Developments in money laundering and funding of terrorism trends along with their prevention : from a local banks’ perspective

Abstract

The issue of Anti-Money Laundering (AML) has been headlining the financial sector for numerous years. Such concern is more crucial for small countries due to their open economy, including Malta. In today’s technological era, criminals are laundering money through advanced means. From another perspective, this innovation influx is also contributing to the development of regulatory systems which are particularly implemented by the banking sector, resulting in an ongoing operation to efficiently combat emerging Money Laundering (ML) and Funding of Terrorism (FT) trends. Hence, the purpose of this research study is to analyse through a qualitative approach, the development in ML and FT trends and how local banks are preventing them. To conduct this study, primary data is collected through online questionnaires which are distributed to all local banks registered in Malta, while secondary data is collected through a desktop study. The findings of this study shows that the continuous development of ML and FT is driven by technological advancements. As a result, local banks are constantly updating their regulatory systems in order to have the capability to combat such emerging ML and FT typologies. Local banks’ regulatory systems are being automated, in a manner to include artificial intelligence with human intelligence. If such process is not done, local banks will experience negative consequences which may lead to long-term repercussions. Consequently, this study deduces that even though such banks face various challenges while updating their regulatory systems, the benefits which arise from efficient regulatory systems will outweigh them. Therefore, this study found that local banks are motivated to comply with the latest AML and CFT preventive measures as such process is deemed as financially justifiable. This research study concluded that the local banks are doing their utmost to keep abreast with the aforementioned emerging ML and FT trends and consequently with the latest procedures and regulations regarding such trends. Such conclusion implicate that the local banking sector is operating in the right direction regarding AML and CFT and that a proactive behaviour must be prominent among local banks, in order to be prepared for the upcoming emerging ML and FT typologies which will definitely arise in the future.