Journal of Financial Crime

Armstrong, Anona F.

2024 Journal of Financial Crime

doi: 10.1108/jfc-12-2024-335

Braaten, Claire Nolasco; Tsai, Lily Chi-Fang

2024 Journal of Financial Crime

doi: 10.1108/jfc-09-2023-0221

This study aims to analyze corporate mail and wire fraud penalties, using bounded rationality in decision-making and assessing internal and external influences on prosecutorial choices.Design/methodology/approachThe study analyzed 467 cases from 1992 to 2019, using data from the Corporate Prosecution Registry of the University of Virginia School of Law and Duke University School of Law. It examined corporations facing mail and wire fraud charges and other fraud crimes. Multiple regression linked predictor variables to the dependent variable, total payment.FindingsThe study found that corporate penalties tend to be lower for financial institutions or corporations in countries with US free trade agreements. Conversely, penalties are higher when the company is a U.S. public company or filed in districts with more pending criminal cases.Originality/valueThis study’s originality lies in applying the bounded rationality model to assess corporate prosecutorial decisions, unveiling external factors’ influence on corporate penalties.

Otudor, Lovina E.; Bagheri, Mahmood

2024 Journal of Financial Crime

doi: 10.1108/jfc-09-2023-0239

This study aims to focus on the legal status of the Financial Action Task Force (FATF) regulatory spread in spite of its limited membership in international law. This is conducted by examining the regime of the FATF with the normative regime of public international law and trying to identify common grounds and conflicts between the two.Design/methodology/approachThis study adopted an exploratory approach involving a thorough examination and analysis of accredited text, command papers and reports, archival materials, national obligations, websites as well as other documentary evidence.FindingsThis research gives an empirical determinant of compliance behaviour in response to FATF regulatory standards and the interplay of international law.Research limitations/implicationsThe findings here are not exhaustive and could be approached from other perspectives. Researchers are therefore encouraged to engage by testing the findings further, as this is only a blueprint for further research.Practical implicationsThis study provides implications for the need to open up the current membership of the FATF, as it appears discriminatory in nature and could inhibit effective compliance with its regulatory standards.Social implicationsFATF regulatory standards do not just revolve around its members and rule-takers but also affect unintended and vulnerable people who were never in contemplation when these regulations were debated without a global consensus.Originality/valueThe main aim of this study is to advocate for a rethink of FATF’s regulatory strategy by ensuring that its operations are more inclusive, where jurisdictions can participate as members, creating a sense of belonging and commitment in the fight against money laundering.

Elmaghrabi, Mohamed Esmail; Diab, Ahmed

2024 Journal of Financial Crime

doi: 10.1108/jfc-09-2023-0235

This study aims to examine the association between anti-corruption corporate disclosure and earnings management practices by bringing evidence from a developed market.Design/methodology/approachThe study uses data from non-financial FTSE 100 Shares in 2016 and 2017. This study develops a disclosure index to capture the anti-corruption disclosures and run pooled, fixed effects and generalized methods of moments regression models to explore the anti-corruption disclosure–earnings management association. This study also disentangles discretionary accruals into positive and negative, use adjusted discretionary accrual computation and take a more conservative view on discretionary accruals computation as an additional analysis.FindingsThe results show a negative and significant association between anti-corruption disclosure and earnings management practices. When disentangling discretionary accruals (overvalued/positive and undervalued/negative), the authors found that higher anti-corruption disclosures were negatively associated with positive discretionary accruals, but not associated with negative discretionary accruals. The additional analysis confirmed the previous results, showing that anti-corruption disclosures are perceived as a substantive practice, rather than a mere disclosure practice for legitimacy reasons.Originality/valueThis study contributes to debate on the symbolic versus the substantive uses of anti-corruption disclosures in the UK context.

Teichmann, Fabian Maximilian Johannes; Wittmann, Chiara; Boticiu, Sonia Ruxandra; Sergi, Bruno Sergio S.

2024 Journal of Financial Crime

doi: 10.1108/jfc-11-2023-0303

The purpose of this paper is to examine the influence that the occurrence of greenwashing has on the consumer perception of corporate social responsibility (CSR).Design/methodology/approachThis paper observed the market indication that a consistent undermining of authentic commitment to CSR taints consumer perception. Investigating how the motivations behind greenwashing contribute to the presentation of CSR was the first means of examining the market forces. Consumer orientation was used as a guiding principle to consider the short- and long-term perspective of a greenwasher.FindingsIndividual instances of greenwashing contribute to a collective deterioration of marketplace trust in the promises of CSR. The negative influence on CSR is not isolated to the greenwashing perpetrator but casts a wider effect. The consequences of greenwashing are not isolated but widely dispersed.Originality/valueWhilst much of the literature focuses on the stigmatisation of individual firms, it is crucial to note how marketplace trust is eroded. In addition, the perception of CSR-related regulations is for example influenced but rarely recognised as a consequence of greenwashing behaviour.

Javid, Misbah; Chandia, Khurram Ejaz; Zaman Malik, Qamar Uz

2024 Journal of Financial Crime

doi: 10.1108/jfc-08-2023-0198

This study aims to investigate the impact of liquidity creation (LC) on the profitability and stability of banks while considering the moderating role of corruption.Design/methodology/approachPanel data from 23 conventional banks and five Islamic banks in Pakistan spanning from 2008 to 2021 were used for analysis. The study used fixed effect and random effect models, along with the generalized method of moments estimation to ensure robustness of the results.FindingsThe study reveals a negative relationship between LC and banking profitability, but a positive association with banking stability. Additionally, corruption is found to play a moderating role in the relationship between LC, profitability and stability in the banking sector of Pakistan.Research limitations/implicationsThe findings have practical implications for bank managers and investors, emphasizing the negative relationship between LC and profitability in Pakistan. Moreover, the study highlights the significant impact of corruption on bank performance, which can guide policymakers in formulating strategies to strengthen the banking sector and prevent financial turmoil in the future.Originality/valueThis study makes a significant contribution to the existing literature by examining the moderating role of corruption in the relationship between LC, profitability and stability in both conventional and Islamic banks.

de Oliveira Orth, Caroline; Momo, Fernanda; Manfroi da Silva Bonotto, Mariana; Schiavi, Giovana

2024 Journal of Financial Crime

doi: 10.1108/jfc-10-2023-0251

This study aims to develop and validate the scale of the Behavioral Regulation for the behavior of the Financial Statement Fraudster, from the perspective of the Organismic Integration Theory (OIT).Design/methodology/approachTo achieve the objective of this article, an exploratory and quantitative study was developed. The instrument developed followed all the steps recommended by Koufteros (1999) and MacKenzie et al. (2011), from the elaboration of the constructs based on the theory to the factorial validation of reliability.FindingsThe tests applied reveal that the instrument has statistical validity and can be applied to models that seek to explain the individual motivations for committing accounting fraud.Research limitations/implicationsWe did not develop a mathematical model. As a suggestion for future studies, it is recommended to focus on developing a mathematical model relating the motivations to commit accounting fraud with variables capable of measuring the quality of governance or related to performance. In addition, study factors that may moderate these relationships.Practical implicationsThe validated instrument can be used by auditors and gatekeepers to detect the risk of fraudulent behavior.Social implicationsThe instrument validated here may be useful to researchers who wish to test the motivations for committing fraud in structural models.Originality/valueThere is little research on accounting fraud on how to define theoretical constructs (as far as the literature review has reached, to the best of the authors’ knowledge, none has been identified). In addition, few studies have been identified that suggest the OIT as an adequate theoretical lens to illuminate the phenomenon of accounting fraud.

Teichmann, Fabian Maximilian Johannes; Wittmann, Chiara

2024 Journal of Financial Crime

doi: 10.1108/jfc-08-2022-0199

This paper aims to elucidate the practical and theoretical mechanisms which contribute to the perception of an economic sanction’s effectiveness as a foreign policy tool.Design/methodology/approachThis paper is divided into three sections, the first two of which are heavily based on the current academic literature and media presentation of sanctions. The third section is rooted in the empirical approach presented in the first author’s exploratory work, Methods of Money Laundering (2021).FindingsEconomic sanctions cannot be perceived as effective when the standard for efficacy remains undefined and sanction circumvention remains feasible. The public perception of sanctions is characterized by a series of assumptions as well as conflict foreign policy objectives, which cultivate an economic theory that is benefited by a practical exploration of the routes of circumvention.Originality/valueThe efficacy of economic sanctions is not a stable equation, but rather the application of an economic tool which is dependent on its context. Paths of sanction circumvention remain open due to weaknesses in compliance regulation. These paths continue to undermine the credibility of sanctions and, ultimately, their efficacy.

Yunan, Zuhairan Yunmi; Alharthi, Majed; Jeris, Saeed Sazzad

2024 Journal of Financial Crime

doi: 10.1108/jfc-09-2023-0229

This study aims to investigate the relationship between political instability and the performance of Islamic banks in emerging countries.Design/methodology/approachFor a data sample of 93 Islamic banks in 20 emerging countries during the period from 2011 to 2016, the authors identify indicators that matter most for the activities of Islamic banks.FindingsThe study finds that a stable government and law and order are positively correlated with the health of Islamic financial institutions. On the other hand, corruption and military involvement in politics can create an unstable environment for businesses, leading to uncertainty and risk. The study also reveals that Islamic banks operating in regions or communities with lower risk of socio-economic conditions tend to exhibit higher levels of profitability.Originality/valueOverall, the study provides valuable insights into the impact of political instability on Islamic banks in emerging countries.

Saelawong, Tippatrai; Yomnak, Torplus; Chaiwat, Thanee; Poopunpanich, Siwat; Sutuktis, Charoen

2024 Journal of Financial Crime

doi: 10.1108/jfc-10-2023-0282

This study evaluates the effect of transparency measures on public procurement efficiency, focusing on Thailand’s Infrastructure Transparency Initiative (CoST). This study aims to understand its impact on the country’s public infrastructure procurement practices.Design/methodology/approachThis paper analyses Thailand’s government construction procurement data, focusing on budgetary savings and CoST process participation. Budgetary savings are this study dependent variable, while the main intervention variable is the adoption of the CoST data disclosure standard. This study uses multiple linear regression, fixed-effects model and propensity score matching with the logit model for a comprehensive analysis.FindingsThis study shows that using the CoST data disclosure leads to notable budget savings in Thai public construction procurement. With CoST’s introduction, the savings rose by Baht 9.6m, and even with added controls, the savings remained significant at around Baht 3.3m. The savings consistently stay near 5% across different models. The propensity score matching method confirms these results, consistent with factors such as open bidding and agency categorisation.Research limitations/implicationsThis study might not capture all benefits, especially non-financial ones. Thailand’s unique context and potential biases in data sources also need consideration.Practical implicationsCoST evidence backs Thailand’s procurement transparency. This study recommends broadening CoST, streamlining online platforms and promoting digital public engagement. Training stakeholders and partnering with state-owned enterprises and local agencies is vital to align with CoST and mitigate risks.Originality/valueThis study shows a clear link between transparency from information disclosure and budget efficiency in public procurement, using data from Thailand. It highlights the potential of transparency measures in developing countries.