The Money Laundry – Regulating Criminal Finance in the Global Economy

  • Author : J C Sharman
  • Author : Susanne Munns
  • Date : December 2012
ABOUT THE REVIEWER: Susanne Munns TEP is Head of Risk and Compliance at Mourant Ozannes in Jersey

In this book, J C Sharman, who is a Professor in the Centre for Governance and Public Policy at Griffith University in Queensland, Australia, investigates and provides his views on whether anti-money laundering (AML) policy works, and why it has spread so rapidly to many different countries, sometimes with little in common.

Following other previous work looking at offshore jurisdictions, it became clear to Sharman that introducing regulations to counter money laundering imposed serious costs on developing countries and that the benefits were often elusive. One of the developing countries that Sharman focuses on in the book is Nauru, and he outlines his concern that countries such as Nauru have incredibly pressing problems aside from financial crime. Despite those problems, money is spent by Nauru’s government on introducing an AML regime.

Sharman describes in detail the background and economy of Nauru and its efforts and reasons for resisting pressure from the Financial Action Task Force (FATF) to introduce an AML regime. In doing this, Sharman aims to demonstrate why the standard AML framework used in Western countries may not be the best use of this country’s resources, and questions how effective or necessary a standard AML regime is for countries whose finance industry and economy is small. The rationale provided makes compelling reading for those who are interested in the debate and subject of AML and global governance.

“The rationale makes compelling reading for those interested in AML and global governance”

Sharman explains the background and current approach of the global AML regime and the strength of the International Monetary Fund and FATF institutions, which are the key standard-setters and enforcers. The strategy and effects of blacklisting noncooperating countries is discussed. Sharman provides results of work that he has undertaken to test the effectiveness of aspects of the AML regime, and includes a table showing the results. The test revolves around the importance of being able to link companies with their real owners, and the results table shows whether service providers that were written to responded in a manner compliant with AML policy. The table of results and the examples provided are as concerning as they are interesting, being split between OECD countries and non-OECD countries.

While a large proportion of the book is focused on whether AML policy does or does not work and on describing why AML policy is adopted by both large and small countries, Sharman is clear, in the final chapter, on ways all countries could make better and more effective use of existing AML legislation and policy. Above all, he advises that this involves reorienting AML policy to concentrate on corruption. He quotes World Bank and IMF views that the problems of governance and corruption are the greatest obstacles to the economic development of poor countries.

The book would be of general interest to anyone working in the finance industry, and particularly relevant for those with a specific interest in studying AML policy.

TITLE: Finances in the Global Economy

AUTHOR: J C Sharman
ISBN: 978-0-8014-5018-1
PUBLISHER: Cornell University Press


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