Skip to main content

Advertisement

SpringerLink
Log in

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

  • Published:
Crime, Law and Social Change Aims and scope Submit manuscript

Abstract

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  1. Drezner, D. (2007). All politics is global. Princeton: Princeton University Press.

    Google Scholar 

  2. Hülsse, R. (2007). Creating the demand for global governance: The making of a global money-laundering problem. Global Society, 21(2), 155–178.

    Article  Google Scholar 

  3. Hülsse, R., & Kerwer, D. (2007). Global standards in action: Insights from anti-money laundering regulations. Organization, 14(5), 625–642.

    Article  Google Scholar 

  4. Jojarth, C. (2009). Crime, war and global trafficking: Designing international cooperation. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  5. Simmons, B. (2000). International efforts against money-laundering. In D. Shelton (Ed.), Commitment and compliance: The role of non-binding norms in the international legal system (pp. 244–263). Oxford: Oxford University Press.

    Google Scholar 

  6. Sharman, J. C. (2011). The money laundry: Regulating criminal finance in the global economy. Ithaca: Cornell University Press.

    Book  Google Scholar 

  7. Tsingou, E. (2010). Global financial governance and the developing anti-money laundering regime: What lessons for international political economy? International Politics, 47(6), 617–637. https://doi.org/10.1057/ip.2010.32.

    Article  Google Scholar 

  8. Krahmann, E. (2003). Conceptualizing security governance. Cooperation and Conflict, 38(1), 5–26.

    Article  Google Scholar 

  9. Crawford, A. (2006). Networked governance and the post-regulatory state? Theoretical Criminology, 10(4), 449–479.

    Article  Google Scholar 

  10. Schuilenburg, M. (2015). The securitization of society: Crime, risk and social order. New York: New York University Press.

    Book  Google Scholar 

  11. Andreas, P., & Price, R. (2001). From war fighting to crime fighting: Transforming the American national security state. International Studies Review, 3(3), 31–52.

    Article  Google Scholar 

  12. Jakobi, A. P. (2013). Common goods and evils? The formation of global crime governance. Oxford: Oxford University Press.

    Book  Google Scholar 

  13. United Nations. (1988). Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. Vienna: UNODC.

  14. Wang, H. Y., & Rosenau, J. N. (2001). Transparency international and corruption as an issue of global governance. Global Governance, 7(1), 25–49.

    Google Scholar 

  15. Kelley, J. G. (2017). Scorecard diplomacy. Grading states to influence their reputation and behavior. Cambridge: Cambridge University Press.

  16. Kelley, J. G., & Simmons, B. A. (2015). Politics by number: Indicators as social pressure in international relations. American Journal of Political Science, 59(1), 55–70. https://doi.org/10.1111/ajps.12119.

    Article  Google Scholar 

  17. Haufler, V. (2009). The Kimberley process certification scheme: An innovation in global governance and conflict prevention. Journal of Business Ethics, 89(4), 403–416.

    Article  Google Scholar 

  18. White House. (2011). International strategy for cyberspace: Prosperity, security and openness in a networked world. Washington: White House.

    Google Scholar 

  19. Mearsheimer, J. J. (2001). The tragedy of great power politics. New York: Norton.

    Google Scholar 

  20. Waltz, K. N. (1979). Theory of international politics. New York: McGraw Hill.

    Google Scholar 

  21. The Commission on Human Security. (2003). Human security now. New York: United Nations.

    Google Scholar 

  22. Krahmann, E. (2005). Security governance and networks: New theoretical perspectives in transatlantic security. Cambridge Review of International Affairs, 1(1), 15–30.

    Article  Google Scholar 

  23. Jo, H., & Bryant, K. (2013). Taming of the warlords: Commitment and compliance by armed opposition groups in civil wars. In T. Risse, S. Ropp, & K. Sikkink (Eds.), The persistent power of human rights: From commitment to compliance (pp. 239–258). Cambridge: Cambridge University Press.

    Chapter  Google Scholar 

  24. Hönke, J. (2013). Transnational companies and security governance: Hybrid practices in a postcolonial world. London: Routledge.

    Google Scholar 

  25. Andreas, P., & Nadelmann, E. (2006). Policing the globe: Criminalization and crime control in international relations. Oxford: Oxford University Press.

    Google Scholar 

  26. Nadelmann, E. A. (1990). Global prohibition regimes: The evolution of norms in international society. International Organization, 44(4), 479–526.

    Article  Google Scholar 

  27. Amicelle, A. (2017). Policing through misunderstanding: Insights from the configuration of financial policing. Crime, Law and Social Change, forthcoming.

  28. Bigo, D. (2000). Liaison officers in Europe: New officers in the European security field. In J. Sheptycki (Ed.), Issues in Transnational Policing (pp. 67–99). New York: Routledge.

    Google Scholar 

  29. Foucault, M. (1978). Discipline and punish: The birth of the prison. New York: Random House.

    Google Scholar 

  30. Foucault, M. (2007). Security, territory, population. Lecures at the Collège de France 1977–1978. Houndmills: Palgrave.

    Google Scholar 

  31. Garland, D. (1997). 'Governmentality' and the problem of crime: Foucault, criminology, sociology. Theoretical Criminology, 1(2), 173–214.

    Article  Google Scholar 

  32. Braithwaite, J. (2000). The new regulatory state and the transformation of criminology. British Journal of Criminology, 40, 222–238.

    Article  Google Scholar 

  33. Garland, D. (2001). The culture of control. crime and social order in contemporary society. Oxford: Oxford university press.

    Google Scholar 

  34. Grabosky, P. N. (1995). Using non-governmental resources to foster regulatory compliance. Governance: An International Journal of Policy, Administration, and Institutions, 8(4), 527–550.

    Article  Google Scholar 

  35. Sheptycki, J. (2000). Issues in transnational policing. New York: Routledge.

    Google Scholar 

  36. Sheptycki, J., & Wardak, A. (Eds.). (2005). Transnational and comparative criminology. Portland: Glasshouse Press.

    Google Scholar 

  37. Deflem, M. (2002). Policing world society: Historical foundations of international police cooperation. Oxford: Clarendon.

    Google Scholar 

  38. Levi, M. (2010). Combating the financing of terrorism: A history and assessment of the control of ‘threat finance’. British Journal of Criminology, 50, 650–669. https://doi.org/10.1093/bjc/azq025.

    Article  Google Scholar 

  39. Paoli, L., Greenfield, V. A., & Reuter, P. (2009). The world heroin market: Can supply be cut? Oxford: Oxford University Press.

    Book  Google Scholar 

  40. Crawford, A. (2002). The governance of crime and insecurity in an anxious age: The trans-European and the local. In A. Crawford (Ed.), Crime and insecurity: The governance of safety in Europe (pp. 27–51). Cullompton: Willan.

    Google Scholar 

  41. MacFarlane, S. N., & Foong-Khong, Y. (2006). Human security and the UN: A critical history. Bloomington: Indiana University Press.

    Google Scholar 

  42. Zürn, M. (2013). Globalization and global governance. In I. W. Carlsnaes, T. Risse, & B. Simmons (Eds.), Handbook of international relations (pp. 401–425). London: Sage.

    Chapter  Google Scholar 

  43. Drori, G. S. (2006). Governed by governance: The new prism for organizational change. In G. S. Drori, J. W. Meyer, & H. Hwang (Eds.), Globalization and organization: World society and organizational change (pp. 91–118). Oxford: Oxford University Press.

    Google Scholar 

  44. Drori, G. S., Meyer, J. W., & Hwang, H. (2009). Global organization: Rationalization and actorhood as dominant scripts. In R. E. Meyer, K. Sahlin, M. J. Ventresca, & P. Walgenbach (Eds.), Institutions and ideology (pp. 17–43). Bingley: Emerald.

    Chapter  Google Scholar 

  45. Strang, D., & Meyer, J.W. (1994). Institutional conditions for diffusion. In W. R. Scott, J. W. Meyer, & associates (Eds.), Institutional environments and organizations (pp. 100–112). London: Sage.

  46. Dean, M. (2010). Governmentality: Power and rule in modern society. London: Sage.

    Google Scholar 

  47. Foucault, M. (1991). Governmentality. In G. Burchell, C. Gordon, & P. Miller (Eds.), The Foucault effect: Studies in governmentality (pp. 87–104). Chicago: University of Chicago Press.

    Google Scholar 

  48. Singer, P. W. (2008). Corporate warriors. The rise of the privatized military industry. Ithaca: Cornell University Press.

    Google Scholar 

  49. Avant, D. D. (2005). The market of force: The consequences of privatizing security. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  50. Johnson, L. (2000). Transnational private policing: The impact of global commercial security. In J. Sheptycki (Ed.), Issues in transnational policing (pp. 21–42). London: Routledge.

    Google Scholar 

  51. Bieri, F. (2010). The roles of NGOs in the Kimberley process. Globality Studies Journal, 20.

  52. Herr, S. (2010). Binding non-state armed groups to international humanitarian law. Geneva call and the ban of anti-personnel mines: lessons from Sudan. (report no. 95/2010). Frankfurt: Peace Research Institute Frankfurt.

  53. Jakobi, A. P., & Wolf, K. D. (Eds.). (2013). The transnational governance of violence and crime: Non-state actors in security. Houndmills: Palgrave.

    Google Scholar 

  54. Liss, C., & Sharman, J. C. (2015). Global corporate crime-fighters: Private transnational responses to piracy and money laundering. Review of International Political Economy, 22(4), 693–718.

    Article  Google Scholar 

  55. Lutterbeck, D. (2005). Blurring the dividing line: The convergence of internal and external security in western Europe. European Security, 14, 231–253.

    Article  Google Scholar 

  56. Svedberg Helgesson, K. (2011). Public-private partners against crime: Governance, surveillance and the limits of corporate accountability. Surveillance & Society, 8(4), 471–484.

    Google Scholar 

  57. Bowcott, O., & Adams, R. (2016). Human rights group condemns prevent anti-radicalisation strategy. The Guardian. https://www.theguardian.com/politics/2016/jul/13/human-rights-group-condemns-prevent-anti-radicalisation-strategy. Accessed 12 Oct 2016.

  58. Woody, K. E. (2012). Conflict minerals legislation: The SEC's new role as diplomatic and humanitarian watchdog. Fordham Law Review, 81, 1315–1351.

    Google Scholar 

  59. Levi, M., & Reuter, P. (2007). Money laundering. In M. Tonry (Ed.), The Oxford Handbook of Crime and Public Policy (pp. 356–380). Oxford: Oxford University Press.

    Google Scholar 

  60. G7. (1988). Political declaration: securing democracy. Toronto Summit, 20 June 1988. http://www.g8.utoronto.ca/summit/1988toronto/political.html. Accessed 22 Oct 2016.

  61. Gardner, K. L. (2007). Fighting terrorism the FATF way. Global Governance, 13(3), 325–345.

    Google Scholar 

  62. Nance, M. T. (2015). Naming and shaming in financial regulation: Explaining variation in the financial actions task force on money laundering. In H. R. Frimann (Ed.), The politics of leverage in international relations: Name, shame and sanction (pp. 123–141). London: Palgrave.

    Google Scholar 

  63. Garside, J. (2015). HSBC pays out £28m over money-laundering claims. The Guardian. http://www.theguardian.com/business/2015/jun/04/hsbc-fined-278m-over-money-laundering-claims. Accessed 4 Nov 2015.

  64. Gaylord, M. S. (2008). The Banco Delta Asia affair: The USA patriot act and allegations of money laundering in Macau. Crime, Law and. Social Change, 50(4–5), 293–305.

    Google Scholar 

  65. FATF. (2012). FATF guidance: The implementation of financial provisions of United Nations security council resolutions to counter the proliferation of weapons of mass destruction. Paris: OECD. http://www.fatfgafi.org/publications/financingofproliferation/documents/unscr-proliferation-wmd.html. Accessed 15 Oct 2016.

  66. FATF. (2011a). FATF report: Organised maritime piracy and related kidnapping for ransom. Paris: FATF.

    Google Scholar 

  67. FATF. (2011b). Money laundering risks arising from trafficking in human beings and smuggling of migrants. Paris: FATF.

    Google Scholar 

  68. FATF. (2016b). FATF report to the G20: Beneficial ownership. Paris: FATF. http://www.fatf-gafi.org/publications/fatfrecommendations/documents/report-g20-beneficial-ownership-2016.html. Accessed 12 Oct 2016.

  69. OECD. (2016). About the global forum on transparency and exchange of information for tax purposes. http://www.oecd.org/tax/transparency/. Accessed 22 Oct 2016.

  70. FATF. (2006). Trade based money laundering. http://www.fatf-gafi.org/publications/methodsandtrends/documents/trade-basedmoneylaundering.html. Accessed April 2017.

  71. FATF. (2015). Money laundering/terrorism financing risks and vulnerabilities associated with gold. http://www.fatf-gafi.org/media/fatf/documents/reports/ML-TF-risks-vulnerabilities-associated-with-gold.pdf. Accessed 15 Oct 2016.

  72. Amicelle, A. (2011). Towards a 'new' political anatomy of financial surveillance. Security Dialogue, 42, 161–178. https://doi.org/10.1177/0967010611401472.

    Article  Google Scholar 

  73. Tallberg, J., Sommerer, T., Squatrito, T., & Jönsson, C. (2013). The opening up of international organizations: Transnational access in global governance. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  74. Union of International Associations. (2014). Yearbook of international organizations. http://www.uia.org/organizations/ybonline.php. Accessed 16 June 2014.

  75. Oliveira, I. S. (2014). Catch me if you can: Or how policy networks help tackle the crime–terror nexus. Global Crime, 15(3–4), 219–240.

    Article  Google Scholar 

  76. Verhage, A. (2009). Between the hammer and the anvil? The anti-money laundering complex and its interactions with the compliance industry. Crime, Law and. Social Change, 52, 9–32.

    Google Scholar 

  77. Bergstrom, M., Helgesson, K. S., & Morth, U. (2011). A new role for for-profit actors? The case of anti-money laundering and risk management. Journal of Common Market Studies, 49, 1043–1064. https://doi.org/10.1111/j.1468-5965.2010.02167.x.

    Article  Google Scholar 

  78. Flohr, A. (2014). Self-regulation and legalization: Making global rules for banks and corporations. Houndmill: Palgrave.

    Book  Google Scholar 

  79. Tsingou, E. (2017). New governors on the block: The rise of anti-money laundering professionals. Crime, Law and. Social Change forthcoming.

  80. FATF. (2016d). Dialogue with the private sector. FATF private sector consultative forum, Vienna, 19–20 April 2016. Chairman’s summary. http://www.fatf-gafi.org/publications/fatfgeneral/documents/private-sector-apr-2016.html. Accessed 10 April 2017.

  81. Pieth, M., & Aiolfi, G. (2004). The private sector becomes active: The Wolfsberg process. Journal of Financial Crime, 10(4), 359–365.

    Article  Google Scholar 

  82. Egmont Group (2016). About the Egmont Group. http://www.egmontgroup.org/about. Accessed 10 Oct 2016.

  83. FATF. (2016c). High-risk and non-cooperative jurisdictions. http://www.fatf-gafi.org/countries/#high-risk. Accessed 12 Oct 2016.

  84. FATF. (2016a). FATF members and observers. http://www.fatf-gafi.org/about/membersandobservers/. Accessed 10 Oct 2016.

  85. FATF. (2013). The role of Hawala and other similar service providers in money laundering and terrorist financing. https://www.imolin.org/pdf/imolin/Role-of-hawala-and-similar-in-ml-tf-1.pdf. Accessed 15 Oct 2016.

Download references

Author information

Authors and Affiliations

  1. Lehrstuhl Internationale Beziehungen, TU Braunschweig, Bienroder Weg 97, 38106, Braunschweig, Germany

    Anja P. Jakobi

Authors
  1. Anja P. Jakobi
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Anja P. Jakobi.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Jakobi, A.P. Governing illicit finance in transnational security spaces: the FATF and anti-money laundering. Crime Law Soc Change 69, 173–190 (2018). https://doi.org/10.1007/s10611-017-9750-y

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10611-017-9750-y

Search

Navigation