Farook Diss.

7/23/2019 Farook Diss.

http://slidepdf.com/reader/full/farook-diss 1/51

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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'



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;



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



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'



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



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,'



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



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



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



• .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



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



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



(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



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



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



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



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



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



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!



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



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



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



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??>-'



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



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



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-



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


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'



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'



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


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



/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'



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



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'



!.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/



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



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



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



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'



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



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



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



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'



!.@ 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'



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


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


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'



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



• 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



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

capital o(s! ,inance 1ndia! Ool' 2=N2! pp' >;"=='7' %kindehinde! 3' +7?22-' igeria Deposit 1nsurance Corporation

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8' %lkin! M' C' +7?2?-' @$aluation essentials4 ,rom % to W' e( Rork! R4

Guilford 6ress'

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,acilitating Money Laundering! 6aper! presented at the conference

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etherlands-! o$ember 7"8! 7??9'>' 0arclays 0ank %nnual #eport 7?25 [online] a$ailable at

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7?2;]9' 0erney! L' +7??:-! ,or online merchants! fraud pre$ention can be a

balancing act' Cards A 6ayments! 72+7-! pp'77"9'

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research methods' e(bury 6ark! C%4 /%G@'=' 0orrego! M'! Douglas! @' 6'! A%melink, C' T' 7??=' Suantitati$e!

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27' Deloitte! +7?27-' 1ndian banking fraud sur$ey4 a$igating the

Challenging @n$ironment'

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Typologies 7??5"7??;!2;' Gates! T' A Iacob! ' +7??=-' 6ayments fraud4 perception

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%S,<%%ahU@(i#(an38rD.%h\.UR5.bHT%@1AurlhttpsP8%P7,

P7,((('hsbc'comP7,P7,mediaP7,hsbc"com

P7,in$estorrelationsassetsP7,annual"results"7?25P7,hsbc"holdings"plc

P7,annual"report"and"accounts"

7?25'pdfAei5/b/Od.MLse<uS/2p5S0%Ausg%,S<CGL:$,f*c9D3TWH

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in igeria commercial banks' @uropean Iournal of /ocial /ciences!

2?+5-! pp'>7:">5?2=' 1M,! +7??2-! ,inancial /ystem %buse! ,inancial Crime and

Money Laundering! Hashington D' C'7?' 1M,! +7??8-! o&shore nancial centers4 The assessment

program! % progress report and the future of the program!

Hashington D' C'

72' Macken*ie! ' A nipe! /'! +7??>-' #esearch dilemmas4

6aradigms! methods and methodology' !ssues in Educational

Research! 2>+7-! pp' 2"28'

77' Malphrus! /' +7??=-' 6erspecti$es on retail payments fraud'

@conomic 6erspecti$es! 88+2-! pp'82">'78' Masciandaro! D' +7??5-! The global nancial crime4 Terrorism!

money laundering and o&shore centres! %ldershot4 %shgate'

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!nteractive #pproach: #n !nteractive #pproach' London4 /%G@'



7;' Mitchell! %E eith! I' A 0ro(n! C' +2==7-' 0anking ethics and

their dimensions' 1n .ortacsu! %' A 3*kan"Gunay! ' @' +7??5-4

@thical issues and attitude in the Turkish banking sector7>' (a*e! C' +7??>-' 0ank fraud eFposed (ith cases and

pre$enti$e measures' Lagos4 Control and /ur$eillance %ssociates

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in igeria! 1nternational Iournal of 1n$estment and ,inance 2+2-!

pp'2?8"229'7=' 3kpara! G' C' +7??=-! 0ank failure and persistent distress in

igeria4 a discriminant %nalysis! igerian Iournal of @conomic and

,inancial #esearch! 7+2-! pp'25:"2;:'

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7;>87' 6erkel! H' +7??5-! Money Laundering and Terrorism4 1nformal

Oalue Transfer /ystems! %merican Criminal La( #e$ie(! 52N7! pp'

2:8"722'

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banking era and the art of money laundering' Journal of #rts $

%ommerce, &'()*, pp.&+-5'

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or social phenomenon! Crime! La( and /ocial Change! Ool' 55N7!

pp' 799"7=='8;' #euter! 6' +7??9-! %re @stimates of the Oolume of Money

Laundering @ither Useful or ,easible! 6aper prepared for the

conference ^Tackling Money Laundering’! Uni$ersity of Utrecht!

Utrecht! etherlands! o$ember 7??9'8>' #euter! 6' and Greeneld! O' +7??2-! Measuring Global Drug

Markets4 .o( good are the numbers and (hy should (e care about

them! Horld @conomics! 7??2! 5N2! pp' 2;="298'89' #euter! 6eter and @' M' Truman +7??5-! Chasing Dirty Money4

The ght against money laundering! Hashington D' C'4 The 1nstitute

for 1nternational @conomics'

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Epidemiolog ' London4 Lippincott Hilliams A Hilkins'



8=' /antander 0ank %nnual #eport 7?25 [online] a$ailable at

Yhttp4NN((('santander'comNcsgsN/tatic0/

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go0lobsAblob(here279:9?97?;;?9AssbinarytrueZ [%ugust ?2!

7?2;]5?' /chneider! ,riedrich +7??5-! The nancial o(s of 1slamic

Terrorism! in4 Masciandaro! Donato +editor-! Global nancial crime4

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0ritain-4 %shgate! 7??5! pp'=9"27>'

52' Halker! Iohn +7??5-! % $ery temptati$e eFploration of therelationship bet(een shado( economy and the production and

transit of illicit drugs! e( Rork4 U3DC document! December 7??5'57' Halker! Iohn +7??9-! Measuring Global Money Laundering!

6aper presented at the conference ^Tackling Money Laundering’!

Uni$ersity of Utrecht! Utrecht! etherlands! o$ember 7??9'58' Hilhelm! H' ' +7??5-' The ,raud Management Lifecycle

Theory4 % .olistic %pproach to ,raud Management' Iournal of

@conomic Crime Management /pring! 7+7-! pp'25"7=

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