Pub Date : 2020-01-11DOI: 10.1108/jfc-12-2018-0126
Ehi Eric Esoimeme
Purpose The purpose of this paper is to propose a new approach to curbing pension fraud in Nigeria. The approach involves the use of anti-money laundering tools, procedures and expertise to advance the fight against pension fraud in Nigeria. The guidance is non-binding and does not override the purview of the National Pension Commission. The intention is to build on the revised procedures on the processing of death benefits and to complement existing circulars and guidelines issued by the National Pension Commission, including in particular the guidelines for compliance officers. Design/methodology/approach The analysis took the form of a desk study, which analyzed various documents and reports, such as the Financial Action Task Force (2012-2018), International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation (the FATF Recommendations); the Financial Action Task Force Guidance on the Risk-Based Approach to Combating Money Laundering and Terrorist Financing: High Level Principles and Procedures; National Pension Commission Regulations for Compliance Officers; the Joint Money Laundering Steering Group Guidance for the United Kingdom Financial Sector Part I, June 2017 [Amended December 2017] and the Federal Financial Institutions Examination Council (FFIEC) Bank Secrecy Act/Anti-Money Laundering Examination Manual 2014. Findings This paper determined that a strong due diligence process where the owner of the pension account and the next-of-kin/legal beneficiary are duly identified before the establishment of a business relationship is capable of reducing the risks associated with pension fraud to the barest minimum. This paper also determined that anti-money laundering measures, such as record keeping, suspicious transactions reporting, training for anti-fraud/money laundering compliance and an independent audit of systems and controls can help curb pension fraud. Research limitations/implications Pension fraud involves the use of deceit or misrepresentation in connection with a pension claim. There are many different kinds of pension fraud, but the type where the fraud is aimed at stealing a person’s pension funds is what this paper is concerned with. Originality/value Although most publications on pension fraud are focused on anti-fraud measures, this paper focuses on the anti-money laundering measures which can be used by Pension Fund Administrators to curb pension fraud.
{"title":"Using Anti-Money Laundering Measures to Curb Pension Fraud in Nigeria","authors":"Ehi Eric Esoimeme","doi":"10.1108/jfc-12-2018-0126","DOIUrl":"https://doi.org/10.1108/jfc-12-2018-0126","url":null,"abstract":"\u0000Purpose\u0000The purpose of this paper is to propose a new approach to curbing pension fraud in Nigeria. The approach involves the use of anti-money laundering tools, procedures and expertise to advance the fight against pension fraud in Nigeria. The guidance is non-binding and does not override the purview of the National Pension Commission. The intention is to build on the revised procedures on the processing of death benefits and to complement existing circulars and guidelines issued by the National Pension Commission, including in particular the guidelines for compliance officers.\u0000\u0000\u0000Design/methodology/approach\u0000The analysis took the form of a desk study, which analyzed various documents and reports, such as the Financial Action Task Force (2012-2018), International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation (the FATF Recommendations); the Financial Action Task Force Guidance on the Risk-Based Approach to Combating Money Laundering and Terrorist Financing: High Level Principles and Procedures; National Pension Commission Regulations for Compliance Officers; the Joint Money Laundering Steering Group Guidance for the United Kingdom Financial Sector Part I, June 2017 [Amended December 2017] and the Federal Financial Institutions Examination Council (FFIEC) Bank Secrecy Act/Anti-Money Laundering Examination Manual 2014.\u0000\u0000\u0000Findings\u0000This paper determined that a strong due diligence process where the owner of the pension account and the next-of-kin/legal beneficiary are duly identified before the establishment of a business relationship is capable of reducing the risks associated with pension fraud to the barest minimum. This paper also determined that anti-money laundering measures, such as record keeping, suspicious transactions reporting, training for anti-fraud/money laundering compliance and an independent audit of systems and controls can help curb pension fraud.\u0000\u0000\u0000Research limitations/implications\u0000Pension fraud involves the use of deceit or misrepresentation in connection with a pension claim. There are many different kinds of pension fraud, but the type where the fraud is aimed at stealing a person’s pension funds is what this paper is concerned with.\u0000\u0000\u0000Originality/value\u0000Although most publications on pension fraud are focused on anti-fraud measures, this paper focuses on the anti-money laundering measures which can be used by Pension Fund Administrators to curb pension fraud.\u0000","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"68 3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-01-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133245808","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article deals with access to the file in competition proceedings conducted by the European Commission for the enforcement of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) (antitrust proceedings) and merger control proceedings under the EU Merger Regulation.
{"title":"Access to the File in Competition Proceedings before the European Commission","authors":"W. Wils, Henry Abbott","doi":"10.2139/SSRN.3399935","DOIUrl":"https://doi.org/10.2139/SSRN.3399935","url":null,"abstract":"This article deals with access to the file in competition proceedings conducted by the European Commission for the enforcement of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) (antitrust proceedings) and merger control proceedings under the EU Merger Regulation.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"15 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126698947","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper explores the legal and economic theories, and empirical evidence of government-imposed punishment for corporate wrongdoing. Among the questions addressed are: What is the purpose of corporate criminal law? How are sanctions to be determined? When should firms versus individuals be held criminally liable for corporate wrongdoing? When should the criminal law be used instead of regulatory agency actions? Regardless of the rationale, criminal punishment of corporations for the wrongdoing of its owners, managers, and/or employees, has taken on an important role in the U.S. and globally. The limited empirical evidence on the use of criminal sanctions for corporate wrongdoing since the 1980s shows considerable increases in monetary sanctions over time. However, a large part of that increase can be attributed to larger crimes, not just larger sanctions. The use of nonmonetary sanctions (e.g., corporate probation) has also grown significantly over time.
{"title":"Punishing Corporations","authors":"M. Cohen","doi":"10.2139/ssrn.3396586","DOIUrl":"https://doi.org/10.2139/ssrn.3396586","url":null,"abstract":"This paper explores the legal and economic theories, and empirical evidence of government-imposed punishment for corporate wrongdoing. Among the questions addressed are: What is the purpose of corporate criminal law? How are sanctions to be determined? When should firms versus individuals be held criminally liable for corporate wrongdoing? When should the criminal law be used instead of regulatory agency actions? Regardless of the rationale, criminal punishment of corporations for the wrongdoing of its owners, managers, and/or employees, has taken on an important role in the U.S. and globally. The limited empirical evidence on the use of criminal sanctions for corporate wrongdoing since the 1980s shows considerable increases in monetary sanctions over time. However, a large part of that increase can be attributed to larger crimes, not just larger sanctions. The use of nonmonetary sanctions (e.g., corporate probation) has also grown significantly over time.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114222997","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Corruption is one of the main topics of discussion in any field and at any level, representing one of the greatest challenges of the contemporary world. This is present both in poor and developing and developed countries, and the fight to combat it has become a serious problem, especially as the phenomenon expands very rapidly, including, firstly, a few sectors, a few domains, and then the whole of society, becoming a lifestyle, a mentality, a labyrinth from which it can no longer come out. The diminution of the phenomenon is possible in a knowledge society, with individuals having an irreproachable moral conduct, based on education, built on the most durable elements of morality and consciousness which mankind has accumulated over time to the form of today of our civilization. Corruption is perceived by most segments of the population as a serious and dangerous phenomenon that undermines the structures of power and authority and violates the expectations of many people as to the subsequent evolution of social life into living standards.
{"title":"Criminal Aspects Specific to Corruption Offenses","authors":"Lucia Cerasela Balan","doi":"10.2139/ssrn.3388062","DOIUrl":"https://doi.org/10.2139/ssrn.3388062","url":null,"abstract":"Corruption is one of the main topics of discussion in any field and at any level, representing one of the greatest challenges of the contemporary world. This is present both in poor and developing and developed countries, and the fight to combat it has become a serious problem, especially as the phenomenon expands very rapidly, including, firstly, a few sectors, a few domains, and then the whole of society, becoming a lifestyle, a mentality, a labyrinth from which it can no longer come out. The diminution of the phenomenon is possible in a knowledge society, with individuals having an irreproachable moral conduct, based on education, built on the most durable elements of morality and consciousness which mankind has accumulated over time to the form of today of our civilization. Corruption is perceived by most segments of the population as a serious and dangerous phenomenon that undermines the structures of power and authority and violates the expectations of many people as to the subsequent evolution of social life into living standards.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"118 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133780439","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper estimates the impact of criminal justice process, mainly the conviction of controlling shareholders, on the market value of entire business group as well as its subsidiary. The court conviction of controlling shareholders in Korean large business groups, chaebols, provides meaningful circumstances to estimate the value of controlling shareholders. Our main findings are as follows. First, the criminal justice process events relating to controlling shareholders generally do not have significant group level effects on the value of firms. Second, even in the case of imprisonment, we are not able to find significant group-wide and individual firm level effects. However, for individual firm level, we find some negative effects on the value of firms. For instance, prosecutors’ raiding the company, which is generally the first media exposure for the crime, does not have a significant effect, but that event conditional on ex-post pre-trial detention does have a negative effect. Also, pretrial custody, controlling shareholders being jailed, at the early stage of criminal justice process, has a negative effect. Finally, the effect of conviction on affiliated firms within the same business group is heterogeneous. The portion of affiliated firms that receive a positive impact and a negative impact from having a controlling shareholder being sentenced guilty almost equivalent (43% versus 57%, respectively). Such decisions have a positive effect on affiliates where a controlling shareholder holds a large proportion of the shares and a positive effect at the firms with better corporate governance; however, they have a negative impact on affiliates thought to be more likely to grow at faster rates in the future. For this reason, sentencing of the controlling shareholder itself induces unintentional and coincidental value transference between the different affiliated firms in a given business group. There are winners and losers within the same business group.
{"title":"Estimating the Value of Tycoon: Evidence from Criminal Justice Process Events on Controlling Shareholders in Large Business Groups","authors":"Changmin Lee, Han-soo Choi","doi":"10.2139/ssrn.3332855","DOIUrl":"https://doi.org/10.2139/ssrn.3332855","url":null,"abstract":"This paper estimates the impact of criminal justice process, mainly the conviction of controlling shareholders, on the market value of entire business group as well as its subsidiary. The court conviction of controlling shareholders in Korean large business groups, chaebols, provides meaningful circumstances to estimate the value of controlling shareholders. Our main findings are as follows. First, the criminal justice process events relating to controlling shareholders generally do not have significant group level effects on the value of firms. Second, even in the case of imprisonment, we are not able to find significant group-wide and individual firm level effects. However, for individual firm level, we find some negative effects on the value of firms. For instance, prosecutors’ raiding the company, which is generally the first media exposure for the crime, does not have a significant effect, but that event conditional on ex-post pre-trial detention does have a negative effect. Also, pretrial custody, controlling shareholders being jailed, at the early stage of criminal justice process, has a negative effect. Finally, the effect of conviction on affiliated firms within the same business group is heterogeneous. The portion of affiliated firms that receive a positive impact and a negative impact from having a controlling shareholder being sentenced guilty almost equivalent (43% versus 57%, respectively). Such decisions have a positive effect on affiliates where a controlling shareholder holds a large proportion of the shares and a positive effect at the firms with better corporate governance; however, they have a negative impact on affiliates thought to be more likely to grow at faster rates in the future. For this reason, sentencing of the controlling shareholder itself induces unintentional and coincidental value transference between the different affiliated firms in a given business group. There are winners and losers within the same business group.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"46 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127209720","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
One of the primary responsibilities of government is to ensure the security of lives and property of its citizenry. To this end, governments criminalizes certain conducts that are seen to be obnoxious to the general public good. Such conducts includes the way and manner of creating wealth as well as the interrogation of the purpose for which monies earned legitimately are utilized. The Nigeria’s Money Laundering (Prohibition) Act, 2011, (as amended) prohibits illicit earnings and criminally induced investments in and out of Nigeria. However, the law in defining the scope of conducts that constitute offences ended up criminalizing all unlawful conducts, whether or not it has anything to do with money or property or the financial institutions. The Act also seems silence on the investment of legitimate earnings on illegal and criminal purpose, such as terrorism and cultism. It is the position of this paper that the definitional scope of the Act is not ambiguous but lopsided. The paper recommends that the Act be amended to focus on the original purpose for global anti- money laundering regimes
{"title":"Examining the Jurisdictional Scope of Nigeria's Anti Money Laundering Regime","authors":"Bariyima Sylvester Kokpan","doi":"10.2139/ssrn.3726159","DOIUrl":"https://doi.org/10.2139/ssrn.3726159","url":null,"abstract":"One of the primary responsibilities of government is to ensure the security of lives and property of its citizenry. To this end, governments criminalizes certain conducts that are seen to be obnoxious to the general public good. Such conducts includes the way and manner of creating wealth as well as the interrogation of the purpose for which monies earned legitimately are utilized. The Nigeria’s Money Laundering (Prohibition) Act, 2011, (as amended) prohibits illicit earnings and criminally induced investments in and out of Nigeria. However, the law in defining the scope of conducts that constitute offences ended up criminalizing all unlawful conducts, whether or not it has anything to do with money or property or the financial institutions. The Act also seems silence on the investment of legitimate earnings on illegal and criminal purpose, such as terrorism and cultism. It is the position of this paper that the definitional scope of the Act is not ambiguous but lopsided. The paper recommends that the Act be amended to focus on the original purpose for global anti- money laundering regimes","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132430385","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper explores how insider trading law addresses computer hackers who employ cyberattacks in connection with the purchase or sale of securities. Current securities law is ill-equipped to deal with such hackers because, unlike the typical defendants in insider trading cases, hackers owe no fiduciary duty to shareholders and no duty of confidentiality to insiders that provide material non-public information. In order to bring hacker-traders within the ambit of federal securities law, the U.S. Securities and Exchange Commission (SEC) developed a novel theory of liability that treats hacking and trading as a form of deception in violation of Section 10(b) of the Securities Exchange Act of 1934. However, the viability of the SEC’s theory remains to be seen as only one decision has endorsed it—SEC v. Dorozhko, 574 F.3d 42 (2d Cir. 2009). This paper argues that, from a normative perspective, the Second Circuit correctly expanded Section 10(b) to hacking and trading. However, this paper takes issue with the Second Circuit's proposition that hacking amounts to deception only when the hacker misrepresents his or her “identity in order to gain access to information that is otherwise off limits, and then steal[s] that information” for purposes of securities trading. Currently, there is little scholarship that thoroughly explores the potential for hackers to use innovative cyberattacks in order to avoid liability for securities fraud. This paper adds to the existing literature by arguing that even if the judiciary were to adopt the SEC’s reconceptualization of insider trading, it is unlikely that the theory would apply to certain sophisticated cybersecurity schemes—such as informed cyber-trading, whereby investors trade “on the basis of advanced knowledge of a cybersecurity breach.” In addition, it is unlikely that Dorozhko would apply to schemes in which a group of hackers short a corporation’s stock and then initiate a cyberattack, such as a distributed denial of service (DDoS) attack, in order to cause a decline in the stock price. Such conduct would not amount to "deceptive hacking" under Dorozhko because even though the hackers masqueraded their identities, they did not do so in order to obtain the type of confidential information typically at issue in illegal insider trading schemes.
{"title":"Hacking Wall Street: Reconceptualizing Insider Trading Law for Computer Hacking and Trading Schemes","authors":"K. Geisler","doi":"10.2139/ssrn.3221987","DOIUrl":"https://doi.org/10.2139/ssrn.3221987","url":null,"abstract":"This paper explores how insider trading law addresses computer hackers who employ cyberattacks in connection with the purchase or sale of securities. Current securities law is ill-equipped to deal with such hackers because, unlike the typical defendants in insider trading cases, hackers owe no fiduciary duty to shareholders and no duty of confidentiality to insiders that provide material non-public information. In order to bring hacker-traders within the ambit of federal securities law, the U.S. Securities and Exchange Commission (SEC) developed a novel theory of liability that treats hacking and trading as a form of deception in violation of Section 10(b) of the Securities Exchange Act of 1934. However, the viability of the SEC’s theory remains to be seen as only one decision has endorsed it—SEC v. Dorozhko, 574 F.3d 42 (2d Cir. 2009). This paper argues that, from a normative perspective, the Second Circuit correctly expanded Section 10(b) to hacking and trading. However, this paper takes issue with the Second Circuit's proposition that hacking amounts to deception only when the hacker misrepresents his or her “identity in order to gain access to information that is otherwise off limits, and then steal[s] that information” for purposes of securities trading. \u0000 \u0000Currently, there is little scholarship that thoroughly explores the potential for hackers to use innovative cyberattacks in order to avoid liability for securities fraud. This paper adds to the existing literature by arguing that even if the judiciary were to adopt the SEC’s reconceptualization of insider trading, it is unlikely that the theory would apply to certain sophisticated cybersecurity schemes—such as informed cyber-trading, whereby investors trade “on the basis of advanced knowledge of a cybersecurity breach.” In addition, it is unlikely that Dorozhko would apply to schemes in which a group of hackers short a corporation’s stock and then initiate a cyberattack, such as a distributed denial of service (DDoS) attack, in order to cause a decline in the stock price. Such conduct would not amount to \"deceptive hacking\" under Dorozhko because even though the hackers masqueraded their identities, they did not do so in order to obtain the type of confidential information typically at issue in illegal insider trading schemes.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"242 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-07-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128164500","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Criminals worldwide typically use misreporting tricks of different sorts to exploit the transfer of goods between different countries for money laundering purposes. The main international anti-money laundering organisations started paying attention to this phenomenon, known as trade-based money laundering, or TBML, a long time ago, but the absence of suitable analytical tools has reportedly impeded preventive action. Nonetheless, the literature has consistently shown that the analysis of discrepancies in mirrored bilateral trade data could provide some help. Based on previous studies, this work builds a model factoring in the main structural determinants of discrepancies between mirrored data concerning Italy’s external trade in the period 2010-13, considered at a highly detailed (6-digit) level of goods classification for each partner country. Point estimates of freight costs are used to net the cif-fob discrepancy. The regression estimates are then used to compute TBML risk indicators at country and at (4-digit) product level. Based on these indicators, rankings of countries and product lines can be compiled and used to detect potential illegal commercial transactions.
{"title":"Magic Mirror in My Hand…. How Trade Mirror Statistics Can Help Us Detect Illegal Financial Flows","authors":"M. Gara, M. Giammatteo, Enrico Tosti","doi":"10.2139/ssrn.3212626","DOIUrl":"https://doi.org/10.2139/ssrn.3212626","url":null,"abstract":"Criminals worldwide typically use misreporting tricks of different sorts to exploit the transfer of goods between different countries for money laundering purposes. The main international anti-money laundering organisations started paying attention to this phenomenon, known as trade-based money laundering, or TBML, a long time ago, but the absence of suitable analytical tools has reportedly impeded preventive action. Nonetheless, the literature has consistently shown that the analysis of discrepancies in mirrored bilateral trade data could provide some help. Based on previous studies, this work builds a model factoring in the main structural determinants of discrepancies between mirrored data concerning Italy’s external trade in the period 2010-13, considered at a highly detailed (6-digit) level of goods classification for each partner country. Point estimates of freight costs are used to net the cif-fob discrepancy. The regression estimates are then used to compute TBML risk indicators at country and at (4-digit) product level. Based on these indicators, rankings of countries and product lines can be compiled and used to detect potential illegal commercial transactions.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-07-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116895824","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Prior to 2016, all-cash purchases of residential real estate were a key loophole in US anti-money-laundering (AML) regulations. Beginning in January 2016, the Department of the Treasury announced orders requiring the owners of LLCs purchasing high-end residential real estate to identify themselves to authorities. We use a new detailed transactional dataset to identify all-cash purchases by corporate entities before and after the introduction of this new AML policy, and thus estimate the size and impact of anonymity-seeking capital on U.S. housing markets. We first find that all-cash purchases by corporate entities form approximately 10% of the dollar volume of housing purchases in our sample prior to the change in policy. After anonymity is no longer freely available to domestic and foreign investors, all-cash purchases by corporations fall by approximately 70%, indicating the share of anonymity-seeking investors using LLCs as “shell corporations.” Testing for potential distortionary market impacts, we find subsequent declines in luxury house prices in counties targeted by the policy relative to untargeted counties. Our findings are relevant to the (mis)measurement of international net investment flows, and to understanding a demand for anonymity that may impact certain asset classes (art, cryptocurrencies) regardless of their risk/reward characteristics.
2016年之前，全现金购买住宅房地产是美国反洗钱(AML)法规的一个关键漏洞。从2016年1月开始，美国财政部(Department of Treasury)宣布命令，要求购买高端住宅房地产的有限责任公司的所有者向当局证明自己的身份。我们使用一个新的详细交易数据集来识别公司实体在引入这一新的“反洗钱”政策之前和之后的全现金购买，从而估计匿名寻求资本对美国房地产市场的规模和影响。我们首先发现，在我们的样本中，在政策变化之前，公司实体的全现金购买约占住房购买量的10%。在国内外投资者不再可以自由地匿名之后，企业的全现金收购减少了约70%，这表明寻求匿名的投资者将有限责任公司作为“空壳公司”使用的比例。测试潜在的扭曲市场影响，我们发现，相对于非目标县，受政策影响的县的豪宅价格随后下降。我们的研究结果与国际净投资流量的(错误)测量有关，并与理解可能影响某些资产类别(艺术品、加密货币)的匿名需求有关，而不管其风险/回报特征如何。
{"title":"Anonymous Capital Flows and U.S. Housing Markets","authors":"Sean Hundtofte, V. Rantala","doi":"10.2139/SSRN.3186634","DOIUrl":"https://doi.org/10.2139/SSRN.3186634","url":null,"abstract":"Prior to 2016, all-cash purchases of residential real estate were a key loophole in US anti-money-laundering (AML) regulations. Beginning in January 2016, the Department of the Treasury announced orders requiring the owners of LLCs purchasing high-end residential real estate to identify themselves to authorities. We use a new detailed transactional dataset to identify all-cash purchases by corporate entities before and after the introduction of this new AML policy, and thus estimate the size and impact of anonymity-seeking capital on U.S. housing markets. We first find that all-cash purchases by corporate entities form approximately 10% of the dollar volume of housing purchases in our sample prior to the change in policy. After anonymity is no longer freely available to domestic and foreign investors, all-cash purchases by corporations fall by approximately 70%, indicating the share of anonymity-seeking investors using LLCs as “shell corporations.” Testing for potential distortionary market impacts, we find subsequent declines in luxury house prices in counties targeted by the policy relative to untargeted counties. Our findings are relevant to the (mis)measurement of international net investment flows, and to understanding a demand for anonymity that may impact certain asset classes (art, cryptocurrencies) regardless of their risk/reward characteristics.","PeriodicalId":376821,"journal":{"name":"White Collar Crime eJournal","volume":"123 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127043317","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-05-01DOI: 10.1108/JMLC-06-2018-0042
Daniele Canestri
Purpose This paper aims to address the money laundering risk posed by politically exposed person’s (PEP’s) controlled legal entities. International standards and national legislation require enhanced due diligence of political office holders but no specific requirements exist on entities controlled by PEPs. While regulators expect the stringent AML risk mitigation regarding this type of entities, financial institutions have no guidelines to follow. This gap produces inconsistent due diligence measures applied to entities with significant PEPs’ connection. Design/methodology/approach The paper uses comparative analysis to identify discrepancies between legal requirements and their interpretation. Moreover, an empirical approach results in a standardised solution to address these discrepancies. Findings The paper defines the concept of politically exposed entities and the applicable due diligence framework. Anticipating legislative measures, it proposes to introduce this concept via best practices of financial institutions and private banking initiatives such as the Wolfsberg Group. Research limitations/implications The research addresses the topic from a legal point of view. However, the implementation of proposed ideas depends on decisions which are political by nature and are not within the scope of this paper. Practical implications The paper aims at stimulating a debate in both the private and public sector to form a consistent approach to AML due diligence of legal entities associated to PEPs. Originality/value This paper responds to an identified need to study how legal entities connected to PEPs should be defined and monitored.
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