How effective are financial sanctions against individuals?

Fabian Maximilian Johannes Teichmann

Journal of Money Laundering Control, 2020, vol. 24, issue 2, 440-445

Abstract: Purpose - The purpose of this paper is to discuss the role of money laundering methods in circumventing sanctions against individuals. In particular, it shows how politically exposed persons can circumvent sanctions through money laundering mechanisms. Design/methodology/approach - A total of 70 expert interviews were conducted, comprising 35 formal interviews with prevention experts and 35 informal interviews with money launderers. By subjecting their responses to qualitative content analysis, concrete ways of circumventing sanctions are identified. Findings - Financial sanctions against individuals are highly ineffective, as they can be easily circumvented. To successfully influence political processes, alternative mechanisms are necessary. Research limitations/implications - This study’s findings are limited to the perspectives of 70 interviewees. Hence, it is possible that a study with a larger sample conducted in different countries or at a different time could have yielded different results. Practical implications - Identifying the gaps in anti-money-laundering mechanisms should provide compliance officers and legislators with valuable insights into why the current prevention schemes are ineffective and how sanctions against individuals can be circumvented. The findings, thus, highlight the scope to improve compliance mechanisms and the need for other tools to influence political processes. Originality/value - The current sanctions against individuals are found to be ineffective means of influencing politics, as they can be easily circumvented. Hence, alternative mechanisms and tools are needed.

Keywords: Money laundering; Compliance; Sanctions; Embargos; Circumvention (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:jmlc-03-2018-0026

DOI: 10.1108/JMLC-03-2018-0026

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