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Transcript of Farook Diss.
7/23/2019 Farook Diss.
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name
[Company name]
[Documenttitle][Document subtitle]
7/23/2019 Farook Diss.
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Abstract
The study aim relates to the understanding of the relationship of the prot
risk due to Money Laundering nancial crimes on bank’s nancial
performance in U! assessment of the Customer"focused ML #isk
Management solutions for de$eloping business $alue for the nancial
institutions! and e$aluation of the integration of %ML risk management
and %ML compliance for e&ecti$e and operationally protable nancial
institutions' The methodology is designed to accomplish understanding of
the relationship of the prot risk due to Money Laundering nancial crimes
on bank’s nancial performance in U! assessment of the Customer"
focused ML #isk Management solutions for de$eloping business $alue for
the nancial institutions and e$aluation of the integration of %ML risk
management and %ML compliance for e&ecti$e and operationally
protable nancial institutions'
The study has been conducted (ith specic research methodology and
systems! then accompanying techni)ues ha$e been produced for
utili*ation to recogni*e (hether nancial crimes risk management +,C#M-
has a&ected the protability of the commercial banks! and to consider the
compliance impact in terms of penalties and nes those three banks ha$e
paid during the last $e years' This includes the case study of ./0C 0ank!
0arclay’s and /antander’s bank’s for e$aluating historical data ha$e been
compared for three banks i'e' prot performance for last $e years and at
the same time the comparison of the rm’s nancial crime management
performance (ith )uantitati$e method'
The study has found that the nancial crimes trends ha$e escalated o$er
the years and the banks are incurring both direct and indirect costs from
the management and alle$iation of nancial crimes in the mass le$els'
The past penalties ha$e been indicati$e of the impact of nancial crimes
in the protability of the banks (hich should be minimi*ed for better
operations management and 0asel 111 compliance'
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Table of Contents%bstract'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''2
Chapter 3ne4 1ntroduction'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''5
2'2 6roblem statement'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''5
2'7 /tudy background''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''5
2'8 /cope of the study'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''92'5 #esearch %im''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''':
2'; #esearch 3b<ecti$es'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''=
2'> /tructure of the research''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''=
Chapter T(o4 Literature #e$ie(''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' 2?
7'2 /ources of money laundering''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''2?
7'7 Measuring money laundering'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' 22
7'8 %ctions on Money laundering'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''27
7'5 @conomic impact of money laundering''''''''''''''''''''''''''''''''''''''''''''''''''''''28
7'; ,rauds in nancial institutions''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''2;
7'> Money laundering on nancial in$estment'''''''''''''''''''''''''''''''''''''''''''''''''2>
Chapter Three4 #esearch Design and Methodology'''''''''''''''''''''''''''''''''''''''''''''2=
8'? 1ntroduction''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''2=
8'2 #esearch methodologies''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''2=
8'2'2 #esearch philosophy''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''7?
8'2'7 #esearch approaches'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''728'2'8 Type of in$estigation''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''72
8'2'5 #esearch Methods''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''77
8'7 #esearch strategy''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''78
8'8 Data collection techni)ue'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''78
8'5 Data analysis process'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''75
8'; @thical considerations''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''75
8'> Limitations A %lternati$e methodologies''''''''''''''''''''''''''''''''''''''''''''''''''''75
Chapter ,our4 ,indings and %nalysis''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''7;
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5'2 Data ,indings'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''7;
5'7 1ndustry condition''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''7>
5'8 Trends of nancial crimes in ./0C'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''7:
5'5 ,inancial crimes of 0arclays 0ank''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''82
5'; ,inancial crimes of /antander 0ank'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''87
5'> #ole of ,C% and ,inancial crime'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''88
5'9 ,C#M and 0asel %ccord''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''85
5'7 1mpact on banking protability'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''8;
5': Conclusion''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''8>
Chapter ,i$e4 Conclusion''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''' 8:
;'2 Conclusion''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''8:
;'7 #ecommendation'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''8=;'8 ,uture research scopes''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''5?
#eferences'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''52
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Chapter One: Introduction
1.1 Problem statement
,inancial crime is a burning issue for the nancial sector (hich has caused
ma<or crises o$er the nancial sector' Considering the establishment of
(orld(ide monetary and political steadiness and the operation of la(!
budgetary (rongdoing is dangerous! obstructs $ote based system! and
seriously harms the (orld(ide economy' The allegations against /tandard
Chartered come as United /tates authorities (ork to take action against
the stream of cash to remote nations! organi*ations and people <oined
(ith terrorism! (eapons of mass decimation and medication traBcking'
Money related (rongdoings belongings uctuate yet can be isolated into
three! occasionally co$ering! classications4 a marker of **led states
empo(ering rebel pioneers and administrations to plunder national
resources and take part in infringement of human rightsE +b- <eopardi*ing
popularity based impro$ement! great administration and monetary
de$elopmentE and +c- heightening the danger of unfortunate nancial
outcomes because of bet(een connected budgetary markets'
Then again internal re$enue /er$ice +1#/- e$asion encourages terrorism
on the grounds that money related support is the (ay to terrorist
mo$ement' 1#/ e$asion is the procedure of camouaging criminal
continues and may incorporate the de$elopment of clean cash through
the United /tates (ith the goal to carry out a (rongdoing later on +e'g'!
terrorism-' 0anks are fundamental to 1#/ e$asion' 0oth elected and state
go$ernment organi*ations are researching a fe( huge %merican
budgetary foundations for neglecting to screen trade eFchanges in for
cold hard currency and out of their branches! a pass that may ha$e
empo(ered street pharmacists and terrorists to launder polluted cash'
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1.2 Study background
3n 2 %pril 7?28! the ,inancial Conduct %uthority +,C%- and the 6rudential
#egulation %uthority +6#%- authoritati$ely came into po(er' The t(o
controllers supplanted the ,inancial /er$ices %uthority under the ,inancial
/er$ices %ct (hich (as gone in December 7?27' /ince its race in 7?2? the
Coalition Go$ernment had been redesigning the Us money related
administrati$e structure' The ,inancial /er$ices %uthority (as disbanded
and obligation regarding monetary security (ent to the 0ank of @ngland'
1nside of the 0ank no( sits the ,inancial 6olicy Committee +,6C-! in charge
of skyline ltering for systemic dangers and the 6rudential #egulation
%uthority +6#%- in charge of the dissol$ability and determination of
systemically essential foundations' The ,inancial Conduct %uthority +,C%-!
is in charge of guaranteeing shopper insurance and markets regulation!
and prudential super$ision of littler rms'
Horld(ide money related (rongdoing inuences a large number of
monetary end"clients! causes billions! if not trillions! of dollars in
misfortunes! and empo(ers ma$erick pioneers to loot national riches' Late
conrmations! settlements and eFaminations ha$e re$ealed far reaching
(orld(ide racketeering and misrepresentation by eFpansi$e (orld(ide
enterprises taking after composed (rongdoing more than managing an
account' The budgetary institutional mo$ement incorporates4 aBrmations
of $alue altering +0arclays-! settlements of o&er apparatus claims +I'6'
Morgan-! admissions of go$ernment e$asion +./0C-! and settlement of 1#/
e$asion charges +/tandard Chartered- +The @conomist! 7?2;-' The money
related foundations ought to consider budgetary (rongdoing dangers
inside of its incorporated danger administration structure' %s needs be! it
ought to o&er thought to the interrelationships and interdependencies
bet(een dangers +@llen! 7?27-'
The coordinated danger administration methodology obliges that
monetary (rongdoing dangers to (hich the organi*ation may beunco$ered be distinguished! e$aluated and e$aluated and that measures
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be eFecuted to moderate such dangers to lessen the likelihood of
operational occasions connected (ith budgetary (rongdoing and their
potential e&ect on the foundation' The administrati$e po(ers ha$e
considered this issue truly and started thorough control checkpoint insideof the keeping money organi*ations so that monetary (rongdoings can be
obser$ed and (iped out appropriately +3li$er et al'! 7??2-' %nother impact
of monetary (rongdoing is the plundering of national riches' Countries
(ith substantial totals of national riches are regularly tormented by
endless destitution and human rights infringement' This impo$erishment
is symboli*ed and maybe partially brought on by the enormous eFchange
of national riches abroad' The eFpulsion of eFpansi$e (holes from the
national treasury obliges the compleF administrations of budgetary
organi*ations'
Hithout this outside help! the national rulers (ould not ha$e the capacity
to loot their national treasuries' 6atrick eenan takes note of this (onder4
the across the board de$elopment of Libyan so$ereign riches trusts makes
a ha*ard that such rulers (ill further protect themsel$es from political
responsibility by mo$ing signicantly a greater amount of the states
assets outside the run of the mill channels of local political control' 1n
Libya! for instance! pre$ious pioneer Col' ada occupied a dumbfounding
total of J7?? billion into nancial balances! land! stock speculations and
organi*ations abroad' The speculations (ere held for the sake of the
Libyan so$ereign riches store +K/H,K- and other national organi*ations yet
as the ma$erick pioneer! ada and his family considered and regarded
those ad$antages as their o(n particular indi$idual riches' Money related
(rongdoing embraced by budgetary organi*ations supported and abetted
this heist' The Libyan /H, is being eFplored and endea$ors are being
made to nd the looted resources' The benet eFchange! speculations and
ledgers (ere all eFpert by monetary foundations (ho earned eFpansi$e
benets' 1t is hard to trust these money related foundations and their
agreeability oBces (ere ignorant of the business and political relationship
in the middle of ada and the Libyan /H,'
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The endemic part of money related organi*ations in encouraging the
budgetary premiums of ma$erick countries and pioneers is undeniable'
Hithout such budgetary administrations! these administrations andpioneers (ould not be in a position to permit mass imprisonment!
star$ation! homicide of political ri$als or take part in acts intended to
smash restriction' Disclosures that substantial sa$ing money houses ha$e
(orked (ith ma$erick administrations are not astounding' /ubstantial
benets can be made by (orking (ith! dealing (ith the ad$antages of!
and gi$ing monetary administrations to rebel administrations' Charges
and commissions can ser$e as a lucrati$e enticement to eFtensi$e
monetary organi*ations to (ork (ith oil"rich **led states! $ery much
nanced terrorists! and money rich medication cartels' Horld(ide banks
ha$e benetted liberally from leading business (ith human rights abusers!
tyrants! political elites and ma$erick administrations' The budgetary
establishments (ere irreplaceable in encouraging burglary of actually
billions of dollars in di&erent countries' Hithout the guide of these
(orld(ide titans of free enterprise! the misrepresentation and go$ernment
e$asion couldnt be eFpert'
Conse)uently! it is $ital to recei$e a thorough (ay to deal (ith monetary
(rongdoing danger administration at the gathering le$el so that principles
material to the establishment are cogni*ant o$er the gathering and
elements framing piece of the gathering can trade data +.enning! 7?22-'
@Fercises connected (ith money related (rongdoing brought out through
a budgetary foundation that structures a piece of a gathering are liable to
ha$e critical repercussions on alternate substances in the gathering or
e$en antagonistically inuence their dissol$ability and! e$entually! the
notoriety of the (hole gathering! by regional standards! broadly and
globally +#osen! 7?28-' /traightfor(ardness and the free stream of data
(ill make it concei$able to recogni*e and e$aluate ranges of (eakness
and diminish monetary (rongdoing dangers' Hhen this $ie(point has
been considered under the operational danger administration of the 0asel
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111 accord! the signicance of monetary danger administration danger has
turned out to be eFtremely critical +Lambrigger et al'! 7??=-'
1.3 Scope o the study
Criminal mo$ement identied (ith monetary administrations inuences
the 0anks business! as (ell as damages our clients and the groups' 1t can
undermine the supportability of de$elopment and! by fuelling neediness
and imbalance! that of the economies (e (ork in' Uni$ersal Monetary
,und +1M,- e$aluations propose that 1#/ e$asion comprehensi$ely
represents some(here around t(o and $e for e$ery penny of the (orlds
GD6 yearly! so handling the danger is a note(orthy test for the (hole
money related di$ision' The sa$ing money industry needs to react to this
risk through far reaching collaboration and useful organi*ation (ith
go$ernments' 0udgetary (rongdoing danger has turned into a note(orthy
issue for the managing an account establishments and the punishment
forced by the di$erse administrati$e po(er like the national banks
inuenced their eFhibitions'
3perational danger administration of the 0asel 111 accord ha$e
underscored the signicance of budgetary danger administration danger
has turned out to be eFtremely note(orthy +Moosa! 7??9-' 0y and large
banks and other budgetary establishments ha$e standard rules to relie$e
the monetary (rongdoing dangers of the banks (hich open them to
administrati$e po(ers and forced distincti$e la(s and regulations
identifying (ith the go$ernment e$asion! sa$ing money eFercises sitting
abo$e U appro$als and terrorist nancing through the sa$ing money
channels'
Go$ernment e$asion monetary unla(ful acts disables the ad$ancement of
budgetary organi*ations for t(o reasonsE to start (ith! it dissol$es the
monetary benet of the sa$ing money establishments due to the
relationship bet(een taF e$asion and lessened o$erall re$enues+Ganegod! 7??:-' /econd! customer and nancial specialists trust get
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hampered because of institutional eFtortion and defencelessness to 1#/
e$asion and illicit eFercises harming the brand estimation of the banks'
Therefore! this specic monetary (rongdoing is an apparent danger to
contributors and nancial specialists alongside to the outer partners' eFtto this #egulators are continually dri$ing mindfulness and policing through
the regulations yet nes are as yet being forced as regulations turn out to
be less successful'
Horld(ide monetary de$elopment relies on consistency and decency! and
the eFpansion of interconnected money related markets is a sign of an
ineForably (orld(ide society' The interconnected (ay of (orld(ide
markets is un)uestionable' @conomies are like(ise antagonistically
inuenced by money related (rongdoing' %long these lines! infection
represents the genuine and huge danger that money related eFtortion
could ha$e heart breaking (orld(ide impacts' Hithout a doubt! the L103#
embarrassment (here real banks purportedly acted falsely to broaden
their gi$ing benets embodies ho( (orld(ide money related
organi*ations (rongdoing can ha$e repercussions around the (orld'
1.! "esearch Aim
This study seeks to analyse the nancial prot and non"nancial
performance of nancial institutions operating in U under national and
international regulations on ma<or nancial crimes i'e' Money laundering
+ML-! banking acti$ities o$erlooking U sanctions and terrorist nancing
through the banking channels' The in$estigation (ill be carried out by
looking at the ma<or nancial institutions of U (here the propensity of
money laundering and other nancial crime has high risk to those banks'
The research is intended to ans(er possible )uestions like
• Hhat is the prot risk due to Money Laundering nancial crimes on
bank’s nancial performance in U
• 1f the Customer"focused ML #isk Management solutions can pro$ide
business $alue for the nancial institutions
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• .o( integration of %ML risk management and %ML compliance (ill
be more e&ecti$e and operationally protable for ,1 +nancial
institutions- in ma<or U banks
1.# "esearch Ob$ecti%es
The research aim (ould be helpful to understand the need for proper
nancial crime risk management as (ell as the intensi$e pressure put by
political and regulatory author to minimi*e the risk eFposure' The
follo(ing ob<ecti$es (ill be helpful in conducting the research4
• To understand the relationship of the prot risk due to Money
Laundering nancial crimes on bank’s nancial performance in U
• To assess the Customer"focused ML #isk Management solutions for
de$eloping business $alue for the nancial institutions
• To e$aluate the integration of %ML risk management and %ML
compliance for e&ecti$e and operationally protable nancial
institutions
1.& Structure o the research
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Chapter '(o: )iterature "e%ie(
2.1 Sources o money laundering
Measuring the si*e and impro$ement of composed (rongdoing andNor
go$ernment e$asion is nished by a couple of specialists! <ust' % standout
amongst the most surely understood market analysts doing full scale
e$aluations' Halker model ha$e e$ol$ed from the money laundering
routes and path(ays by an Kengaging )uality leK! (hich is in light of a
scope of $ariables that eFpress the open doors and dangers introduced by
the monetary areasNestablishments in e$ery nation' .e asserts that his
(ay to deal (ith e$aluate go$ernment e$asion is apparently better than
those in $ie( of in$estigation of budgetary eFchanges! since money
laundering has become the best alternati$e to the formal banking channel
and there are t(o innate areas of taF e$asion forms' The model
characteri*es the sorts of information and eFaminations (hich should be
produced (ith a specic end goal to successfully display (orld(ide
transnational (rongdoing and 1#/ e$asion' Halker +7??9- presumes that
since 7??? (orld(ide go$ernment e$asion may represent e$en higher
than 8'?? trillion U/D' Moreo$er! that business eFtortion surpasses illegal
medications as a (ellspring of laundered cash' .e contends that
assaulting the nancial matters of (rongdoing can be a successful
transnational (rongdoing counteracti$e action procedure and that
business analysts can assume a protable part in obser$ing and ghting
transnational (rongdoing and go$ernment e$asion'
,inancial eFperts ha$e considered the dubiousness of such gauges is an
after e&ect of both contradictions o$er ho( to conceptuali*e go$ernment
e$asion! and in addition shortcomings in the systems used to measure it
+%gar(al and %man! 7??5-' %s an outcome e$aluated changes in the
$olume of go$ernment e$asion cant be utili*ed as a measure to <udge
ade)uacy of (orld(ide hostile to taF e$asion administration' .e presumes
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that total gures gi$e little esteem added to arrangement producers' .e
legitimi*es his decision as takes after'
To begin (ith! these total disco$eries hide as much as they unco$er'/econd! the counter taF e$asion control administration has been
de$eloped less to decrease taF e$asion as to in particular diminish pay
creating unla(ful acts! build the trust(orthiness of the money related
frame(ork (ith the in$ol$ed traces of the illicit sources of money
recei$ed' This has been contradicted (ith the contemporary nancial
eFperts (ho thought that the counter nancial crimes measures taken by
the banks should be satisfactory to alle$iate the e&ect +Gates A Iacob!
7??=-' The endea$our to gauge all out income from e$ery real class of
illicit (rongdoing eFercises **les! as a result of an absence of precise
information frame(orks for catching the si*e of e$ery (rongdoing' To
abridge! 6eter #euter is eFceptionally suspicious of the total assessments
and on any endea$our to gauge composed (rongdoing and 1#/ e$asion!
either for a solitary nation or for the entire (orld'
2.2 *easuring money laundering
0rigitte Unger +7??9! 7??>-! tightly shields this seek regarding /te$e
Master! ri$alling in (hich because leader eFploration regarding Master
+2==5-! it really is likely to generate a construction to gauge 1#/' G3O
e$asion e$ery land and also around the (orld' %part from! your (oman
contends in (hich Halkers type is usually optimistic case in point
intended for interdisciplinary perform regarding criminology and also
personal things' 1n her o(n distinct perform! Unger tries to legitimi*e this
Master type and also tries to o&er a hypothetical encouraging on the
Master illustrate by utili*ing Tinbergens old the la( of gra$ity type' This
the la( of gra$ity illustrate mostly aBrms that the fare streams by land
into land to trust this GD6 regarding the t(o buying and selling and also
posting international locations plus the separating in$ol$ing these' Hhile
this is true in this (ay to face this present the la( of gra$ity strategy!(here the appeal to (ash money is dependent among distinct parameters
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(ithin the nancial institution unkno(n throughout international locations!
this go$ernment (ay of thinking to(ards debasement and also
(rongdoing! and the like' /he concedes until this type re)uires
eFceptional scaled"do(n si*e institution! but your (oman unmistakablycontends that the primary Tinbergens eFclusi$ely e)uipped formula had
been do(n the line of course miniaturi*ed si*e set up'
1n this (ay! 0rigitte Unger gi$es a rst speculati$e reason of the Halker
model! applies it and sho(s that she can reach possible assessments of
duty a$oidance and sorted out (rongdoing' +Unger et al'! 7??>- appraisals
the measure of 1#/ a$oidance in the etherlands from 2: to 7; billion
@uro +year 7??5N?;-! (hich is pretty much ;P of the Dutch GD6' The
report of Unger et al' +7??>- presents a summary of 7; e&ects of eFpense
a$oidance on society! (hich are both positi$e and negati$e and ha$e an
e&ect in both the short and (hole deal' This once"o$er <oins results for
(rongdoing rates! money related impro$ement! imports! con$eys!
estimations! terrorism! the resol$ability and li)uidity of the budgetary
di$ision' Unger et al' land at the conclusion! in the (ake of percei$ing all
e&ects and in$estigating the composition! that most (ritten (ork on 1#/
a$oidance e&ects are faultless hypothesis furthermore! one source
insinuates substitute sources! (ithout much test solid fortication'
Hhat sum unla(ful trade in for cold hard currency each one of its
structures can be $ie(ed 0read cook +7??9- sur$eyed that the unla(ful
money to range bet(een U/J 2'? and 2'> trillion a year' This eFamination
has been gotten by the Horld 0ank' Like(ise! 0aker gages that half Q U/J
;?? to :?? a year Q lea$es making and transitional economies' These are
countries that much of the time ha$e the (eakest authentic and
administrati$e structures! the greatest criminal gatherings of road drug
specialists! and! routinely! money related and political elites (ho need to
take their money out by any systems possible' 1n cross"fringe illegal
budgetary streams! the returns of pay o& and robbery are the littlest! at
<ust maybe three percent of the (orld(ide aggregate' Criminally produced
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trusts represent in the ballpark of 8? to 8; percent of the (orld(ide
aggregate' Monetarily assessment sidestepping cash! dri$en specically
by in<urious eFchange e$aluating and faked eFchanges and in addition
mispricing is by a (ide margin the biggest segment! at practically >? to>; percent of the (orld(ide aggregate'
2.3 Actions on *oney laundering
Oan Duyne +7??=- and his collaborators (ork is all in all eFceptionally
basic and pose the )uestion about the condition of our present
information about composed (rongdoing andNor taF e$asion! (hich can be
managed in an eFtremely basic (ay4 There is no hard or sho(ed learning
of the si*e and head(ay of 1#/ a$oidance or sorted out (rongdoing'
either the ,%T,! nor ,1U ha$e placed assets into changing o$er the photo
of hypothesis into mo$ing nearer in$estigati$e comprehension into the
(onder of 1#/ a$oidance and formed (rongdoing +Oan Duyne! 7??8-' Oan
Duyne battles that e$ery part state delineates the (ashing and sorted out
(rongdoing sensation as an o$erall means! yet none has contemplated a
multi"country <oined key information organi*ation structure +Demiranda!
7??7-' The inherent unlucky deciency of nding out about 1#/ a$oidance
is composed by the nonappearance of solidarity and straightfor(ardness'
,rom no( on! this care has not been deciphered into any further
mo$ement so far' Oan Duyne contends! though there is minimal
obser$ational learning! one ought to at any rate concur on (hat
go$ernment e$asion should mean' 0e that as it may! as it is the situation
(ith the term sorted out (rongdoing! the substance of an on the (hole
sa( mar$el is regularly underestimated'
1s 1#/ e$asion truly as a reasonable (onder as oBcials! legal scholars or
nancial analysts! think it is This is an essential in)uiry! taking after the
contention of Oan Duyne! in light of the fact that if the mar$el is
e)ui$ocally characteri*ed! one cant focus the $olume or degree of its
money related danger' 0eside this (eakness! there is still +politically- aneFpert danger of the impact of the (rongdoing money' Moreo$er! Oan
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Duyne censures that another issue! (hich concerns him a ton! is the
gigantic hole bet(een the enormous totals of (rongdoing money that are
thought to eFist! from one point of $ie( +by sensible appraisals- and the
modestly much smaller sums that are truly taken after! then again' Theremay be t(o clarications4 3ne is the truly unsurprising la(
implementation clarication! (hich implies that one does not follo( a
signicant part of the cash and resources in light of the fact that the
o&enders are eFcessi$ely shre(d! so one needs more instruments! (hich
closes additionally in more cash! more indi$idual! more research trusts'
%nother! not unrealistic! clarication is that a lot of (rongdoing cash stays
destitute cash and as opposed to debilitating (estern social orders! it
continues drifting around' The money related ending spots are then the
banks! (hich get! (hile the gatherings of (rongdoing money are
eFperienced them' Oan Duyne ghts that the ght against criminal money
organi*ation! including 1#/ a$oidance or other sorted out (rongdoing!
should be dri$en by the fundamental yearning to fulll the reclamation of
$alue' The (rongdoer should not to hold the money or (hate$er other
criminal purpose of enthusiasm for any case' To diagram! Oan Duyne is to
a great degree critical of the courses ho( to gage the si*e and progression
of sorted out (rongdoing and go$ernment a$oidance! furthermore against
the schedules for the relationship like ,%T, or ,1U clash (ith formed
(rongdoing'
2.! +conomic impact o money laundering
1nside the study! Dobo$sek +7??9- in$estigations that (ill these prison
organi*ations possess migrated in past times inter$al to(ards the
personal places to encourage monetary force! ne$ertheless he or she is
far more (anting to comprehend that (ill pounds is before for(ard state
politic by means of their systems' .is e$aluation pro$es that (ill persons
carrying out categori*ed out unla(ful acts eFperienced migrated to the
neFt period of de$elopment in$ol$ing prison organi*ations to the group of
friends in$ol$ing nancial system' /eeing that mentioned by means of Dobo$sek! it (ould appear that many people currently possess migrated
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right nally point Q inno$ations into go$ernmental diBculties' 1nside this
sort of signicance! this made up (rongdoing is turning up such as fth
part in$ol$ing state strength! on the co&ee grounds that it is inuencing
together (ith a(esome (ay of measuring cash! debasement! systemsgo$ernment along (ith blackmail! in state nancial system along (ith
design along (ith thats Dobo$sek suggests that particular really should
practically break do(n the (ay categori*ed out (rongdoing created to
unco$er reactions in the future' %s outlined by 0unt +7??9-! .a(ala
traders tend to be dollars associated go$ernment companies that nish
monetary s(aps (ithout enable along (ith accordingly de$oid of
authorities’ management' They (ill ackno(ledge dollars! checks as (ell
as some other successful products +precious rocks! gold- on one particular
place along (ith spend a relating entire inside actual money as (ell as
some other reimbursement on one more place' Certainly not <ust like
eFpert banking companies! possess ha(ala brokers o$erlooked this legit
obligations (ith regards to the di&erentiating proof of customers! le
keeping! plus the thought in$ol$ing bi*arre s(aps! to that these eFpert
monetary makeup foundations tend to be theme'
creating competition by elegant arrangement ad$antages! the use
regarding ha(ala managing an account features most likely not dropped'
0ecause indicated by (ay of later e$aluate by the 1M,! +particularly %sian-
$agrants eFchange 2?? thousand cash for each year to family as (ell as
contact of their country regarding root through the guru cost composition'
1n addition! a ne( comparable measure of dollars can be shifted because
products! dollars! as (ell as as a result of underground traders +1M, 7??;-'
%s per 0unt +7??9-! youll nd no less than 7 alternate factors regarding
take on ha(ala sa$ing money' ,rom standpoint! ha(ala sa$ing money can
be considered a ne( centuries"old place (hich includes not really ho(e$er
outlasted its ease' Lo("(age authorities as (ell as $agrant labourers
particularly so far as anybody understands place a lot more trust in
ha(ala traders (hen compared (ith (ithin elegant nance institutions'
This specic standpoint accentuates the challenge linked to submitting
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ha(ala sa$ing money to(ards same standards because elegant nance
institutions' #egulations either as a result of enrolment or making it
possible for is seen because lack of (ithin light of the fact that it is going
to in essence dri$e the composition a lot more distant underground!additional entangling the legally unsafe errand regarding controlling
ha(ala s(aps +#a*a$y 7??;-' 3n the in$erse standpoint! 0unt +7??9-
contends that ha(ala sa$ing money can be portrayed because
underground managing an account! a ne( composition that ies beneath
the radar regarding current day guidance regarding cost s(aps'
Underground managing an account can be considered a ne( possibility
to(ards ade)uacy regarding inhospitable to 1#/ e$asion actions and also
the battle against terrorist capital +Greene! 7??=-' To maintain
underground nanciers coming from turning into a location regarding
sanctuary pertaining to thie$es as (ell as terrorists! they (ill end up being
liable to the con$entional restrictions regarding history preser$ing!
re$elation regarding unusual s(aps as (ell as uni)ue e$idence of buyer
+Greene! 7??=-'
2.# ,rauds in -nancial institutions
@Ftortion is maybe the most lethal of the considerable number of dangers
standing up to banks' The actual immensity in$ol$ing lender eFtortion
(ith globally setting could be acti$ated by its )uality! $olume and also
genuine bad luck' % good )uantity of nancial institutions knocko&s are
generally stied largely because of the identities in$ol$ed or perhaps (ith
light in$ol$ing (orry in the bad inuence like di$ulgence might ha$e
(ithin the photograph in the lender' Clients might shed trust in the
nancial institution and also this may create some sort of dra(back (ith
its impro$ement' Misrepresentation re)uests decrease in funds using a
spot possibly for the lender or perhaps clients' This sort of misfortunes
could be used by the re(ards to the moti$ated eFchanging inter$al and
also this! hence! lo(ers the (ay of measuring gain (hich might are
a$ailable intended for dispersion for you to in$estors' Misfortunes byeFtortion! that are used by the benet funds in the lender! hamper the
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banks money connected (ell"being and also compel its ability for you to
amplify tokens and also ad$ances intended for e&ecti$e businesses'
Throughout good conditions! unchecked and also signicant prices
in$ol$ing eFtortion may induce some sort of banks discontent'
@Ftortion can eFpand the (orking eFpense of a bank as a result of the
included eFpense of introducing the fundamental apparatus for its
disco$ery! a$oidance and security of benets' 1n addition! committing
important time to shielding its benet from fake men di$erts
administration' This useless preoccupation of assets decreases yields and
lo( benets (hich thus could hinder the de$elopment of the bank' 1t
like(ise prompts a decreasing impact on the ad$antage )uality of banks'
The issue is more risky (hen aggra$ated by insider ad$ance misuse' 1n
fact! the original of eFchanged banks by D1C (as to a great eFtent a
result of cheats eFecuted through insider credit mishandles' 3n the o&
chance that this issue is not suBciently taken care of! it could prompt pain
and bank disappointment' This study is prefaced on The ,raud Triangle
Theory' Cressey +2=92- portrayed the traditional eFtortion hypothesis and
assigned the penchants for misrepresentation as a triangle of sa(
opportunity! sa( (eight and sa( <ustication'
2.& *oney laundering on -nancial in%estment
%luko +7?27- study the impact of go$ernment e$asion on subsidi*ing
$enture' .e found that go$ernment e$asion and money related criminal
acts ha$e a negati$e impact on monetary de$elopment and budgetary
stability in distincti$e nations' %long these lines! it is needed from these
nations cooperating to decrease the impacts ad$ersely (hich (ith respect
to of subsidi*ing $enture! employments and ne( ad$ances' Like(ise!
%luko disco$ered a positi$e relationship in the middle of debasement and
taF e$asion in many nations' 1do(u +7?27- research indicated that 1#/
e$asion has negati$e results on the subsidi*ing speculations (ith impact
on the incomes of the administration' %nother highlight is nancial gro(thfee in addition to undermine the political solidness in addition to internal
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safety measures of a land' Conse)uently! it re)uires to conrm your
physical eFercises connected (ith nancial fundamentals (ithin gentle of
the fact that the item assumes an important part (ithin funding your likes
and dislikes (ithin assorted international locations' 1hsan A #a*i +7?27-!disco$ered the 1#/ e$asion comes (ith an impact on country (ide salary
also it similarly impact on the outdoors con<ecture' 6er e)ually
respondents! there are many dangerous in order to 1#/ e$asion legislation
that can keep the taF e$asion' 6er e)ually respondents! your laundered
money for the (ellbeing connected (ith land can be re"utili*ed'
Go$ernment could similarly end your taF e$asion by means of analysis
sparing! successful taking care of a merchant account document system
in addition to build mindfulness (ithin land by media' /o the ; elements
(here your entire eFamine can be made of are the courses regarding
impro$ing your legislation against 1#/ e$asion in addition to reducing this
particular subtle (rongdoing'
%yodegi +7?22- found that taF e$asion impacts on monetary de$elopment
and money related security' %s the monetary foundations assume an
imperati$e part in nancing the $entures it obliges them to battle 1#/
e$asion (ith check the opening records! tolerating cash on store and gi$es
the ad$ances' These information (ere proted (ashing! money related
(rongdoing and terrorist nancing' 0rigitte et al' +7??>- eFamination that
the economy (as impacted con$ersely by eFpense a$oidance! cash
related (rongdoing and terrorist nancing' Therefore! the limit of cash
streams bet(een countries has $arious focal points! if these countries had
the limit ght go$ernment a$oidance and money related (rongdoing and
terrorist nancing in light of the (ay that the skirmish of 1#/ a$oidance
and budgetary (rongdoing and terrorist nancing (ill diminish the e&ects
con$ersely in regards of sponsoring endea$our! li$elihoods and ne(
head(ays' ,%T, +7??=- sho(ed that the utili*ation of the securities
business to launder cash is $ie(ed as a genuine risk on the grounds that it
diminished the nancing of securities and changing o$er lthy cash into
clean nances by utili*ing of budgetary foundations' Conse)uently it is
obliged all the more customarily connected (ith MLNT,! for eFample!
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budgetary instincts! are Fed! the utili*ation of the securities business
may turn into a more note(orthy allurement to those trying to camouage
illegal continues! or in fact to produce them'
Maria et al' +7??;-! eFamination (hat are the (ays (hich can gro( or
decrease of cash streams from /(it*erland to the U/% after the segment
and re)uest of the ,ederal %ct to keep the Money Laundering in the scal
establishments' Maria et al are nding moreo$er after the Money
Laundering %ct +ML%- in the midst of 2? 3ctober 2==9 and 2 %pril 2==: a
discriminating addition in the apportions of cash oods of the country in
the midst of the period 2==:Q7??? in light of the fact that it is more
straightfor(ard for an association or indi$idual to mo$e their capital
bet(een countries' 0artlett +7??7- look at that the economy is a&ected
antagonistically by 1#/ a$oidance! in light of the fact that the assessment
a$oidance +ML- s(ay on scal ad$ancement and endea$ors to lessen
benet and trade of trusts to the sho(ings of (rongdoing and corruption'
Conse)uently! impose a$oidance (ill reduce the remote trade and
eFchange streams in for chilly hard money the (hole deal! (hich obliges
unfriendly to 1#/ a$oidance +%ML- from all /tates' 3n the other hand! he
moreo$er proposed from making countries set up o&shore scal centers
+3,Cs- as $ehicles for money related change and lessens the (rongdoing
and debasement' 6eculiarity +2==>- in$estigated the e&ect of
macroeconomic of go$ernment a$oidance on the )uality of the economy!
and endea$our sponsoring' Moreo$er he discussed ho( assess a$oidance
can be measured and looked into the econometric on monetary beha$iour
in present day countries to against 1#/ a$oidance +%ML-'
,inally! he found that antagonistic to 1#/ a$oidance +%ML- obliged the
controlling of change scale! dealing (ith a record super$ision! charge
shirking! real reporting and authori*ation because these parts that impact
on scal impro$ement rates and endea$ours to guarantee the negati$e
e&ects of the economy' Tan*i +2==>- eFamined that there is a constructi$e
outcome bet(een against go$ernment e$asion +%ML- and the eFercises of
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the uni$ersal economy and (orld(ide monetary markets on the grounds
that the globali*ation of nancial eFercises attempts to most reduce the
eFpense of hostile to 1#/ e$asion +%ML-' 1n spite of the fact that the oBce
(ith (hich lthyNcash can no( be laundered uni$ersally this attempts tomost minimal the eFpense of hostile to 1#/ e$asion +%ML-' %t last! Tan*i
disco$ered a positi$e relationship in the middle of globali*ation and 1#/
e$asion! and in addition some to the monetary ramications of eFpansi$e
scale go$ernment e$asion'
Chapter 'hree: "esearch esign and *ethodology
3./ Introduction
The eFploration design is the structure (hich permits to direct a specic
study e&ecti$ely and consider the e&ect on the study point' 1t co$ers
e$ery one of the $ie(points identied (ith eFamination theory!
methodologies and conguration alongside information accumulation
apparatuses and strategies' The study (as led utili*ing the )uantitati$e
methodology (hich is po(erful in applying the eFplorati$e eFamination
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outline in the business research structure' This (as connected (ith the
study strategy for better application in the comprehension of customer
discernment in regards to the $alue position of a specic on the occasion
of further uses in the comparati$e business sector'
This chapter is critically important for the study aim relates to the
understanding of the relationship of the prot risk due to Money
Laundering nancial crimes on bank’s nancial performance in U!
assessment of the Customer"focused ML #isk Management solutions for
de$eloping business $alue for the nancial institutions! and e$aluation of
the integration of %ML risk management and %ML compliance for e&ecti$e
and operationally protable nancial institutions' The methodology is
designed to accomplish understanding of the relationship of the prot risk
due to Money Laundering nancial crimes on bank’s nancial performance
in U! assessment of the Customer"focused ML #isk Management
solutions for de$eloping business $alue for the nancial institutions and
e$aluation of the integration of %ML risk management and %ML
compliance for e&ecti$e and operationally protable nancial institutions'
3.1 "esearch methodologies
1n social eFamination systems the purpose of the study is discriminatingly
$ital and considered the rationality behind the eFploration +Den*en! 7??:-'
Hhile there are $arious eFploration methods of insight accessible to lead a
specic study including the authenticity! ob<ecti$ism! positi$ism!
interpreti$ism and so on the determination of the most suitable one is
eFtremely critical' 1n authenticity reasoning the purpose is to ponder the
common sense results of an eFamined sub<ect (ithout $ie(ing it as right
or o&"base' Then again the positi$ism rationality considers all the
concentrated on sub<ects as positi$e to the future necessity and is in this
(ay critical to in$estigate' 1n any case! the ob<ecti$ism reasoning is fairly
particular and can generally be connected in in$estigati$e looks into' The
interpreti$ism is some(hat open to thoughts con$eyed from the
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eFamination and relies on upon this present reality thought instead of
being constrained to hypothetical premise <ust'
,igure 1: "esearch Onion 0Source: Saunders et al. 2/12
8'2'2 #esearch philosophy
The more eFtensi$e point of $ie( of leading a study is credited to the
study rationality' #esearch methods of insight can di&er from authenticity!
positi$ism! post"positi$ism! interpreti$ism! and ob<ecti$ism and so on'
+Macken*ie and nipe! 7??>-' These methods of insight are utili*ed for
alternate points of $ie( and ha$e changed goals and procedures' Case in
point! the authenticity logic considers the presence of learning kno(n or
obscure to the con$ictions of the scientists and tries to comprehend it!
(hile positi$ism manages the truth and ackno(ledges the perceptions for
re$ealing reality in the (ay of more note(orthy truth of future eFploration
+Cress(ell! 7??8-' 1n the interim the interpreti$ism considers the ideas
and recogni*es it (ith the indi$idual social elements common in the
perceptions! and ob<ecti$ism in$estigates a specic result (ithout
connecting to eFploratory preoccupation in the short run +Da$ies A @lder!
7??>-'
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The in$estigation of understanding the impact of nancial crimes and its
impact on the nancial institutions re)uires comprehension of the
hypothetical point of $ie( of concept of nancial crimes! eFamine the
e&ect of nancial crime management' The ob<ecti$e is to gure out(hether the impact of nancial crimes as a hypothesis is i- a&ecting the
banks operating protability and ii- dissect the e&ect on eFecution of
protection against nancial crimes through training and pre$enti$e
measures' The purpose of this study' The impact study is like(ise re)uired
as it needs to coordinate on real life case basis'
8'2'7 #esearch approaches
This specic study has been led applying the in$estigati$e reasoning
(hich is fairly most suitable considering the prere)uisite to in$estigate the
e&ect of nancial crimes management and the protability issue of the
commercial banks' The support for the determination of this specic idea
is that hypothetically it cant be o$erruled that brand augmentation is
fundamental yet it is not as critical as is thought to be by the ad$ertisers'
Therefore the do(n to earth ramications of the study can be in$estigated
through this sort of logic (ithout refereeing to any solid relationship
bet(een these t(o $ariables in the business (orld settings'
1n accordance (ith the study idea through eFamination theory! the
specic methodology (hich is most suitable for study is the deducti$e
methodology' Despite the fact that there are di&erent (ays to deal (ith
consider! for eFample! the inducti$e methodology! the deducti$e
methodology is more appropriate to in$estigati$e eFamination purposes'
The reason is that the current (riting on the brand eFpansion techni)ues
gi$e suBcient premise to the establishment of hypotheses identied (ith
brand augmentation' %long these lines the theories on the ade)uacy of
brand eFpansion can be shaped and tried later on in the (ake of ha$ing
legitimate perception on the ob<ecti$e buyers of a specic case sub<ect'
This is precisely done in the study and thus the disco$eries of the studyaccommodated the comprehension identied (ith the aBrmation of
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eFamination speculations and (ith ackno(ledgment or dismissal the
study point (ould be nished and the disco$eries can be connected for
further studies'
8'2'8 Type of in$estigation
The tactic of research (ith the research can be obtained because
technological! eFploratory as (ell as illustrati$e assumption +Da$ies A
,olk! 7??>-' Rour scientic study needs )uantitati$e details plus a cause
e&ect process to produce along (ith translate the contention! although
eFploratory pursuit are more realistic in nature along (ith includes likely
to obscure from recogni*ed outlook+ +Den*in et al'! 7??:-' 1nside
meantime realistic pursuit can be $ie(ed as (ith regard to depicting as
(ell as con$erting some conse)uence (ith the hypothetical net(ork' That
research has $erbal the truth kno(ing the utili*ation of theory for a
predicament net(ork obliging in$estigati$e process (ith the pursuit along
(ith the t(o sub<ecti$e along (ith )uantitati$e research eFercises can be
hooked up (ith the thorough pursuit'
8'2'5 #esearch Methods
3n the assumption of information accumulating and also using eFamine
strategies research systems may be looked after because summary!
)uantitati$e or e$en merged methods +Cress(ell! 7??8-' /ub<ecti$e
methodology is actually far more pertinent (here by eFperts pay out
uni)ue focus on $arious e&ects from your perceptions (ith no o$erriding
les can be found to help relate case study' This type of eFamine tactic is
actually far more (ell"kno(n (ith all the summary information
<udgements then (hen suBcient mathematical information are missing
out on from the eFamine +/aunders et al'! 7?27-' Suantitati$e tactic then
again (ill depend on ho(e$er (ith mathematical information and also
obliges reliable result of case study to do up(ards using a specic truth
from your eFamine +Den*in et al'! 7??:-' /uch a eFamine program is
actually $aluable in o&ering ob$ious resol$e to eFamine and also calls for
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considerable information from essential and also reliable resources' The
particular miFed approach is actually the $ariety of the prior a couple of
strategies and is connected pertaining to checks in (hich oblige
understanding in the circumstance from both e)ually summary and also)uantitati$e standpoint'
%s this study has t(o fundamental ob<ecti$es i'e' (hether the impact of
nancial crimes as a hypothesis is i- a&ecting the banks operating
protability and ii- dissect the e&ect on eFecution of protection against
nancial crimes through training and pre$enti$e measures! the miFed
research method (ould be most suitable for the study' To begin (ith! to
recogni*e (hether the impact of nancial crimes is a&ecting the banks
operating protability the study (ould be considered on the )uantitati$e
basis and historical data ha$e been compared for three banks i'e' ./0C
0ank! 0arclay’s and /antander’s bank’s prot performance for last $e
years and at the same time the comparison of the rm’s nancial crime
management performance' 3n the other hand to in$estigate (hether the
impact of nancial crimes is a&ecting the operations management for
protection against nancial crimes through training and pre$enti$e
measures! a sur$ey of the employees of the three banks has been
conducted'
3.2 "esearch strategy
Taking into account the study methodology and systems! the
accompanying techni)ues ha$e been produced for utili*ation for
connected in the banks! and to gure out if ad<usted scorecard has an
e&ect on eFecution of the three banks4
Case study of ./0C 0ank! 0arclay’s and /antander’s bank’s for
e$aluating historical data ha$e been compared for three banks i'e'
prot performance for last $e years and at the same time the
comparison of the rm’s nancial crime management performance
+(ith )uantitati$e method-
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These ha$e been used to eFplore the research )uestions i'e' This study
seeks to analyse the nancial prot and non"nancial performance of
nancial institutions operating in U under national and international
regulations on ma<or nancial crimes i'e' Money laundering +ML-! bankingacti$ities o$erlooking U sanctions and terrorist nancing through the
banking channels' The in$estigation (ill be carried out by looking at the
ma<or nancial institutions of U (here the propensity of money
laundering and other nancial crime has high risk to those banks' The
research is intended to ans(er possible )uestions like (hat is the prot
risk due to Money Laundering nancial crimes on bank’s nancial
performance in U' 1f the Customer"focused ML #isk Management
solutions can pro$ide business $alue for the nancial institutions .o(
integration of %ML risk management and %ML compliance (ill be more
e&ecti$e and operationally protable for ,1 +nancial institutions- in ma<or
U banks
3.3 ata collection techniue
The study has considered t(o di$erse information sorts for t(o
eFploration instrumentsE for study of the (orkers! essential information
ha$e been utili*ed! for conteFtual analysis reason auFiliary information
ha$e been utili*ed' The signicant information for the study has been
gathered from t(o sourcesE essential and auFiliary sources' These are
described in brief in the follo(ing4
Secondary sources: secondary data ha$e been collected for the
three banks from annual reports and other ne(s sources (hich are
basically historical data on time series basis for comparison of three
banks nancial crimes management performance i'e' prot
performance for last $e years and at the same time the
comparison of the rm’s nancial crime management performance'
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3.! ata analysis process
The information study procedure included portrayal of the information
gathered from both essential and optional sources' The )uantitati$e
information (ere prepared through M/ @Fcel and important factual
de$ices (ere connected to decipher the information' The study returns
(ere additionally arranged in M/ @Fcel and displayed for eFpressi$e
measurements (ith pie diagram! bar graph! and histogram and so on'
3.# +thical considerations
Moral contemplations stay as one of the key part of the acceptance of
eFploration +Den*in et al'! 7??:-' 1nformation security and data pri$acy
ha$e been guaranteed to stay a(ay from any moral clash' #esearch data
ha$e been created in a manner that any assumption of the researcher
does not think about the selecti$e members' The presentation of the
information (as additionally made reasonably for staying nonpartisan to
the study disco$eries'
3.& )imitations 4 Alternati%e methodologies
The current study techni)ues (ere restricted by the sub<ecti$e (ay to
deal (ith the nancial crimes management to ha$e an e&ect on
operational management of banks' The )uantitati$e in$estigation could
ha$e been considered ho(e$er the information openness issue (as
imposing' This can be the premise for future research around there of
study' 0eside this the use of money laundering pre$ention measures alsoha$e global impact (hich could be measured through eFtensi$e
)uantitati$e data collection method'
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Chapter ,our: ,indings and Analysis
!.1 ata ,indings
This chapter pro$ides the data ndings for the three banks i'e' Case study
of ./0C 0ank! 0arclay’s and /antander’s bank’s for e$aluating historical
data ha$e been compared for three banks i'e' prot performance for last
$e years and at the same time the comparison of the rm’s nancial
crime management performance +(ith )uantitati$e method-' This chapter
is critically important for the study aim relates to the understanding of the
relationship of the prot risk due to Money Laundering nancial crimes on
bank’s nancial performance in U! assessment of the Customer"focused
ML #isk Management solutions for de$eloping business $alue for the
nancial institutions! and e$aluation of the integration of %ML risk
management and %ML compliance for e&ecti$e and operationally
protable nancial institutions' The methodology is designed to
accomplish understanding of the relationship of the prot risk due to
Money Laundering nancial crimes on bank’s nancial performance in U!
assessment of the Customer"focused ML #isk Management solutions for
de$eloping business $alue for the nancial institutions and e$aluation of
the integration of %ML risk management and %ML compliance for e&ecti$e
and operationally protable nancial institutions'
The nes paid by the three banks are pro$ided in the follo(ing' The data
of last $e years are not a$ailable as the banks did not attributed the
nancial crimes impact as an eFpense issue in their earlier reporting
formats i'e' annual reports or ne(s presentations'
2/1!
5S6C 8;8
6arclays 785
Santander 27'5
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/ource4 ./0C 0ank %nnul #eport! 7?25! 7?28E /antander 0ank %nnual
report! 7?25! 0arclays 0ank %nnual report! 7?25
3#3
23!
12.!
,ines imposed to 0anks by ,C% in 7?25 +in millions G06-
,igure 2: ,ines imposed to 6anks by ,CA in 2/1! 0in millions 76P 0Source: 5S6C Annual"eport 2/1! 'he aily 'elegraph 2/1#a8 2/1#b8 2/1#c
!.2 Industry condition@nglish banks ha$e hauled out of dangerous organi*ations to cut the shot
of incidentally empo(ering go$ernment e$asion' 6resently they (ould like
to strike an arrangement to re"begin o&ering administrations to some
po(erless clients (ho ha$e missed out starting from the crack' 1n$estors
trust that another sur$ey of hostile to taF e$asion tenets could bring about
the po(ers being more merciful (ith instances of messy cash sneaking
past the net! the length of the banks can demonstrate they made intense
mo$e to attempt to stop it happening' The business is under immense
(eight to $erify it doesnt o&er a channel to culprits and terrorists to make
utili*ation of their e$il gotten picks up! and thus banks ha$e halted
operations (ith clients (ith connections to the most dangerous nations
like /omalia'
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Hhile such compelling mo$ement helps shield banks from true blue
action! it in like manner suggests guiltless customers are cut o& from! for
eFample! sending trade to their families in for cold hard currency di$erse
countries' Hhats more! also hurting banks customers! it moreo$er hitsgo$ernment tries to decrease desperation in making countries' /imilarly! it
can dri$e money mo$es into parts of the budgetary system (hich are less
solidly seen than banks! therefore make it harder for the forces to spot
(hen chaotic money is being traded' %s needs be! banks trust they (ill
ha$e the ability to go to a simultaneousness (ith the forces (hereby
banks (hich do attempt to stop denied trades (ill be managed more
tolerantly (hen terrible trades do perse$ere! in aBrmation of the
necessity for a congruity bet(een the battling parts'
,igure 3: 6iggest 9 bank -nes 0Source: 'elegraph 2/1!
;http:<<(((.telegraph.co.uk<-nance<ne(sbysector<epic<barc<11&11/=1<6arclays>set>or>record>9>bank>-ne.html?
The assembly is obliged to dispatch a re$ie( of the counter assessment
a$oidance organi*ation in the propelling (eeks as a segment of the
Chancellors 6roducti$ity 6lan! ac)uainting a chance (ith consider! for
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instance! a change' 6ercei$e that banks need to oblige counter cash
related (rongdoing necessities! and additionally distincti$e matters! for
instance! data conrmation! ordered and the customer responsibilities'
More huge security from legal danger could be gi$en to banks and theirsta& (here they are endea$ouring to settle on the best decision to the
eFtent ending cash related (rongdoing! considering budgetary
(rongdoing oBcial at the 0ritish 0ankers %ssociation' 1t is $ital for the
0ritish go$ernment to co"ordinate its tries uni$ersally! to lessen the
assortment in fundamentals bet(een the countries in (hich the banks
(ork'
Consistency of regulatory techni)ue is crucial' The larger part of our part
banks (ork o$er the (orld and they need to consider budgetary
(rongdoing pleasantness through a get"together (ide and o$erall lens'
More essential consistency and clarity on authoritati$e goals at an o$erall
le$el (ould be to an eFtraordinary degree steady' The dealing (ith a
record industry is con$ersing (ith di&erent (orld(ide bodies on these
matters' 1t may be perfect if go$ernment associations (orked more almost
and clearly (ith banks in recogni*ing the routinely changing systems of
money launderers! so it can be made much harder for punks to mo$e
money into the bona de nancial structure from any heading'
Like(ise! the head of threatening to 1#/ a$oidance at 6MG the business
(ill use the opportunity to (ork (ith the la( making body to diminish the
incon$eniences for customers (ho need to eFhibit their characters' There
is an impressi$e measure of de$elopment that can be gotten and used to
upgrade the organi*ation on cash related (rongdoing organi*ation' % $alid
eFample! rather than taking the $isa into a branch so one can take a
photocopy and sign it! one could make use of the biometric information in
a tra$el allo( and read it (ith the nearby eld correspondences chip in
the 6D%! to gi$e that information from home'
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!.3 'rends o -nancial crimes in 5S6CHorld(ide 6ri$ate 0anking keeps on eFperiencing a far reaching upgrade
(hich (as )uickened from 7?22' %s a component of this redesign! banks
are actuali*ing eFtreme budgetary (rongdoing! administrati$e
agreeability and assessment straightfor(ardness measures' Hith a
specic end goal to accomplish our sought plan of action and educated by
our siF channels process! ./0C has like(ise sold $arious organi*ations
and client portfolios! incorporating resources in Iapan! 6anama and
LuFembourg' The )uantity of client records in its /(iss 6ri$ate 0ank is
presently about 9?P lo(er than at its top'
,igure !: operational risk losses o 5S6C
+/ource4 ./0C %nnual #eport! 7?25! page 2:=-
Horking costs (ere higher because of eFpansion in administrati$e and
consistence costs! inationary (eights and interest in key acti$ities to
bolster de$elopment! essentially in Commercial 0anking in %sia and
@urope' Critical things! (hich incorporate rebuilding eFpenses! (ere
additionally higher than a year ago' He concurred settlements in
admiration of re)uest by the U ,inancial Conduct %uthority and the U/
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Commodity ,utures Trading Commission into the remote trade market in
7?25' ./0C (as seriously let around a couple of people (hose acti$ities
dont mirror the lions share of (orkers (ho maintain the )ualities and
gauges eFpected of the bank' This matter is presently rightly in the handsof the /erious ,raud 3Bce' 3ur asset report stayed solid! (ith a
proportion of client ad$ances to client records of 97P' 0arring the impacts
of money interpretation! client ad$ances and ad$ances de$eloped by
U/J7:bn amid 7?25'
,igure #: operational risk losses o 5S6C
+/ource4 ./0C %nnual #eport! 7?28! page 759-
./0C takes eFtortion and other money related unla(ful acts genuinely'
Despite the fact that the bank has business sector dri$ing
misrepresentation location frame(orks! ./0C needs to be mindful of the
distincti$e (ays crooks may attempt to take' This plans to guarantee
manageability in the long haul' ./0Cs o$erall cra$ing and (ay to deal
(ith monetary (rongdoing danger is that the bank (ont endure (orking(ithout the frame(orks and controls set up intended to recogni*e and
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a$ert money related (rongdoing and (ont lead business (ith people or
substances in (hich the organi*ation accept to be occupied (ith unla(ful
conduct' Monetary administration suppliers are at danger of
administrati$e endorses or nes identied (ith beha$iour of business andmoney related (rongdoing' #upture of the U/ D6% may permit the U/
po(ers to force ./0C regarding matters secured thereunder' Monetary
(rongdoing danger controls are a piece of our regular business and they
are administered by (orld(ide money related (rongdoing danger longing
proclamation'
!.! ,inancial crimes o 6arclays 6ank 0arclays 0ank has been ned in 7?25 for the highest amount in nancial
crimes and miscreants and is relied upon to gi$e out its greatest e$er ne'
0arclays has become the 0ritish bank turns into the last ma<or money
related foundation to settle remote trade Fing claims in the U' The
greatest ne the ,C% has imposed to date (as the 785m U0/ paid in
o$embers foreF settlement' The ,inancial Conduct %uthority is relied
upon to make 0arclays pay at any rate 7;?m! eFceeding the totals
di&erent banks paid out to the controller in o$ember 7?25' 0arclays may
e$en no( be )ualied for littler rebates on its ne! ho(e$er (ont get the
full 8?pc! so is prone to pay more than di&erent banks'
The ne has come as a feature of more than 5bn in punishments
eFpected on Hednesday for 0arclays! #oyal 0ank of /cotland! U0/!
I6Morgan and Citigroup for coin Fing! the greater part of (hich (ill be
paid to U/ controllers' 0arclays (as the one and only of the $e not to
settle (ith the ,C% in o$ember! (hen ./0C (as like(ise ned' The bank
hauled out at the ele$enth hour in light of the fact that it (as not able to
concur an arrangement (ith e( Rorks Department of ,inancial /er$ices!
(hich (as not researching alternate organi*ations' This implied that
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0arclays passed up a ma<or opportunity for the 8?pc early settlement
markdo(n the other $e banks got! (hich brought their <oined nes do(n
from 2'>bn to 2'2bn'
Citicorp! I6Morgan Chase A Co'! 0arclays 6lc and #oyal 0ank of /cotland
6lc consented to confess to la(ful o&ense indictments of plotting to
control the cost of U'/' dollars and euros! as indicated by settlements
reported by the Iustice Department in Hashington Hednesday' The
principle keeping money unit of U0/ Group %G consented to confess to a
(ire"eFtortion charge identied (ith premium rate control' The /(iss
bank! the rst to participate (ith antitrust eFaminers! (as conceded
in$ulnerability in the money test'
The four banks that consented to confess to coin charges are among the
(orld’s greatest outside trade dealers' They (ere blamed for aligning so
as to intrigue to impact benchmark rates positions and pushing eFchanges
through in the meantime' Merchants (ho depicted themsel$es as
indi$iduals from KThe CartelK utili*ed online $isit rooms to eFamine their
positions before the rates (ere set and smother ri$alry in the business!
the Iustice Department
!.# ,inancial crimes o Santander 6ank /antander U has also been ned in 7?25 for gi$ing out poor speculation
counsel to the customers' The ne (as decreased by 8?pc from a
concei$able 29'9m since the bank consented to an early settlement' 1t
said /antander U had neglected to make preparations for clients being
gi$en deluding data about its items and administrations' 1t additionally
said the bank did not screen its $entures under its KpremiumK image!
(hich (as ad$ertised as a customi*ed administration (hich reallocated
money to best address the clients issues' The ,inancial Conduct %uthority
+,C%- declared a punishment of 27'5m on the /panish"claimed
moneylender! the Us fth biggest retail bank' The ,C% like(ise
unco$ered inade)uacies in the banks preparation and obser$ing of its
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guides' Clients trusted /antander to help them deal (ith their cash
astutely! yet it neglected to eFperience that obligation' /antander U has
consented to contact inuenced clients and o&er change (here tting! yet
the bank eFpected the le$el of client misfortunes to be lo( gi$en theeFecution of the basic speculations'
The ,C% like(ise said that since the estimation of the stock eFchange has
ascended subse)uent to a considerable lot of the interests being referred
to (ere rst made! that Kit is likely that purchaser misfortunes! and thusly
change for some! (ill be negligibleK' 1t included ho(e$er that clients (ho
paid for a 6remium 1n$estment may be )ualied for pay Kon the o& chance
that they paid for an administration they didnt getK' The ne takes after a
year"long ,C% eFamination concerning /antander after a Kpu**le
shoppingK acti$ity o$er the Us sa$ing money area unco$ered
(eaknesses in its speculation counsel' /antander U briey suspended
the o&er of $enture items a year ago yet is comprehended to ha$e
updated its recommendation administration in light of the disco$eries of
the acti$ity! (hich nished up in December 7?25'
!.& "ole o ,CA and ,inancial crime1n the middle of March and /eptember 7?27! the ,inancial /er$ices
%uthority +,/%-! the ,C%s ancestor! paid more than 78? $isits to 0ritains
siF principle high road banks and building social orders' The principle
issues recogni*ed o$er the business (ere that counsellors neglected to
distinguish the le$el of danger clients (ere (illing to contemplate! did not
take the time allotment clients needed to hold the $enture and did not
generally consider a clients monetary circumstances' %t the point (hen
the conse)uences of the secret shopping acti$ity (ere distributed in
,ebruary a year ago'
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This audit demonstrates that clients are not reliably getting the nature of
counsel on their $entures that they ought to eFpect (hen going by a
counsellor in a bank or building society' Hhilst there are disillusioned by
the conse)uences of this audit! (e are supported by the acti$ity that theorgani*ations included ha$e taken to amend the circumstance for their
clients' /ince this audit occurred! (e ha$e presented ne( guidelines on
speculation eFhortation (hich ha$e eFpanded the eFpert standard of the
counsels (orking in the business and ha$e e$acuated the potential for
counsellors to prescribe items that pay the biggest commission yet may
not be ideal for the client'
The ,inancial Conduct %uthority has ned four banks more than 28m in
the pre$ious t(o years for neglecting to o$ersee go$ernment e$asion
dangers' 1n 7?28! the controller like(ise cautioned a further four banks
they (ere po(erless against taF e$asion' ,C% additionally cautioned four
banks this year they (ere at danger of taF e$asion' %fter the ,C%s initial
mediation! one eFpansi$e bank chose to step far from a )uarter of 2!;??
client connections' 1n 88P of these choices! the reason (as the high
danger of go$ernment e$asion' %ll the more generally! generally a large
portion of banks had no reasonable approach for managing eFchange
based go$ernment e$asion dangers! as per the ,C%s most recent
assessments'
umerous incidents (ere not able to sho( they had considered the
danger (hen handling specic eFchanges or e$en made po(erful
utili*ation of client (eighs aggregated by sta& in di&erent parts of the
bank' %t times! bank sta& re<ected aBrmations about their clients and had
all the earmarks of being eFcessi$ely near high ha*ard people! the
controller found' @$ery year 2?bn of unla(ful stores go through the piece
of the monetary administrations di$ision sub<ect to taF e$asion
regulations! as indicated by Treasury gauges' This controlled area does
eFclude home loan intermediaries' De$eloping dangers incorporate
cybercrime and computeri*ed coinage that are at present unregulated by
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the ,C%' %s indicated by go$ernment information! the budgetary
administrations segment endures the fth most note(orthy number of
digital assaults against its 6C frame(orks of any segment'
!.= ,C"* and 6asel Accord3perational risk organi*ation of the 0asel 111 accord ha$e underscored the
hugeness of budgetary peril organi*ation threat has ended up being
greatly essential +Moosa! 7??9-' %ll things considered banks and other
budgetary foundations ha$e standard principles to alle$iate the scal
(rongdoing risks of the banks (hich open them to regulatory po(ers and
constrained particular la(s and regulations relating to the administration
a$oidance! sparing cash acti$ities sitting abo$e U regards and terrorist
nancing through the sparing cash channels'
3$erall scal ad$ancement depends on consistency and goodness! and
the de$elopment of interconnected cash related markets is an indication
of an unyieldingly o$erall society' The interconnected method for o$erall
markets is certain' @conomies are in like manner unfairly impacted by
cash related (rongdoing' Thusly! disease speaks to the bona de and
colossal threat that cash related blackmail could ha$e grie$ous o$erall
e&ects' Undoubtedly! the L103# shame (here genuine banks purportedly
acted dishonestly to (iden their gi$ing ad$antages encapsulates ho(
o$erall cash related associations (rongdoing can ha$e repercussions
around the globe'
3$erall cash related (rongdoing impacts countless end"customers! causes
billions! if not trillions! of dollars in incidents! and engages free thinker
pioneers to plunder national (ealth' Late aBrmations! settlements and
eFaminations ha$e unco$ered s(eeping o$erall racketeering and
deception by far reaching o$erall endea$ours taking after created
(rongdoing more than dealing (ith a record' The budgetary institutional
de$elopment <oins4 attestations of )uality ad<usting +0arclays-!
settlements of o&er de$ice claims +I'6' Morgan-! conrmations of
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go$ernment a$oidance +./0C-! and settlement of 1#/ a$oidance charges
+/tandard Chartered- +The @conomist! 7?2;-' The cash related
establishments should consider budgetary (rongdoing risks (ithin its
fused peril organi*ation structure' %s necessities be! it should o&erthought to the interrelationships and interdependencies bet(een risks
+@llen! 7?27-'
The composed threat organi*ation strategy obliges that nancial
(rongdoing perils to (hich the association may be re$ealed be
recogni*ed! assessed and assessed and that measures be eFecuted to
direct such risks to reduce the probability of operational e$ents <oined
(ith budgetary (rongdoing and their potential impact on the
establishment' The managerial forces ha$e considered this issue really
and began eFhausti$e control checkpoint (ithin the keeping cash
associations so that money related (rongdoings can be (atched and
(iped out suitably +3li$er et al'! 7??2-' %nother e&ect of nancial
(rongdoing is the looting of national (ealth' ations (ith considerable
aggregates of national (ealth are consistently tormented by perpetual
de<ection and human rights encroachment' This impo$erishment is
symboli*ed and perhaps mostly brought on by the huge trade of national
(ealth abroad' The e<ection of far reaching (holes from the national
treasury obliges the perpleFing organi*ations of budgetary associations'
!.2 Impact on banking pro-tability
Monetary (rongdoing is a smouldering issue for the money related area
(hich has brought on real emergencies regarding the budgetary part'
Considering the foundation of o$erall money related and political
relentlessness and the operation of la(! budgetary (rongdoing is unsafe!
impedes $ote based frame(ork! and genuinely hurts the o$erall economy'
The claims against /tandard Chartered come as United /tates po(ers
(ork to make a mo$e against the surge of money to remote countries!
associations and indi$iduals <oined (ith terrorism! (eapons of mass
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pul$eri*ation and medicine traBcking' Cash related (rongdoings e&ects
$acillate yet can be disconnected into three! sporadically co$ering!
characteri*ations4 a marker of failed states engaging radical pioneers and
organi*ations to loot national assets and participate in encroachment of human rightsE +b- risking prominence based change! eFtraordinary
organi*ation and scal ad$ancementE and +c- increasing the threat of
grie$ous money related results on account of bet(een <oined budgetary
markets'
3f course interior income /er$ice +1#/- a$oidance energi*es terrorism in
light of the fact that cash related backing is the best approach to terrorist
de$elopment' 1#/ a$oidance is the system of disguising criminal proceeds
(ith and may consolidate the impro$ement of clean money through the
United /tates (ith the ob<ecti$e to do a (rongdoing later on +e'g'!
terrorism-' 0anks are crucial to 1#/ a$oidance' 0oth chose and state
go$ernment associations are in)uiring about a couple of gigantic
%merican budgetary establishments for fail to screen eFchange trades in
for cool hard coin and out of their branches! a pass that may ha$e
engaged road drug specialists and terrorists to (ash dirtied money'
Go$ernment a$oidance scal unla(ful acts incapacitates the head(ay of
budgetary associations for t(o reasonsE to begin (ith! it breaks up the
nancial ad$antage of the sparing cash foundations because of the
relationship bet(een duty a$oidance and reduced general incomes
+Ganegod! 7??:-' /econd! client and monetary authoritys trust get
hampered on account of institutional blackmail and defencelessness to
1#/ a$oidance and unla(ful acti$ities hurting the brand estimation of the
banks' %ccordingly! this particular money related (rongdoing is an e$ident
threat to donors and monetary eFperts close by to the eFternal
accomplices' 0eside this #egulators are constantly dri$ing care and
policing through the regulations yet nes are up til no( being constrained
as regulations end up being less e&ecti$e'
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!.@ ConclusionCriminal de$elopment related to nancial organi*ations impacts the
0anks business! and also harms our customers and the gatherings' 1t can
undermine the supportability of ad$ancement and! by fuelling destitution
and une$enness! that of the economies (e (ork in' General Monetary
,und +1M,- assessments recommend that 1#/ a$oidance thoroughly
speaks to some place around t(o and $e for each penny of the (orlds
GD6 yearly! so taking care of the peril is an essential test for the entire
cash related di$ision' The sparing cash industry needs to respond to this
danger through eFtensi$e coordinated e&ort and helpful association (ith
go$ernments' 0udgetary (rongdoing peril has transformed into an
essential issue for the dealing (ith a record foundations and the discipline
constrained by the di&erent managerial force like the national banks
a&ected their sho(s'
The endemic piece of cash related associations in empo(ering the
budgetary premiums of free thinker nations and pioneers is certain'
Hithout such budgetary organi*ations! these organi*ations and pioneers
(ould not be in a position to allo( mass detainment! star$ation!
manslaughter of political ad$ersaries or tune in acts planned to crush
connement' #e$elations that generous sparing cash houses ha$e (orked
(ith free thinker organi*ations are not ama*ing' /ignicant ad$antages
can be made by (orking (ith! managing the upsides of! and gi$ing
nancial organi*ations to re$olt organi*ations' Charges and commissions
can ser$e as a lucrati$e allurement to broad nancial associations to (ork
(ith oil"rich failed states! all that much nanced terrorists! and cash rich
solution cartels' 3$erall banks ha$e proted generously from dri$ing
business (ith human rights abusers! despots! political elites and free
thinker organi*ations' The budgetary foundations (ere indispensable in
empo(ering theft of really billions of dollars in di$erse nations' Hithout
the aid of these o$erall titans of free undertaking! the distortion and
go$ernment a$oidance couldnt be master'
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Thus! it is imperati$e to get an intensi$e approach to manage money
related (rongdoing peril organi*ation at the social e$ent le$el so that
standards material to the foundation are insightful o$er the get"together
and components encircling bit of the get"together can eFchangeinformation +.enning! 7?22-' %cti$ities associated (ith cash related
(rongdoing brought out through a budgetary establishment that
structures a bit of a get"together are at risk to ha$e discriminating
repercussions on eFchange substances in the social occasion or e$en
inimically impact their dissol$ability and! ine$itably! the reputation of the
entire get"together! by local models! eFtensi$ely and uni$ersally +#osen!
7?28-' /traightfor(ardness and the free stream of information (ill make it
possible to percei$e and assess scopes of shortcoming and decrease scal
(rongdoing threats' %t the point (hen this perspecti$e has been
considered under the operational risk organi*ation of the 0asel 111 accord!
the criticalness of money related threat organi*ation peril has ended up
being greatly discriminating +Lambrigger et al'! 7??=-'
Chapter ,i%e: Conclusion
#.1 Conclusion
the study aim relates to the understanding of the relationship of the prot
risk due to Money Laundering nancial crimes on bank’s nancial
performance in U! assessment of the Customer"focused ML #isk
Management solutions for de$eloping business $alue for the nancial
institutions! and e$aluation of the integration of %ML risk management
and %ML compliance for e&ecti$e and operationally protable nancial
institutions' The methodology is designed to accomplish understanding of
the relationship of the prot risk due to Money Laundering nancial crimes
on bank’s nancial performance in U! assessment of the Customer"
focused ML #isk Management solutions for de$eloping business $alue for
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the nancial institutions and e$aluation of the integration of %ML risk
management and %ML compliance for e&ecti$e and operationally
protable nancial institutions'
3$erall cash related (rongdoing impacts a substantial number of scal
end"customers! causes billions! if not trillions! of dollars in setbacks! and
engages free thinker pioneers to plunder national (ealth' Late
aBrmations! settlements and eFaminations ha$e unco$ered broad o$erall
racketeering and deception by far reaching o$erall $entures taking after
made (rongdoing more than dealing (ith a record' The budgetary
institutional de$elopment fuses4 insistences of (orth changing +0arclays-!
settlements of o&er contraption claims +I'6' Morgan-! aBrmations of
go$ernment a$oidance +./0C-! and settlement of 1#/ a$oidance charges
+/tandard Chartered- +The @conomist! 7?2;-' The cash related
establishments should consider budgetary (rongdoing threats (ithin its
consolidated peril organi*ation structure' %s necessities be! it should o&er
thought to the interrelationships and interdependencies bet(een perils
+@llen! 7?27-'
Criminal de$elopment related to nancial organi*ations impacts the
0anks business! and also harms our customers and the gatherings' 1t can
undermine the supportability of impro$ement and! by fuelling destitution
and une$enness! that of the economies (e (ork in' General Monetary
,und +1M,- assessments suggest that 1#/ a$oidance eFhausti$ely speaks
to some place around t(o and $e for each penny of the (orlds GD6
yearly! so taking care of the threat is a $ital test for the entire cash related
di$ision' The sparing cash industry needs to respond to this danger
through s(eeping coordinated e&ort and $aluable association (ith
go$ernments' 0udgetary (rongdoing peril has transformed into a
paramount issue for the dealing (ith a record foundations and the
discipline constrained by the assorted regulatory force like the national
banks a&ected their displays'
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3perational peril organi*ation of the 0asel 111 accord ha$e underscored the
importance of budgetary risk organi*ation threat has ended up being
greatly essential +Moosa! 7??9-' %ll things considered banks and other
budgetary foundations ha$e standard tenets to assuage the scal(rongdoing threats of the banks (hich open them to managerial po(ers
and constrained unmistakable la(s and regulations relating to the
administration a$oidance! sparing cash acti$ities sitting abo$e U
approbations and terrorist nancing through the sparing cash channels'
Go$ernment a$oidance nancial unla(ful acts cripples the progression of
budgetary associations for t(o reasonsE to begin (ith! it disintegrates the
scal ad$antage of the sparing cash foundations because of the
relationship bet(een duty a$oidance and reduced general incomes
+Ganegod! 7??:-' /econd! client and budgetary eFperts trust get
hampered in light of institutional coercion and defencelessness to 1#/
a$oidance and unla(ful acti$ities hurting the brand estimation of the
banks' Thusly! this particular money related (rongdoing is an ob$ious
peril to benefactors and budgetary pros nearby to the eFternal
accomplices' 0y this #egulators are ceaselessly dri$ing care and policing
through the regulations yet nes are up til no( being constrained as
regulations end up being less fruitful'
#.2 "ecommendation
The nancial crimes trends ha$e escalated o$er the years and the banks
are incurring both direct and indirect costs from the management and
alle$iation of nancial crimes in the mass le$els' The past penalties ha$e
been indicati$e of the impact of nancial crimes in the protability of the
banks (hich should be minimi*ed for better operations management and
0asel 111 compliance' The follo(ing recommendations are compiled to take
into consideration from the nancial crimes e&ect in the banks4
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• The commercial banks ha$e to redene their operating procedures
related to the customer relationships de$eloped and conse)uent
transactions relating to the nancial crimes i'e' taF breach! e$asion!
money laundering! drug related fund transfer etc'• The ,C% mandates that all commercial banks should be compliant to
the U sanctions related to terrorist and economically suspended
countries' The banks ha$e to follo( those sanctions to maintain
compliant banking operations in the future'
• The technological applications of the online banking! mobile banking
and $irtual banking ha$e challenged the no( your customerV
policy of the commercial banks seriously' /o the banks need toaddress this issue further sophistically (ith the use of additional
technological uses to enable the regulatory oBcers to pursue
suspected and unscrupulous customer transactions'
• The employees of the commercial banks are also prone to
inade)uate training and lack of proper kno(ledge regarding the
money laundering procedures! la(s! regulations! and process to
restrict those' These should be put into e&ect through the use of increased employee trainings and conscious re$ie(s of customer
transactions'
• The cartel of controlling nancial markets also leads to nancial
crimes for the commercial banks (hich should be put into e&ect for
discharging the areas in (hich indi$idual banks should emphasi*e
and restrict from certain operations eFposing nancial crimes for the
banks'
#.3 ,uture research scopes
The current study techni)ues (ere restricted by the sub<ecti$e (ay to
deal (ith the nancial crimes management to ha$e an e&ect on
operational management of banks' The )uantitati$e in$estigation could
ha$e been considered ho(e$er the information openness issue (as
imposing' This can be the premise for future research around there of
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study' 0eside this the use of money laundering pre$ention measures also
ha$e global impact (hich could be measured through eFtensi$e
)uantitati$e data collection method' 0y follo(ing an in depth )uantitati$e
research (ould lead to the consideration of better understanding of thenancial crimes e&ect in the banking industry'
"eerences
2' %gar(al! I' D' and %man %' +7??5-! Globali*ation and international
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,acilitating Money Laundering! 6aper! presented at the conference
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Challenging @n$ironment'
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satArct<A)AesrcsAsource(ebAcd2Acadr<aAuact:A$ed?CC
%S,<%%ahU@(i#(an38rD.%h\.UR5.bHT%@1AurlhttpsP8%P7,
P7,((('hsbc'comP7,P7,mediaP7,hsbc"com
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