Globalisation has raised the risk of financial crimes, which seriously threaten enterprises’ commercial operations. Consequently, the requirement to reduce risk using all available methods has also increased.
Money laundering is a global issue that financial institutions, especially those in the banking sector, are becoming increasingly concerned about because it can undermine them and expose them to severe dangers like operational, legal, and reputational issues (Mohamad Abdul Latif & Abdul-Rahman, 2018; Raweh et al., 2017). Globalisation has raised the risk of financial crimes, which seriously threaten enterprises’ commercial operations. Consequently, the requirement to reduce risk using all available methods has also increased.
Money laundering is a covert method used to conceal the illegal source of earnings obtained through illicit activity. The main sources of funds used in money-laundering crimes include illicit sales of weapons, drug trafficking, bribery, cyber fraud, and activities involving technological deception, human trafficking, and migrant smuggling (Sohn, 2003). Despite being thought of as a victimless crime, it is frequently linked to a number of violent and exploitative crimes, including human trafficking and large-scale drug sales.
Further, in the UK, money laundering has been estimated to exceed £90 billion a year (Home Office, 2017), representing 4-5% of the UK’s GDP (Office for National Statistics, 2021). According to the Basel Index, Malaysia is at the 72nd rank in money laundering risk, with a score of 5.21. Marzunisham said that according to the Royal Malaysia Police (PDRM), the National Risk Assessment 2020 (NRA 2020) based on data analysis between 2017 and 2019 also found that fraud, corruption, smuggling, illicit drug trafficking and organised crimes formed the top five high-risk crimes that pose significant money laundering and terrorist financing (ML/TF) threats in Malaysia.
Despite the threats posed by money laundering, we can no longer deny that money laundering operations involve organisations that operate in more than one country. We should keep in mind that to secure a more stable economic environment, it is crucial for the fight against them to be primarily global.
Every country should adopt and implement policies created at a global scale on a national scale. To ensure an effective process to be effective, the fight needs to be simultaneously national and global. The lack of implementation of global law enables the location of money-laundering activities to migrate to countries which have gaps in their money-laundering regulations (Yetim, 2000). Besides that, when the implementation of the law at a national scale remains within national borders, the actions are only executed by minor groups. Hence, the issue remains unsolved.
We should be aware that measures should be taken to protect enterprises that are part of the financial system, regardless of their size and field of activity. It is undeniable that any enterprises that are involved in illegal money transfers can be affected very negatively and pushed out of the market (Yetim, 2000).
About the Author:
FAIRUZA BINTI HAJIMIA
Programme Leader cum Lecturer, Faculty of Business, Accountancy & Law (FoBAL), SEGi College Penang
Fairuza binti Hajimia, an experienced industrial practitioner, has worked with various industrial companies and dedicated over a decade to the education industry. Before joining the SEGi family, she actively participated in numerous industrial and educational institutions. Currently pursuing a PhD in Forensic Accounting, with a specific focus on money laundering, Fairuza is actively engaged in academic endeavours. Alongside her scholarly pursuits, she actively participates in direct selling and social activities. Known for her easy-going nature, enthusiasm, and innovative teaching methods, Fairuza creates an engaging and conducive learning environment for her students. In her current role, she imparts her knowledge to diploma and degree students, leaving a positive impact on their educational journey. Fairuza’s involvement extends to the international stage, where she has presented papers at both national and international conferences.