AML‐CTF: a forced marriage post 9/11 and its effect on financial institutions

Gauri Sinha

Journal of Money Laundering Control, 2013, vol. 16, issue 2, 142-158

Abstract: Purpose - The purpose of this paper is to explain the incompatibility of anti‐money laundering (AML) and counter‐terrorist financing (CTF) measures as a hasty over‐reaction after 9/11, focusing on the compliance burdens that this imposes on the regulated sector, most notably financial institutions. Design/methodology/approach - This paper explains the fundamental differences between money laundering and terrorist financing. It follows the evolution of the marriage between AML and CTF measures in the USA and the UK, comparing the pre and post‐9/11 phases. Consequently, the specific legal burdens placed on financial institutions as a result of this marriage are discussed. Findings - The paper, while recognising the importance of targeting terrorist money, contends that inherent differences exist between money laundering and terrorist financing, and fusing them together is a hasty reaction to the 9/11 attacks. It argues that the need of the hour is to focus on terrorist profiling, rather than attempting to target terrorist financing through the AML regime. It also concludes that financial institutions are unfairly burdened with the task of “suspecting” terrorist funds, while receiving little or no guidance in this respect. Originality/value - This paper is of value to governments, regulators, and financial institutions considering the effective implementation of the AML‐CTF regime in the UK and the USA.

Keywords: Anti‐Money Laundering; Counter‐Terrorist Financing; Financial Institutions; Compliance; Compliance burden; 9/11 over‐reaction; Suspicious activity reports; United Kingdom; United States of America; Terrorism; Money laundering (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:13685201311318494

DOI: 10.1108/13685201311318494

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