The regulatory dialectic and innovation in service-based money laundering

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

Journal of Financial Crime, 2024, vol. 32, issue 1, 245-254

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.

Keywords: Money laundering; Banking; Regulatory policy; International trade and finance (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfcpps:jfc-03-2024-0110

DOI: 10.1108/JFC-03-2024-0110

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