department of Law and International Economics, University of Barcelona, Avinguda Diagonal 690, Torre 2, 08034 Barcelona, Spain

Abstract: The Anti-Money Laundering and the Combating of the Financing of Terrorism (AML/CFT) regime constitutes one of the international standards regulating the behaviour of states and private sector actors. Using a quantitative methodology, this paper provides evidence that different jurisdictions| compliance with international AML/CFT recommendations is globally low. In general, the jurisdictions do not comply with the legal requirements that are the bases of these standards; there still remain loopholes maintaining secrecy laws that hinder international cooperation and some private actors have failed to implement preventive measures such as Customer Due Diligence (CDD). All of the above failures and weaknesses hamper the effectiveness of the AML/CFT regime against money launderers and terrorists. In view of these results, to overcome low compliance it is necessary that states engage market participants, such as financial institutions, nondesignated financial business professions and transgovernmental regulatory networks, to participate in the policy design of the AML/CFT strategy.

Keywords: money laundering; terrorist financing; financial regulation; compliance; AML/CFT effectiveness; international standards; anti-money laundering regulation; international cooperation; preventive measures; customer due diligence.

DOI: 10.1504/GBER.2008.019988

Global Business and Economics Review, 2008 Vol.10 No.3, pp.353 - 378

Published online: 20 Aug 2008 *

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