Money laundering: correlation between risk assessment and suspicious transactions

Sonja Cindori
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Sonja Cindori: University of Zagreb, Faculty of Law, Zagreb, Croatia

Financial Theory and Practice, 2013, vol. 37, issue 2, 181-206

Abstract: The risk assessment system was introduced in the Republic of Croatia in 2009, as a result of harmonization with international standards, especially the Directive 2005/60/EC on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing. Risk assessment is an extensive concept which requires not only a legislative framework, but also the application of numerous criteria for its effective implementation in practice. Among these criteria are suspicious transactions, closely related to the assessment of the customer, transaction, product or service.The undeniable contribution of suspicious transactions to the quality of the risk assessment system will be confirmed by a statistical analysis of a number of West and East European countries. A combination of strict, but sufficiently flexible legal provisions governing the system for prevention of money laundering and terrorist financing and a statistical analysis of reported suspicious transactions will lead to conclusions that either support or represent criticism of the efficiency of application of the risk assessment system in practice.The aforementioned statistical analysis will show whether suspicious transactions are a reliable criterion for the risk assessment analysis, and whether they can be considered the only such criterion. There is a possibility that the findings of the analysis will be contradictory to those of some international studies.

Keywords: money laundering; suspicion; transaction; risk; risk assessment; statistics; analysis (search for similar items in EconPapers)
JEL-codes: K42 (search for similar items in EconPapers)
Date: 2013
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