Search for statistically approved criteria for identifying money laundering risk
-
Received November 20, 2020;Accepted December 15, 2020;Published December 17, 2020
-
Author(s)Link to ORCID Index: https://orcid.org/0000-0002-6584-8390Link to ORCID Index: https://orcid.org/0000-0003-3798-3816
-
DOIhttp://dx.doi.org/10.21511/bbs.15(4).2020.13
-
Article InfoVolume 15 2020, Issue #4, pp. 150-163
- TO CITE АНОТАЦІЯ
-
Cited by1 articlesJournal title: Scientific Bulletin of Mukachevo State University Series “Economics”Article title: Economic and Mathematical Modelling of the Effectiveness of the National System for Combatting Cyber Fraud and Legalisation of Criminal Proceeds Based on Survival Analysis MethodsDOI: 10.52566/msu-econ.8(1).2021.144-153Volume: 8 / Issue: 1 / First page: 144 / Year: 2021Contributors: Olha V. Kuzmenko, Tetiana V. Dotsenko, Liliia O. Skrynka
- 706 Views
-
88 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
The paper focuses on the theoretical justification and theoretical foundations of using statistical criteria for identifying money laundering risk as a tool to prevent and counteract the legalization of bank clients’ proceeds.
The hypothesis is that the coefficient of variation can be appropriately used as an identifier for money laundering risk. To prove this hypothesis, a special methodology was used: generalization, grouping, statistical analysis of time series, and correlation analysis – to identify and analyze the hidden signs of the customer income legalization in the financial activities of a bank; mathematical statistics and scaling – to determine the quantitative values of risk levels for the use of bank services for legalizing customer income. The analysis of financial activities of 32 Ukrainian banks aimed at identifying money-laundering risks showed that banks in which the National Bank of Ukraine revealed suspicious transactions with money-laundering features (16 operating banks) had much higher coefficients of variation in the volume of cash flows, in cash flows for on-demand accounts of economic entities, in cash flows of on-demand accounts for individuals, compared with banks in which violations of legislation in the field of financial monitoring were revealed (eight banks), and with banks where violations were not found (eight banks). This proves that sudden changes in customer transaction volume can be a sign of money laundering risk.
Acknowledgment
State grant for fundamental scientific research “Risk-oriented approach in countering money laundering, terrorist financing and proliferation of weapons of mass destruction” (state registration number 0118U000058).
- Keywords
-
JEL Classification (Paper profile tab)G21, O17
-
References46
-
Tables6
-
Figures0
-
- Table 1. Generalized information on inspections of banks by the NBU and enforcement measures applied to them for violation of legal requirements on financial monitoring
- Table 2. Statistical characteristics of the dynamics of cash turnover and funds on on-demand accounts from September 1, 2017 to April 1, 2019 for JSC “JSCB “CONCORD”
- Table 3. Shapiro-Wilk test value for 20 observations
- Table 4. Coefficients of pairwise correlation between indicators of cash and non-cash flows of clients of JSC “JSCB “CONCORD”
- Table 5. Statistical characteristics of the dynamics of cash turnover and funds on the on-demand accounts from September 1, 2017 to April 1, 2019 for JSC “ASVIO BANK”
- Table 6. Generalized results of calculating the coefficient of variation of cash flow by cash registers and accounts on demand of bank customers for the period August 2017 – May 2019
-
- Academy of Financial Monitoring. (2019). Zvit pro provedennia natsionalnoi otsinky ryzykiv u sferi zapobihannia ta protydii lehalizatsii (vidmyvanniu) dokhodiv, oderzhanykh zlochynnym shliakhom, ta finansuvanniu teroryzmu [Report on the national risk assessment on prevention and counteraction to legalization (laundering) of the proceeds of crime and financing of terrorism]. (In Ukrainian).
- Bashina, O. E., Spirin, A. A., Baburin, V. T., & Ionsen, I. A. (2003). Obshchaya teoriia statistiki: Statisticheskaya metodologiya v izuchenii kommercheskoy deyatelnosti [General theory of statistics: Statistical methodology for examining the commercial activity] (5th ed.) (440 p.). Moscow: Finansy i statistika. (In Russian).
- BIS. (1988). Prevention of criminal use of the banking system for the purpose of money-laundering. Basel Committee publications.
- Cabinet of Ministers of Ukraine. (2015). Rozporiadzhenniam Kabinetu ministriv Ukrainy vid 30.12.2015 № 1407-r “Stratehiia rozvytku systemy zapobihannia ta protydii lehalizatsii (vidmyvanniu) dokhodiv, oderzhanykh zlochynnym shliakhom, finansuvanniu teroryzmu ta finansuvanniu rozpovsiudzhennia zbroi masovoho znyshchennia na period do 2020 roku” [By Order of the Cabinet of Ministers of Ukraine dated December 30, 2015 No. 1407-r “Strategy for the Development of the System of Prevention and Counteraction to Legalization (Laundering) of the Proceeds of Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction until 2020”]. (In Ukrainian).
- Cabinet of Ministers of Ukraine. (2017). Plan zakhodiv na 2017–2019 roky z realizatsii Stratehii rozvytku systemy zapobihannia ta protydii lehalizatsii (vidmyvanniu) dokhodiv, oderzhanykh zlochynnym shliakhom, finansuvanniu teroryzmu ta finansuvanniu rozpovsiudzhennia zbroi masovoho znyshchennia na period do 2020 roku [Activity plan for 2017–2019 on realization of the system of prevention and counteraction to legalization (laundering) of the proceeds of crime, financing of terrorism and financing of proliferation of weapons of mass destruction until 2020] approved by the Resolution of the Cabinet of Ministers of Ukraine dated August 30, 2017. (In Ukrainian).
- Dmytrov, S. О., Cherniak, V. М., & Kuzmenko, O. V. (2011). Systema skorynhu na osnovi indykatoriv ryzyku yak efektyvna skladova finansovoho monitorynhu v banku [Scoring system of the basis of the risk indicators as an effective element of the financial monitoring of the bank]. Visnyk NBU – NBU Bulletin, 1, 26-32. (In Ukrainian).
- Dmytrov, S. О., Merenkova, О. V., Medvid, Т. А., & Vashchenko, О. M. (2010). Assessment and risk management services for the use of money laundering or terrorist financing in commercial bank (114 p.). Sumy: SHEI “UAB NBU”. (In Ukrainian).
- FATF. (2014). Risk-based Approach. Guidance for the Banking Sector. Financial Action Task Force.
- FATF. (2019). Procedures for the FATF Fourth Round of AML/CFT Mutual Evaluation. Financial Action Task Force.
- FATF. (2020). International Standards on Combating Money Laundering and the Financing Terrorism and Proliferation (The FATF Recommendations). Financial Action Task Force.
- FATF. (n.d.). Money Laundering. Official website.
- Hlushchenko, О. О., & Semehen, І. B. (2014). Antylehalizatsiinyi finansovyi monitorynh: ryzyk-oriientovanyi pidhid: monohrafiia [Antilegalization financial monitoring: risk-based approach: monograph] (386 p.). Kyiv: UBS NBU. (In Ukrainian).
- Honcharenko, I. H., Berezina, O. Yu., & Shevchenko, A. М. (2017). The problem of corruption and legalization of money laundering. Scientific Bulletin of Polissia, 3(11), 127-135.
- Honcharenko, І. H. (2019). Analyzing the Risk of Legalization of Proceeds of Crime through Ukrainian Banks. Business Inform, 9, 245-251.
- Husarov, V. М. (2002). Statistica [Statistics] (463 p.). Moscow: UNITY-DANA. (In Russian).
- JSC CB “PRIVATBANK”. (2018). Polityka PAT KB “PRYVATBANK” z pytan dotrymannia vymoh zakonodavstva u sferi zapobihannia ta protydii lehalizatsii (vidmyvanniu) dokhodiv, oderzhanykh zlochynnym shliakhom, finansuvanniu teroryzmu ta finansuvanniu rozpovsiudzhennia zbroi masovoho znyshchennia [The policy of JSC CB PRIVATBANK on complying with legal requirements in the sphere of prevention and counteraction to legalization (laundering) of the proceeds of crime, financing of terrorism and financing of proliferation of weapons of mass destruction]. (In Ukrainian).
- Kolodiziev, О. М., Lebid, О. V., & Zuieva, О. V. (2018). Finansovyi potentsial banku: sutnist, metody otsiniuvannia, instrumenty protydii lehalizatsii dokhodiv, otrymannykh zlochynnym shliakhom: monohrafiia [Financial potential of the bank: essence, methods of evaluation, tools for combating legalization of proceeds of crime: monograph] (246 p.). Kharkiv: Simon Kuznets Kharkiv National University of Economics. (In Ukrainian).
- Kordik, M., & Kurilovska, L. (2017). Protection of the National Financial System From the Money Laundering and Terrorism Financing. Entrepreneurship and Sustainability Issues, 5(2), 243-262.
- Lebid, O. V., Chmutova, I. M., Zuieva, O. V., & Veits, O. I. (2018). Risk Assessment of the Bank’s Involvement to Legalization of Questionable Income Considering the Influence of FinTech Innovations Implementation. Marketing and Management of Innovations, 2, 232-346.
- Levi, M., Reuter, P., & Halliday, T. (2018). Can the AML system be evaluated without better data? Crime Law and Social Change, 69(2), 307-328.
- Lyeonov, S., Кuzmenko, O., Yarovenko, H., & Dotsenko, T. (2019). The Innovative Approach to Increasing Cybersecurity of Transactions Through Counteraction to Money Laundering. Marketing and Management of Innovations, 3, 308-326.
- Malyarets, L., Dorokhov, O., Koybichuk, V., & Dorokhova, L. (2019). Obtaining a Generalized Index of Bank Competitiveness Using a Fuzzy Approach. Journal of Central Banking Theory and Practice, 8(1), 163-182.
- Ministry of Finance of Ukraine. (2016). Nakaz vid 08.07.2016 No. 584 “Pro zatverdzhennia Kryteriiv ryzyku lehalizatsii (vidmyvannia) dokhodiv, oderzhanykh zlochynnym shliakhom, finansuvannia teroryzmu, finansuvannia rozpovsiudzhennia zbroi masovoho znyshchennia” [Order dated July 8, 2016 No. 584 On Approval of the Risk Criteria of Legalization (Laundering) of the Proceeds of Crime, financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction.] (In Ukrainian).
- National Commission for State Regulation of Financial Services Markets. (n.d.). Richni zvity Natskomfinposluh [Annual reports of the National Commission Performing State Regulation in the sphere of the Markets of Financial Services]. (In Ukrainian).
- NBU. (2017a). Postanova Pravlinnia NBU vid 26.06.2015 No 417 “Pro zatverdzhennia Polozhennia pro zdiisnennia bankamy finansovoho monitorynhu: postanova Pravlinnia NBU” [Resolution of the NBU Board dated June 26, 2015 No. 417 On Approval of the Procedure on Performing of the Financial Monitoring of Banks]. (In Ukrainian).
- NBU. (2017b). Postanova Pravlinnia NBU vid 31.08.2017 No. 85 “Pro opublikuvannia okremoi informatsii pro diialnist bankiv Ukrainy” [Resolution of the NBU Board dated August 31,2017 No. 85 About publication of separate information on activity of banks of Ukraine]. (In Ukrainian).
- NBU. (2018). Natsionalnyi bank roziasnyv prychyny zastosuvannia zakhodu vplyvu do banku “Pivdennyi” [The National Bank explained the reasons for taking enforcement measures to the bank “Pivdennyi”]. (In Ukrainian).
- NBU. (2019). Ryzyk-oriientovanyi pidkhid u finansovomu monitorynhu [Risk-based approach to the financial monitoring]. Presentation of I. Priazhentseva, Head of the office of compliance of the department of financial monitoring. (In Ukrainian).
- Omelchenko, О. І., & Ostrovskyi, D. М. (2019). The Ways to Minimize the Risks of Legalization of the Bank’s Customers’ Incomes. Business Inform, 6, 239-245.
- Omelchenko, О. І., & Rats, О. М. (2018). Leveling the Financial Risks of Banking System with Use of Monitoring Instruments. Business Inform, 12, 379-385.
- PAT “KREDOBANK” (2018). Polityka protydii vidmyvanniu kryminalnykh dokhodiv, finansuvanniu teroryzmu ta zbroi masovoho znyshchennia [Policy on counteracting laundering of the proceeds of crime, financing terrorism and weapons of mass destruction]. (In Ukrainian).
- Ponomarenko, V. S., & Maliarets, L. М. (2009). Analiz danykh u doslidzhenniakh sotsialno-ekonomichnykh system [Analysis of data from researches of social and economic systems] (432 p.). Kharkiv: Publishing house “INZHEK”. (In Ukrainian).
- Ponomarenko, V. S., Vnukova, N. M., Kolodiziev, O. M., & Achkasova, S. A. (2019). The Influence of Governmental Regulation and Supervision on the Development of The Risk-Oriented System of Financial Monitoring of Ukraine. Financial and Credit Activity: problems of theory and practice, 2(29), 419-429.
- Pryimak, V. М. (2017). Upravlinnia proektamy [Project management] (464 p.). Kyiv: Taras Shevchenko Kyiv National University. (In Ukrainian).
- Samorodov, B. V., & Utkina, О. V. (2018). Klasyfikatsiini oznaky ryzyku bankivskoi ustanovy u sferi vidmyvannia koshtiv abo finansuvannia teroryzmu [Classification features of the banking institution risk in the sphere of money laundering or financing terrorism]. Banking University Bulletin, 2(32), 47-51. (In Ukrainian).
- Shtal, T., & Proskurnina, N. (2018). Trends of structural dynamic changes in retail trade. Economics of Development, 17(3), 64-73.
- Smaglo, О. V. (2015). Otsinka ryzyku lehalizatsii zlochynnykh dokhodiv subiektiv pervynnoho finansovoho monitorynhu [Evaluation of the risk of legalization of proceeds of crime of the subjects of primary financial monitoring]. The Journal of Zhytomyr State Technological University. Series: Economic Sciences, 4(74), 201-212. (In Ukrainian).
- Soshnikova, L. А., Tamashevich, V. N., Uebe, G., & Sheffer, М. (1999). Mnogomernyi statisticheskii analiz v ekonomike: ucheb. posobie dlia vuzov [Multivariate Statistical Analysis in Economics: textbook] (598 p.). Moscow: UNITY-DANA. (In Russian).
- State Financial Monitoring Service of Ukraine. (2018). Ryzyky vykorystannia subiektiv z neprozoroiu strukturoiu vlasnosti u skhemakh vidmyvannia kryminalnykh dokhodiv: typolohichne doslidzhennia; Derzhavna sluzhba finansovoho monitorynhu Ukrainy [Risks of the using of subjects with non-transparent ownership structure in the schemes of laundering money of crime]. (In Ukrainian).
- The Verkhovna Rada of Ukraine. (2014). Zakon Ukrainy vid 14.10.2014 No. 1700-VII “Pro zapobihannia koruptsii” [Law of Ukraine dated October 14, 2014 No. 1700-VII On Preventing Corruption] (In Ukrainian).
- The Verkhovna Rada of Ukraine. (2020). Zakon Ukrainy zi zminamy vid 19.06.2020 No. 361-IX “Pro zapobihannia ta protydiiu lehalizatsii (vidmyvanniu) dokhodiv, oderzhanykh zlochynnym shliakhom, finansuvanniu teroryzmu ta finansuvanniu rozpovsiudzhennia zbroi masovoho znyshchennia” [Law of Ukraine with changes dated June 19, 2020 No. 361-IX On Prevention and Counteraction to Legalization (Laundering) of the Proceeds of Crime, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction]. (In Ukrainian).
- Vasylieva, Т. А., & Zarutska, А. B. (2013). Rozvytok strukturno-funktsionalnoho pidhodu do analizu finansovoi stiikosti v systemi bankivskoho nahliadu [Development of structural and functional approach to the analysis of financial firmness in the system of financial supervision]. Visnyk of the National Bank of Ukraine, 10(212), 28-35. (In Ukrainian).
- Vitlinskyi, V. V., & Velykoivanenko, H. І. (2004). Ryzykolohiia v ekonomitsi ta pidpryiemnytstvi: monohrafiia [Riskology in the economics and entrepreneurship: monograph] (480 p.). Kyiv: KNEU. (In Ukrainian).
- Vnukova, N. М., Andriichenko, Zh. О., & Hontar, D. D. (2018a). Kontseptualni zasady formuvannia ryzyk-oriientovanoi systemy protydii vidmyvanniu koshtiv, finansuvanniu teroryzmu ta rozpovsiudzhennia zbroi massovoho znyshchennia [Conceptual bases for formation of risk-based system of counteraction to money laundering, financing of terrorism and proliferation of weapons of mass destruction]. The Problems of Economy, 4, 201-215. (In Ukrainian).
- Vnukova, N., Hontar, D., & Andriichenko, Zh. (2018b). International Preconditions for Development the Basics of a Concept of Risk-oriented System on Combating Money Laundering and the Financing of Terrorism and Proliferation. In Modern Management: Economy and Administration (pp. 37-43). Opole: The Academy of Management and Administration in Opole.
- Xue, Y.-W., & Zhang, Y.-H. (2016) Research on money laundering risk assessment of customers – based on the empirical research of China. Journal of Money Laundering Control, 19(3), 249-263.
-
-
Conceptualization
Olesia Lebid
-
Methodology
Olesia Lebid
-
Project administration
Olesia Lebid
-
Software
Olesia Lebid
-
Validation
Olesia Lebid
-
Visualization
Olesia Lebid
-
Writing – review & editing
Olesia Lebid
-
Data curation
Oleksandr Veits
-
Formal Analysis
Oleksandr Veits
-
Investigation
Oleksandr Veits
-
Writing – original draft
Oleksandr Veits
-
Conceptualization
-
Financial sustainability management of the insurance company: case of Ukraine
Ruslana Pikus , Nataliia Prykaziuk , Mariia Balytska doi: http://dx.doi.org/10.21511/imfi.15(4).2018.18Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 219-228 Views: 3456 Downloads: 287 TO CITE АНОТАЦІЯIn the current conditions of the Ukrainian economy, which is characterized by crisis phenomena and frequent changes in legislation, the insurance organizations are facing a number of difficulties in maintaining their financial sustainability. Moreover, these processes take place under the increased requirements for solvency of insurers. However, a significant part of domestic insurance companies is financially unstable, which is conditioned not only by the lack of funds, but also by the low level of management. This situation hinders the further development of the insurance market in Ukraine and has a negative impact on all areas of the domestic financial system and prevents it from successful integration into the European financial field. In order to address this problem, it is necessary to distinguish the key groups of risks that affect the financial sustainability of insurance organizations, among which there are the following: insurance, strategic, market risk, risk of inefficient capital structure, risk of limiting the insurance company’s liquidity, tax risk, investment risk, operational risk, the risk of ineffective organizational structure of the enterprise, and information risk. It should be noted that under conditions of changing environment, the impact of these risks only increases, and therefore the task of minimizing the impact of these risks on the activities of insurance companies is highly important. Accordingly, the authors of the article proposed a four-stage strategy to manage the financial sustainability of the insurance company, the purpose of which is to identify the risks of limiting the insurer’s financial sustainability, their qualitative and quantitative assessment, as well as the development and implementation of appropriate measures to minimize and eliminate unacceptable consequences.
-
The risk management practices in the manufacturing SMEs in Cape Town
Clinton Mbuyiselo Sifumba , Kevin Boitshoko Mothibi , Anthony Ezeonwuka , Siphesande Qeke , Mamorena Lucia Matsoso doi: http://dx.doi.org/10.21511/ppm.15(2-2).2017.08Problems and Perspectives in Management Volume 15, 2017 Issue #2 (cont. 2) pp. 386-403 Views: 3307 Downloads: 524 TO CITE АНОТАЦІЯRisk management is one of the prominent issues which are pivotal to the success of a business and may adversely affect profitability if not properly practised. Therefore, the main objective of this paper was to determine risk management practices in manufacturing SMEs in Cape Town. The research conducted was quantitative in nature and constituted the collection of data from 74 SME leaders, all of whom had to adhere to a list of strict delineation criteria. All data collected were thoroughly analyzed through means of descriptive statistics. From the findings made, it is clear that SMEs in the manufacturing sector do in fact understand risk management initiatives applicable to ‘manage’ their respective businesses towards sustainability, but not to a large extent. It was found that respondents are unaware of the elements which make risk management effective, which ultimately aids to the development of problems for SMEs. All employees, managers and owners must coordinate their efforts together to identify and manage organizational risks within their ambit to obtain total risk coverage, as well as provide assurance that these risks are effectively managed from a coordinated approach. Further studies may be carried out to identify measures that can be taken to improve the effectiveness of risk management practices in SMEs.
-
Risk premiums in life insurance
Elinor Mualem , Abraham Zaks doi: http://dx.doi.org/10.21511/ins.10(1).2019.01Insurance Markets and Companies Volume 10, 2019 Issue #1 pp. 1-8 Views: 2544 Downloads: 270 TO CITE АНОТАЦІЯ