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Disclosing anti-money launderers through CSR regulation – a new way to combat money laundering

Disclosing anti-money launderers through CSR regulation – a new way to combat money laundering Recent research questions the innocence of companies outside the current EU money laundering regulation in terms of contributing to the externality problem of money laundering. The purpose of this paper is to examine how including anti-money laundering as an element of the EU corporate social responsibilities (CSR) directive can contribute to solving the externality problem of money laundering. Based on the principles of CSR and the economic effects of disclosure duties, this paper analyzes the implications an introduction of anti-money laundering policies and disclosure duties can have on corporate clients and the combatting against money laundering. Furthermore, it is the intention of this paper to argue how such a regulatory change can help the financial companies dividing “good” and “bad” clients to prevent money laundering from happening.Design/methodology/approachThe method of this paper is a functional approach to law and economics. It seeks to enhance the efficiency of the regulatory framework combatting money laundering by including economic incentive theory.FindingsBased on the regulatory framework of the fourth anti-money laundering and counter terrorist financing directive and the directive on criminalizing money laundering, this paper argues that inclusion of anti-money laundering in the EU CSR directive will contribute to solving the externality problem of money laundering in the EU. Additionally, the expansion of the regulatory framework can start a culture, where corporate clients to the financial sector will take active steps toward combatting money laundering.Originality/valueThe paper identifies a way to change the corporate perception of anti-money laundering prevention from having an incentive of minimal compliance/“race-to-the-bottom” to be a possible element of competition between companies through their CSR strategy. While most research focuses on the financial sector in terms of money laundering, this paper takes the next step and includes corporate clients in the financial sector. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Money Laundering Control Emerald Publishing

Disclosing anti-money launderers through CSR regulation – a new way to combat money laundering

Rose, Kalle Johannes
Journal of Money Laundering Control , Volume 23 (1): 15 – Jan 27, 2020
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References (17)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1368-5201
DOI
10.1108/jmlc-07-2019-0062
Publisher site
See Article on Publisher Site

Abstract

Recent research questions the innocence of companies outside the current EU money laundering regulation in terms of contributing to the externality problem of money laundering. The purpose of this paper is to examine how including anti-money laundering as an element of the EU corporate social responsibilities (CSR) directive can contribute to solving the externality problem of money laundering. Based on the principles of CSR and the economic effects of disclosure duties, this paper analyzes the implications an introduction of anti-money laundering policies and disclosure duties can have on corporate clients and the combatting against money laundering. Furthermore, it is the intention of this paper to argue how such a regulatory change can help the financial companies dividing “good” and “bad” clients to prevent money laundering from happening.Design/methodology/approachThe method of this paper is a functional approach to law and economics. It seeks to enhance the efficiency of the regulatory framework combatting money laundering by including economic incentive theory.FindingsBased on the regulatory framework of the fourth anti-money laundering and counter terrorist financing directive and the directive on criminalizing money laundering, this paper argues that inclusion of anti-money laundering in the EU CSR directive will contribute to solving the externality problem of money laundering in the EU. Additionally, the expansion of the regulatory framework can start a culture, where corporate clients to the financial sector will take active steps toward combatting money laundering.Originality/valueThe paper identifies a way to change the corporate perception of anti-money laundering prevention from having an incentive of minimal compliance/“race-to-the-bottom” to be a possible element of competition between companies through their CSR strategy. While most research focuses on the financial sector in terms of money laundering, this paper takes the next step and includes corporate clients in the financial sector.

Journal

Journal of Money Laundering Control – Emerald Publishing

Published: Jan 27, 2020

Keywords: CSR; EU; Regulation; Money laundering; Non-financial entities; Criminalizing

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