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Compliance Impact on Financial Crimes Proposal


Abstract

This proposal aims at the investigation of compliance programs’ influence on financial crimes in the UAE. Particularly, such compliance units as FATF MENA, NICE Actimize, and DFSA, current problems, and possible solutions were identified. The evidence-based literature review provides the basis for the study. The proposal also involves the methodology of the potential research consisting of both quantitative and qualitative methods.

The topic of the Research Proposal

The finance scope, an area of monetary and currency values and securities, is actively developing a significant element of the UAE economy. In terms of freedom of economic relations and the imperfection of the legal regulation, the financial sector has become one of the most attractive for the commission of criminal acts. The term “financial crime” includes a very large group of crimes that have similarities in their forensic characterization.

This concept is generally associated with criminal acts of fraud, embezzlement, money laundering, and others. In this regard, there is a need to investigate the UAE way of confronting financial crimes through compliance programs such as FATF MENA, NICE Actimize, and DFSA resulting in the concise analysis of key problems, objectives, concepts, and methodology of the proposal.

Literature Review

In order to identify principal problems in the marked area, it is essential to conduct a literature review. The corporate compliance unit is one of the ways of affecting financial crimes as it guarantees that all the businesses in the country are organized legally according to requirements of local and federal laws. There are a number of programs devoted to the implementation of the mentioned strategy.

The Middle East and North Africa Financial Action Task Force (FATF MENA) is an international organization that is a benchmark in the global fight against money laundering, the mission of which is to combat money laundering and terrorist financing. Hawala is the traditionally utilized Alternative Remittance Systems (ARS) in the UAE. The Central Bank administers the registration of hawala operations and adherence to a related set of rules and assures that details of those registered are kept safe, under strict confidentiality rules1.

The FATF MENA program involves legal systems and financial structures aimed at the enhancement of the efficiency of struggle against financial crimes as well as at the strengthening of international cooperation in this field. It is also very significant to point out the fact that the purpose of these regimes is the awareness of the financial crime phenomenon both within the government structures and the private business sector and the introduction of the necessary regulatory measures for agencies dealing with this issue.

The other program providing a fraud management platform is a NICE Actimize that is a group of products and solutions in the field of financial fraud prevention and anti-money laundering. Through best-in-class integrated solutions concerning financial security, risk, and compliance with regulatory requirements, financial institutions can meet the challenges of risk management, reduce operationally and IT costs, improve investment efficiency, and increase customers’ loyalty.

The enhanced functionality available within Actimize’s Suspicious Activity Monitoring and Customer Due Diligence solutions will allow the institution to address evolving money laundering and terrorism financing threats more efficiently2. Besides, the use of NICE Actimize solutions enables customers to prevent financial crime, mitigate risk, reduce operational costs, minimize losses, and provide a higher level of compliance with regulatory requirements. The unit’s solutions provide real-time fraud prevention through various channels of interaction with customers, the use of policies to combat money laundering, enterprise investigations, and risk management.

It is also necessary to pinpoint the Dubai Financial Services Authority (DFSA) that grants licenses and controls financial actions by means of Dubai International Financial Centre (DIFC)3. The management of DFSA applies to asset management services, collective investment funds, credit, insurance, banking services, storage services, and fiduciary disposal of securities providing access to trade commodity futures, stocks, and other securities.

Key Problems

Based on the above literature review, it is possible to determine the following problems need to be addressed in the research:

  • The problem of the unification of financial regulation and supervision. Among the important problems of financial control programs, there is its legal basis, which lags behind economic realities and the state of problems in the financial sector. The rules of the general financial control are not contained in a single legislative act as they are scattered in various normative legal acts regulating certain types of financial control. In this regard, there is a problem with standardization to prevent financial crimes.
  • The problem of financial control enhancement in order to advance efficiency improving its role that is very important in terms of building an economic system based on innovation. The set of proposed solutions should lead to the development of the national innovation system, namely, a set of interrelated organizations engaged in the production and commercialization of science and technology.
  • The problem of money laundering. Despite the tightening of regulatory requirements, the relevance of the topic of combating money laundering of criminal proceeds is steadily growing. Money laundering acquires more sophisticated forms, and even large financial institutions worldwide are making difficult to reduce risks of illegal activities.

Objectives of the Study

Basically, the objectives of the study constitute the potential answers to the above problems and questions listed below and the evaluation of the present situation suggesting some improvements.

Justification of the Study

The current situation in the UAE concerning the financial sector remains corrupt to some extent and, therefore, might be considered as the justification of the study.

Definition of Major Concepts

Under the concept of the financial crime, one understands an unlawful (haram) act that directly infringes the formation, distribution, redistribution, and use financial resources of economic agents4. Financial crimes can be classified on various grounds. Depending on the level of financial relations, which is the object of crimes, the following types are usually distinguished:

  1. The crimes encroaching on the state financial system (public and municipal finance).
  2. The crimes encroaching on enterprise finances.

Depending on the scope of infringement, financial crimes might concern the following fields: taxation, securities market, insurance market, foreign exchange market, interbank money market, credit market, and market of goods and services.

Depending on the type of operations that are used for criminal purposes, crimes in the sphere of credit, accounting, currency, and stock are distinguished.

Hypotheses

The proposed solutions for the identified problems comprise the following aspects:

  • Give compliance agencies the power to monitor, collect, and confiscate profits obtained illegally in the final stage;
  • Provide the necessary infrastructure to enable compliance agencies to exchange information with their counterparts abroad;
  • It is principally important that the UAE government should take into account all the relevant facts in the development of programs to combat financial crimes. More precisely, there is a need to combine legal and financial structures with the private sector to enable financial institutions to contribute to the settlement of the problem. It means, among other things, that the power structure should establish the money transfer tracking system to identify the customer’s personality and preserve the information in petto.
  • Address future threats. Finally, a new system of fighting financial crime should take into account not only current but also future threats. The development of Internet banking opens new possibilities to criminals to use cryptocurrency5. One also might note the rapid development of new payment technologies, the growth of which is associated with the commercial espionage. To properly respond to such trends, it is necessary to create new systems that will make the most accurate predictions and implement the necessary changes timely.

Research Questions

  • What are the ways of combating financial crimes?
  • What are the main objectives aimed at creating an integrated system of financial control?
  • How should Internet banking be protected?
  • What are the improvements that should be implemented to prevent financial crimes?

Methodology

Every research needs a research design before starting because it is an integral part of the research. Therefore, there is a need to determine a research method for a possible investigation. In my research, I would use the mixed design of the investigation. A qualitative method involves the collection of information in a free form; it focuses on the understanding, explanation, and interpretation of empirical data that is the source of speculation and productive ideas. A quantitative method comprises conducting various surveys based on the use of structured questions of closed type, which corresponds to a large number of respondents6.

The main objective of quantitative research is to obtain a numerical estimate of the issue or the reaction of respondents towards it. For example, it would be better if the number of crimes would be accompanied by an explanation of the situation. Accordingly, I would like to provide quantitative research finding out the number of committed financial crimes.

All in all, it seems appropriate to examine at least three cases of financial crimes to suggest appropriate solutions using the interview method. I consider that less number of cases would lead to incorrect results. After that, I would like to interpret and understand the results to make relevant conclusions and contribute to some extent to the resolution of financial crime prevention.

Limitation to the Study

The study limits to the considered country, namely, the UAE as the proposal counts for its peculiarities and compliance programs conducted within the country. In addition, the study is limited by the time frame as it covers only the contemporary period.

Chapters’ Sequence

Speaking of the chapters’ organization, the mentioned thesis will consist of six chapters. The first chapter will provide the literature review to determine the current situation focused on evidence-based sources. The second chapter will formulate the key problems of the research to be addressed. The third chapter will identify fundamental concepts of the study including the notion of financial crime and its types. The fourth chapter will assume possible solutions. The fifth chapter will outline the findings of the research and their discussion. Finally, the last chapter will conclude the main points of the research and pinpoint gaps in the study.

Conclusion

In conclusion, it should be emphasized that this paper proposes a study in the field of financial crimes in the UAE. The problems identified in the proposal are relevant and researchable as they relate to the current situation in the country.

Bibliography

Cox Dennis, Handbook of Anti-Money Laundering (Wiley 2014).

Jabbar SFA, “Financial Crimes” (2010) 17 Journal of Financial Crime 287.

Neyadi AA and others, “Internet Governance and Cyber Crimes In UAE ” (2015) 4 International Journal of Scientific & Technology Research 350.

” (NICE Systems 2015). Web.

Stoudt BG, “Quantitative Methods” (2014) 2 The SAGE Encyclopedia of Action Research 669.

Trautsolt Joanna and Johnson Jesper, “International Anti‐Money Laundering Regulation of Alternative Remittance Systems” (2012) 15 Journal of Money Laundering Control 407.

Footnotes

  1. Trautsolt Joanna and Johnson Jesper, “International Anti‐Money Laundering Regulation of Alternative Remittance Systems” (2012) 15 Journal of Money Laundering Control 407.
  2. “NICE Actimize to Support UAE Exchange with Financial Crime Solutions Addressing Anti-Money Laundering and Integrated Fraud Management” (NICE Systems 2015). Web.
  3. Cox Cox Dennis, Handbook of Anti-Money Laundering (Wiley 2014).
  4. Jabbar SFA, “Financial Crimes” (2010) 17 Journal of Financial Crime 287.
  5. Neyadi AA and others, “Internet Governance and Cyber Crimes In UAE” (2015) 4 International Journal of Scientific & Technology Research 350.
  6. Stoudt BG, “Quantitative Methods” (2014) 2 The SAGE Encyclopedia of Action Research 669.
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IvyPanda. (2020, September 27). Compliance Impact on Financial Crimes. Retrieved from https://ivypanda.com/essays/compliance-impact-on-financial-crimes/

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"Compliance Impact on Financial Crimes." IvyPanda, 27 Sept. 2020, ivypanda.com/essays/compliance-impact-on-financial-crimes/.

1. IvyPanda. "Compliance Impact on Financial Crimes." September 27, 2020. https://ivypanda.com/essays/compliance-impact-on-financial-crimes/.


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IvyPanda. "Compliance Impact on Financial Crimes." September 27, 2020. https://ivypanda.com/essays/compliance-impact-on-financial-crimes/.

References

IvyPanda. 2020. "Compliance Impact on Financial Crimes." September 27, 2020. https://ivypanda.com/essays/compliance-impact-on-financial-crimes/.

References

IvyPanda. (2020) 'Compliance Impact on Financial Crimes'. 27 September.

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