The anti-money laundering expectations gap in Iran: auditor and judiciary perspectives

Vahid Molla Imeny, Simon D. Norton, Mahdi Moradi and Mahdi Salehi

Journal of Money Laundering Control, 2021, vol. 24, issue 4, 681-692

Abstract: Purpose - This study aims to compare judicial and auditor expectations of audit in the detection and reporting of money laundering in Iran. It also aims to assess the implications of expectations gap for the reliability of data provided to the Financial Action Task Force (FATF) in its blacklisting policy. Design/methodology/approach - Questionnaires were administered to auditors to determine perceptions of their anti-money laundering (AML) reporting obligations. These were also completed by Iranian judges who hear money laundering prosecutions and who agreed to participate in the research. The group was created through the “snowballing” technique. Findings - There is significant divergence between judges and auditors regarding the latter’s AML reporting obligations. Self-perception among auditors regarding investigative duties is insufficiently aligned with expectations of the FATF, particularly where there is use of corporate structures, charities and trusts in which identity of true owners, of payers and payees of funds cannot be accurately verified. This gap presents a significant terrorist financing risk. Practical implications - The expectations gap makes training in forensic accounting, as well as compliance with international reporting expectations, a matter of urgency for the Iranian auditing profession. The judiciary needs to be more aware of international expectations. Originality/value - Data regarding judicial expectations of auditors’ AML reporting obligations is difficult to obtain and of a highly sensitive nature. This research has obtained such data which has relevance to the FATF blacklisting policy, and to international organisations tasked with disrupting terrorist financing networks.

Keywords: Iran; Forensic accounting; Anti-money laundering reporting; FATF blacklist; Judiciary auditor expectations gap; Snowballing technique (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:jmlc-09-2020-0105

DOI: 10.1108/JMLC-09-2020-0105

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