The regime that FATF built: an introduction to the Financial Action Task Force

This article serves to introduce this special issue of Crime, Law, & Social Change on the Financial Action Task Force (FATF). It provides a primer on the history and purpose of FATF and lays out some of the central debates over FATF and the anti-money laundering (AML) regime. Finally, as a way of giving readers an overview of the articles in the special issue, it proposes a series of themes that academics and practitioners should consider in future research and work with FATF.     

Governing illicit finance in transnational security spaces: the FATF and anti-money laundering

This article analyzes the global anti-money laundering (AML) regime from the perspective of security governance, examining the creation of a transnational security space by the FATF. Security is often mentioned as relevant context for AML measures, and the Financial Action Taskforce (FATF) as its central institution. Yet, most analyses – implicitly or explicitly – present the FATF as an important banking regulator. Arguing that this perspective on the FATF is too limited, the article outlines the changing security context in which AML emerged as an important tool for governance. Unlike traditional ideas of international security, the idea of security governance emphasizes new forms of cooperation to ensure safety and security across multiple levels. Based on International Relations (IR) and criminological research, the article develops a framework with five dimensions of security governance: a comprehensive security concept, multi-purpose rationalization, public-private cooperation, multi-nodal governance, and transnational security spaces as a result. Unlike other efforts of global crime governance, the global AML regime provides a prime example of security governance in all of these dimensions. At the same time, the link to security also explains why the global AML regime expanded in some areas more than in others: AML is still a weak governance instrument for regulating financial crimes such as tax evasion or corruption, but it is a strong one for security-related crimes. While the FATF remains a special case in global governance, the creation of transnational security spaces in AML – caused by FATF activities – is likely to be a model for future security governance in other fields.     

The governance of the financial action task force: an analysis of power and influence throughout the years

The international fight against money laundering illustrates changes in global governance as a result of the increasingly cross-border nature of crime and the need it creates for all involved to cooperate. The economic priorities and security concerns that surround it contributed to the strong evolution of global governance in this area and the status of anti-money laundering as a shared problem. The creation of the Financial Action Task Force (FATF), its expansion and cementation throughout the years, is a good example of the many forces working together to responding to the demands of emerging criminal threats and trends. It offers a good illustration of how relationships in global governance have influenced FATF’s priorities and action and ultimately the way in which illicit financial flows are tackled. This analysis offers an overview of FATF’s network across time taking into account the role of states, international organisations, and the private sector in the decision-making processes. It argues that Great Powers – a small, but aligned, group of states of global economic relevance – are responsible for FATF’s direction and the international efforts against illicit financial flows. It suggests, however, that unlike what could be expected, their power is declining following the rise of private sector influence through resourceful, organised and transnational actions e.g. on information sharing.     

Bitcoin,crypto-coins,and global anti-money laundering governance

Crypto-coins (CCs) like Bitcoin are digitally encrypted tokens traded in peer-to-peer networks whose money laundering potential has attracted the attention of regulators, firms and the wider public worldwide. This article assesses the effectiveness of the global anti-money laundering regime in balancing both the challenges and opportunities presented by these novel ‘altcoins’. Two main arguments are advanced. First, the implications that crypto-coins presently pose for global anti-money laundering efforts stem less from the threats of their illicit uses as digital currencies and more from the opportunities presented by their underlying blockchain technologies. Second, despite several shortcomings, the risk-based approach pursued by the Financial Action Task Force (FATF) strikes an effective balance between the existing threats and opportunities that crypto-coins currently present. Rather than a conclusive evaluation however this article stresses the need for continual monitoring and investigation of the wider ethical implications raised by CCs for global efforts to combat money laundering in an era of rapid technological change.     

East Meets West in Anti-Money Laundering and Anti-Terrorist Finance: Policy Dialogue and Differentiation on Security, the Timber Trade and ‘Alternative’ Banking

This paper compares and contrasts South East Asian and European Union countries’ perceptions of the priorities for anti money laundering (AML) and anti terrorist finance (ATF) in relation to three industries: security goods and services; the timber trade; and ‘informal’ value transfer and banking services. It might be expected that all countries would equally support each of these aspects of AML/ATF policies, without differentiating between the industries generating the proceeds. As this paper will show, however, historical experiences, contemporary political relations and patterns of trade shape countries’ approaches, resulting in distinctive enthusiasms and reservations. In a nutshell, the EU points most strongly to products and services originating in Asia as posing AML/CTF risks, and locates primary responsibility for monitoring and control as falling within Asia - a projection of risk and responsibility that is reciprocated by Asian countries. Asian countries perceive a need for tighter control of dangerous products exported by the west, for example, small arms and light weapons, and of related money laundering circuits. Asian and European policy makers increasingly articulate concerns over illegal logging and related laundering, however European importers and their governments see responsibilities for this as falling primarily within Asia. Finally, the EU (like the US) perceives high levels of laundering risk in ‘informal’ value transfer/banking services, in which Asian-run businesses have a global competitive advantage. For the future, as the international balance of trade shifts, and as Asia increases its influence in international fora including those concerned with AML/CTF, so the region’s policy preferences may be expected to carry more weight.

Can the AML system be evaluated without better data?

The Anti-Money Laundering regime has been important in harmonizing laws and institutions, and has received global political support. Yet there has been minimal effort at evaluation of how well any AML intervention does in achieving its goals. There are no credible estimates either of the total amount laundered (globally or nationally) nor of most of the specific serious harms that AML aims to avert. Consequently, reduction of these is not a plausible outcome measure. There have been few efforts by country evaluators in the FATF Mutual Evaluation Reports (MERs) to acquire qualitative data or seriously analyze either quantitative or qualitative data. We find that data are relatively unimportant in policy development and implementation. Moreover, the long gaps of about 8 years between evaluations mean that widely used ‘country risk’ models for AML are forced still to rely largely on the 3rd Round evaluations whose use of data was minimal and inconsistent. While the 4th round MERs (2014–2022) have made an effort to be more systematic in the collection and analysis of data, FATF has still not established procedures that provide sufficiently informative evaluations. Our analysis of five recent National Risk Assessments (a major component of the new evaluations) in major countries shows little use of data, though the UK is notably better than the others. In the absence of more consistent and systematic data analysis, claims that countries have less or more effective systems will be open to allegations of ad hoc, impressionistic or politicized judgments. This reduces their perceived legitimacy, though this does not mean that the AML efforts and the evaluation processes themselves have no effects.     

Cause Lawyers,Political Violence,and Professionalism in Conflict

This article examines how cause lawyers in conflicted and authoritarian societies balance their professional responsibilities as lawyers with their commitment to a political cause. It is drawn from extensive interviews with both lawyers and political activists in a range of societies. It focuses on the challenges for lawyers in managing relations with violent politically‐motivated clients and their movements. Using the notion of ‘legitimation work', it seeks to examine the complex, fluid, and contingent understandings of legal professionalism that is developed in such contexts, offering three overlapping ‘ideal types’ of cause lawyers in order to better understand the meaning of legal professionalism in such sites: (a) struggle lawyers (b) human rights activists and (c) a ‘pragmatic moral community'. The article concludes by re‐examining how law is imagined in the legitimation work of cause lawyers in such settings and how that work is remembered in the transition from violence.     

虚拟货币的国际监管:以反洗钱为起点走出自发秩序

虚拟货币诞生已逾十年,其并未对现有法定货币体系造成冲击,因此,主要国家货币当局并未对个人持有并使用虚拟货币进行禁止。同时,由于虚拟货币是否适合普通投资者并没有定论,主要国家证券监管当局也并未正面注册或审批任何一种面向公众投资者发行的虚拟货币或与其挂钩的金融产品。但是,投机、欺诈和严重的洗钱问题促使各国当局不得不以实质性...     

In Dependence: The Paradox of Professional Independence and Taking Seriously the Vulnerabilities of Lawyers in Large Corporate Law Firms

In this article, and drawing on the work of Martha Fineman and others, we deploy a vulnerability lens as an heuristic device to push against the concept of professional lawyer independence as enshrined in statute and promoted by legal services regulators. Using interviews with 53 senior partners and others from 20 large corporate law firms, we show how the meaning and practice of independence are profoundly mediated by the contexts, relationships, and interactions of corporate lawyers’ everyday working lives. Vulnerable to competition from other firms, the demands of clients, the shift over time from ‘trusted advisor’ to ‘service provider', regulatory requirements, pressures to make profit, and so on, these corporate lawyers appeared prone to developing and normalizing potentially risky and irresponsible practices. We therefore argue that a debate about corporate legal regulation is better based upon a richly theorized concept of interdependence that takes seriously the causes and effects of practitioner vulnerabilities in particular circumstances.     

The Practice of Law as an Obstacle to Justice: Chinese Lawyers at Work

This article helps strengthen our comparative and theoretical understanding of lawyers as gatekeepers to justice by analyzing the screening practices of lawyers in a non-Western context. The explanation for Chinese lawyers' aversion to representing workers with labor grievances focuses on their own working conditions, on the organization of their legal labor, and on their evaluations of the moral character of prospective clients. By linking the screening practices of Chinese lawyers to their socioeconomic insecurity and to popular stereotypes informing and legitimating their screening decisions, this article identifies institutional and cultural obstacles not only to the official justice system but also to cause lawyering. After establishing motives for screening clients, this article then demonstrates lawyers' screening methods: by defining legal reality in strategic and often misleading ways, lawyers use the law as a weapon against the interests of the individuals who seek their help.     

Prevention of money laundering and the role of asset recovery

The purpose of this paper is to examine the increasing emphasis of the UK anti-money laundering (AML) legislative framework, on the financial arrangements of criminals. Our qualitative study engaged key stakeholders from the AML environment through a series of focus groups. This included law enforcement; accountants; prosecutors; bankers and, importantly, ex-offenders. We argue that the inclusion of the views of a traditionally hard to reach group of ex-offenders, adds significantly to knowledge and understanding about effectiveness of AML. The research findings suggest that, at first glance, the focus on asset recovery has been successful. However, our respondents shared with us areas of tension and inconsistencies in application of the law, in particular between police and the courts. For example, whether it was better to prosecute the predicate offence  separately or in addition to the offence of money laundering; or whether to pursue criminal or civil recovery. We further find that criminals have been able to use their knowledge to circumvent the system, suggesting that greater effort is needed to promote cooperation, rather than competition, in successfully detecting and prosecuting offenders.     

Police evaluative perceptions of themselves,the general public and selected occupational groups

In recent years the police have faced sharply increasing pressures, criticisms, and role confusions due to such factors as rising crime rates, widely publicized incidents of police corruption and brutality, judicial changes in legally acceptable due process procedures, and new functions and tasks being assigned to police. This study investigates aspects related to the effects of increased strains and role confusions on police. Specifically, the study examines, with a semantic differential scale administered to 492 state and city police, how police perceive themselves and their roles, and their perceptual evaluations of the general public and various groups they interact with. The findings indicate that the respondents evaluate themselves and their profession highly implying they have a positive self-concept and are favorably disposed to their career. The four most negatively evaluated groups were lawyers, college students, politicians, and prison inmates. The low evaluation of lawyers may be due to the respondents' view that attorney frustrate and complicate the criminal justice system.     

Nature versus Nurture: A Comparison of Russian Law Graduates Destined for State Service and for Private Practice

This article explores the mind‐set of Russian law students on the cusp of graduation. Drawing on a 2016 survey, the analysis finds that, despite having taken different paths to their degrees, the respondents share a confidence in the Russian courts that distinguishes them from Russians without legal education. Within the sample, a natural division is evident between those who plan to go into state service and those who plan to go into private practice. Aspiring state lawyers are more likely to support the policies of the Putin regime, even when they preference politics over the letter of the law. This strongly suggests that the tendency of judges and state lawyers within the criminal justice system to work as a team to ensure convictions is not solely the result of workplace incentives, as had previously been assumed, but is an element of a worldview that these lawyers share that predates their legal education. Aspiring private lawyers, by contrast, are consistently more skeptical of the state. To the extent that they are later coopted by the state, as studies of criminal defense lawyers suggest, such behavior would likely be the result of a desire to endear themselves to investigators and prosecutors in order to ensure further appointments to represent indigent clients.     

Contingent-Fee Lawyers and Their Clients: Settlement Expectations, Settlement Realities, and Issues of Control in the Lawyer-Client Relationship

One hallmark of Herb Jacob's analyses of criminal courts—extensive consideration of the interaction among actors–was less pronounced in his work on civil justice, which was more focused on institutions and the politics behind the laws that those institutions administered. In the research I report here, my emphasis is squarely on the actors in the civil justice process: the relationship between contingency-fee lawyers and clients, and how that relationship plays out in the settlement process. In Felony Justice, Herb, and his coauthor James Eisenstein, focus on the courtroom workgroup as a case-processing (and, largely, case-settling) machine; clients are relatively peripheral. In my account, clients, both current and future, are extremely important in how the lawyer works to settle cases. In the criminal court workgroup, lawyers do not worry about where future clients will come from because police secure them. In contrast, the contingency-fee lawyer has constant concerns about future clients, and I argue, this concern provides a control over lawyers that prior analyses of the contingency fee have largely missed. This dynamic also may explain why the courtroom workgroups, or court communities, found in the criminal courts do not appear to exist in the civil justice system.     

Re-thinking FATF: an experimentalist interpretation of the Financial Action Task Force

Most explanations of the Financial Action Task Force argue that material coercion plays a key role in the consolidation and diffusion of the global anti-money laundering regime. This paper looks carefully at the decision-making within FATF and argues that, at its most impactful, FATF operates in line with the principles of “experimentalist governance.” Experimentalism emphasizes broad, participatory standard setting, contextualized implementation, intensive but diagnostic monitoring, and routinized updating in light of experience. The paper discusses the differences between the more common understandings of FATF before laying out the principles of experimentalist governance. It outlines the experimentalist form of FATF decision-making. It then provides evidence of experimentalist decision-making in three important aspects of FATF: the evolution of blacklisting; the role of monitoring; and the continuing implementation of the risk-based approach.     

Still standing accused: addressing the gap between work and talk in firms of criminal defence lawyers

This paper presents findings from an ethnographic study investigating the everyday reality of legally aided criminal defence. This is the largest survey of its kind for fifteen years since two competing accounts clashed in this journal. In order to update understanding of this branch of the profession, participant observation and formal interviews are utilised to elucidate something of the health of the lawyer–client relationship as it currently stands. The results challenge the prospect of achieving access to criminal justice, as lawyers degrade their clients. However, this is deemed to be caused by a misalignment of values that might be rectified if lawyers are encouraged to become more ethically self-aware.     

The Stalking of Lawyers: A Survey Amongst Professionals in Milan

This is the first study focused on the stalking of lawyers. The authors hypothesized that these professionals are at risk of being stalked by their clients and that this stalking is ascribable to RECON type I.B. A random sample of lawyers was survived. 37.3% of 166 respondents revealed to have been stalked: not only by clients, but also by adversaries and colleagues. Data seem to confirm that the stalking of lawyers mainly belongs to RECON type I.B. Female lawyers were at greater risk than male lawyers. In family law cases, the professionals tended to be stalked by the former husbands of the lawyers' clients (p < 0.01). Several female lawyers—but no male lawyers—were threatened with harm to their family members (p < 0.05). Most of the stalking victims described psychological effects of being stalked. Who suffered physical aggression or repercussions on work was more likely to lodge a complaint (p < 0.01).     

A review of tools to comply with the Fourth EU anti-money laundering directive

The aim of this paper is to present tools that are used by financial institutions to implement legal requirements with regard to anti-money laundering (AML) and combating the financing of terrorism (CFT). The fight against money laundering and terrorist financing is a two-stage procedure, where state authorities outsource a major part of their tasks and responsibilities to private entities. The bulk of the task falls to financial institutions, which have to monitor the transactions of their customers pursuant to international, European and national laws as well as internal policies. To comply with the legal requirements, they use sophisticated surveillance software and collect large amounts of personal data. The European Union introduced two Proposals (COM(2013) 45 final and COM(2013) 44 final) to update the European Union's AML/CFT regime. Even though the Proposals have not yet become legal acts, it is quite obvious that new tools to support financial institutions will emerge. The amendments foreseen by the Proposals as well as already existing tools, which will remain relevant, shall be examined and privacy considerations will be discussed.