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The money laundering risk posed by low-risk financial products in South Africa : findings and guidelines

De Koker, Louis 2009, The money laundering risk posed by low-risk financial products in South Africa : findings and guidelines, Journal of money laundering control, vol. 12, no. 4, pp. 323-339.

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Title The money laundering risk posed by low-risk financial products in South Africa : findings and guidelines
Author(s) De Koker, Louis
Journal name Journal of money laundering control
Volume number 12
Issue number 4
Start page 323
End page 339
Total pages 17
Publisher Emerald Group Publishing
Place of publication Bingley, England
Publication date 2009
ISSN 1368-5201
1758-7808
Keyword(s) crime
money laundering
South Africa
terrorism
Summary Purpose – The purpose of this paper is to investigate the level and nature of criminal abuse of financial products that are classified as posing a low anti-money laundering/combating of financing of terrorists (AML/CFT) risk in South Africa to determine the effectiveness of the simplified due diligence measures that apply to these products.

Design/methodology/approach – The paper presents empirical research on the views of bank officials and law enforcement officials regarding the criminal abuse of South African financial products that are subject to simplified customer due diligence controls.

Findings – South Africa's AML/CFT laws allow certain deposit-taking institutions and money remitters to implement simplified customer due diligence measures in relation to specific low-risk products that are mainly designed to allow previously unbanked persons to access financial services. The paper finds that the products have been abused by criminals but that the incidence of such abuse and the amounts involved are low. The paper investigates possible weaknesses in the current system that allow limited criminal abuse to occur. It concludes with a number of guidelines that emerge from the study and are of value to regulators that wish to implement a similar system.

Originality/value –
The South African AML/CFT scheme in relation to low-risk products is of interest to many international regulators that are grappling with the interplay between effective AML/CFT controls and the impact of strict controls on the ability of socially and economically excluded persons to access appropriate financial services. This paper provides evidence that appropriately designed controls can facilitate financial inclusion while limiting the risk of criminal abuse.
Notes Reproduced with the kind permission of the copyright owner.
Language eng
Field of Research 189999 Law and Legal Studies not elsewhere classified
Socio Economic Objective 940402 Crime Prevention
HERDC Research category C1 Refereed article in a scholarly journal
HERDC collection year 2009
Copyright notice ©2009, Emerald Group Publishing
Persistent URL http://hdl.handle.net/10536/DRO/DU:30020720

Document type: Journal Article
Collections: Faculty of Business and Law
School of Law
Open Access Collection
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Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.