The Global Anti-Money Laundering Regulatory Landscape in Less Developed Countries by Norman Mugarura

Author:Norman Mugarura
Language: eng
Format: epub
Publisher: Ashgate Publishing
Published: 2012-10-16T04:00:00+00:00

Disparities in Technology and a Two-Lane System

It should be noted that since globalization is technologically embedded, the space within which global processes operate is dominated by the technologically advanced economies and is inimical to technologically less developed economies. First of all, the widespread availability of effective encryption technology undermines money laundering controls in countries which are ‘driving in the slow lane’ in terms of technological development.31 The ICT world is developing very quickly, which presupposes that countries moving at a slower rate could be vulnerable to criminal exploitation. Criminals have demonstrated a high level of agility in exploiting weakness in the system, manipulating markets, undermining controls and doing whatever they do in a sophisticated manner that keeps them clear of detection. Criminals have robustly exploited enhanced technology to communicate with their sponsors and other syndicates with regard to activities like setting up schemes and liaising with local criminal groups. It is important to note that the pervasiveness of the Internet has not only engendered new crime typologies but has also drastically changed the landscape within which traditional crimes are conceptualized. Meanwhile, in developed countries, advances in technology mean that many business operations are impersonalized (for example, online and telephone banking), making the system prone to manipulation. Criminals are known to exploit advances in ICT not only to perpetuate money laundering but also to stay ahead of the game by circumventing state prudential and regulatory controls. In theory, globalization works as a means to transmit technological benefits from one place to another, helping to create a level playing field for all in the long run. However, the Internet provides an ideal opportunity for perpetuating money laundering-related crimes in technologically disadvantaged countries.

Specifically, the traditional KYC paradigm of AML/CFT control is being threatened by the innovative changes ushered in by advances in technology. Following the changed business landscape, criminals who would have been identified at the initial business stage take advantage of advances in technology to exploit the impersonalized nature of the modern business landscape. Thus, much as globalization in its economic context has generated economic opportunities for the business community,32 the system is still skewed in favour of a handful of societies and is arguably less (or not at all) global as the system seeks to assert.33 This is either explained by the sharp information asymmetries that exist between two societies or the fact that the global system needs to be customized locally by each society according to its development priorities. If societies fail to generate the requisite information, important policy issues may be misjudged, resulting in increased transactional costs and hence reduced profit margins.

The above predicament is associated with many developing countries where there are a host of problems, such as the absence of a centralized intelligence system, a confusing system of collation of information or a lack of investigatory capability to assess and prevent criminal activity. Equally, poor information undermines economies in pursuing the fight against organized crime groups. Therefore, the proponents of the global system have no choice but

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