Client identification and money laundering control : perspectives on the Financial Intelligence Centre Act 38 of 2001

The Financial Intelligence Centre Act 38 of 2001 (FICA) compels certain persons and institutions (defined as "accountable institutions'') to identify and verify the identity of a new client before any transaction may be concluded or any business relationship is established.1 Accountable institutions are listed in schedule ¹ to FICA and include banks, brokers, financial advisers, insurance companies, attorneys and estate agents. This duty to identify new clients came into effect on 30 June 2003. However, FICA also requires a similar procedure to be followed in respect of all current clients. Current clients are those with whom an accountable institution had business relationships on 30 June 2003.² After 30 June 2004 an institution may not conclude a transaction in the course of its business relationship with an unidentified current client, until it has established and verified that client's identity as prescribed. An institution that concludes any transaction in contravention of this prohibition, commits an offence and is liable to a fine not exceeding R10 million or to imprisonment of up to 15 years.³

The majority of accountable institutions and their clients failed to meet the June 2004 current client identification deadline.4 This failure posed serious economic and legal risks. With a few days to spare, the minister of finance granted a partial and temporary exemption in respect of these requirements. This article explores the statutory scheme for identification and re-identification of clients and some of the practical problems that were encountered. The June 2004 exemptions from these requirements are also considered and proposals for law reform are made.

The discussion of the FICA identification scheme necessitates the following brief overview of the international and South African money laundering control framework.

1 s 21(1) of FICA.
2 s 21(2) of FICA. See also s 82(2)(b).
3 s 46(2) of FICA read with s 68(1) of FICA.

A trusted approach to e-commerce

It has been well documented that lack of trust between commercial entities and purchasers can restrict the potential of e-commerce. This may be because the purchaser is required to provide sensitive information to the commercial entity or because the purchaser may be suspicious that after payment has been processed, the goods purchased will not arrive. The challenge for the researcher is to determine the e-commerce model which maximizes the trust relationship. In this paper, we introduce a measure of the trust based on the information distributed to the parties in the transaction and isolate the instances which maximize trust for the purchaser. This leads us to propose four new models for e-commerce which would improve consumer trust and therefore likely lead to an increase in on-line commerce. We demonstrate that no new technologies are needed in order to implement these new models.

The role of trust in joint venture control : a theoretical framework

This paper develops a theoretical framework and a number of propositions for systematically studying the role of trust in the control and performance of Joint Ventures, a prominent form of inter-firm alliance. The proposed framework is more complete than the frameworks available in the extant literature because it incorporates both transaction related risks and the partner related risks which are likely to impact on the reliance on particular control patterns. Partner-related risks in joint ventures are represented by the level of inter-partner trust, while transaction-related risks are represented by the Transaction Cost Economics (TCE) variables of asset specificity, task complexity, performance measurability, and environmental uncertainty.

The framework also links one of the established management control typologies (i.e., behaviour, outcome, and social) to two of the alliance control patterns (bureaucratic-based pattern, and trust-based pattern) identified in the literature on alliance control.

Agency theory and accounting research : an overview of some conceptual and empirical issues

This chapter aims to give the reader an overview of agency theory (AT) and its application in accounting research. It delineates the basic assumptions and concepts of AT and identifies the various measures that can be undertaken to minimise agency costs. The chapter also provides a summary of the commonalities and differences across the three major paradigms adopted by accounting researches when using an agency framework: Principal-Agent, Transaction Cost Economics and Positivist (Rochester) model. Further, a review of some recent theoretical and empirical studies on the design of optimal contracts, namely those relating to implicit contracts, multi-agents and multi-period issues is undertaken. Several suggestions are made for future studies adopting an AT-based approach.

Construction supply chain modeling : a research review and interdisciplinary research agenda

Supply chain management has emerged as a popular and useful concept in the construction industry and research community since the mid 1990s. Research in construction supply chain management draws from a broad range of disciplines, notably: (1) Industrial organization economics to better understand market structure and forces and their effect on firm and supply chain behavior and (2) Analytic modeling of supply chains to improve supply chain performance along metrics such as speed, cost, reliability, quality, etc. Both industrial organization and analytic modeling provide useful but ultimately incomplete perspectives and prescriptions for construction supply chain management. As such, this paper proposes development of an interdisciplinary research agenda that draws from both fields. Towards that agenda, a review of research is presented to introduce the main ideas, relevant literature, and theory and methods in each of the two areas. From these independent reviews, applications that could benefit from a combined perspective are identified and used as a basis for development of an interdisciplinary research agenda.

Construction supply chain management : a research review and interdisciplinary research agenda

Supply chain management has emerged as a popular and useful concept in the construction industry and research community since the mid 1990s. Research in construction supply chain management draws from a broad range of disciplines, notably: (1) industrial organization economics to better understand market structure and forces and their effect on firm and supply chain behavior and (2) Analytic modeling of supply chains to improve supply chain performance along metrics such as speed, cost, reliability, quality, etc. Both industrial organization and analytic modeling provide useful but ultimately incomplete perspectives and prescriptions for construction supply chain management. As such, this paper proposes development of an interdisciplinary research agenda that draws from both fields. Towards that agenda, a review of research is presented to introduce the main ideas, relevant literature, and theory and methods in each of the two areas. From these independent reviews, applications that could benefit from a combined perspective are identified and used as a basis for development of an interdisciplinary research agenda.

Property transactions : a note on ethics

Some activities that are applied in the property market to facilitate transactions have the potential to lead to unethical behaviour. Two conditions required for a sale price to be acceptable as market value are that the transaction is at arm’s length and the parties to the transaction are knowledgeable and prudent. The well-known difficulties associated with access to market pricing information are exacerbated by several of these activities including dummy bidding at auctions, two-tier marketing and the provision of lease incentives. Added to these is a common requirement that any negotiation be commercial-in-confidence. The lack of information has the potential to distort the market and this has been well publicised in recent times particularly in the residential market.
The definition of market value is visited and the nature of ethics in property transactions is outlined. Several examples of activities that could lead to unethical behaviour are described. It is concluded that unethical behaviour is hard to identify. Some recommendations are included for consideration and discussion.

Risk allocation in public-private partnership projects : an innovative model with an intelligent approach

Both the increasing private participation in public projects and the critical importance of appropriate risk allocation to the success of Public-private partnership (PPP) projects justify specific research on how to establish effective risk allocation strategies in PPP projects. Partner’s risk management capability is currently the main concern to risk allocation in PPP projects. Following the transaction cost economics, it is argued that factors such as partner’s commitment and risk management structure should be considered simultaneously in order to develop effective risk allocation strategies. Based on the holistic capability-commitment governance-driven view, this paper proposed a model for generating an optimal risk allocation strategy in PPP projects. The model is demonstrated and described. An artificial intelligent technique integrated with fuzzy logic for model testing and validation is then introduced and justified. The innovative model is expected to provide a logical and complete understanding of the risk allocation strategy selection process, and to provide stakeholders with a richer framework than previously existing ones to guide their decision-making on risk allocation strategies.

Interjurisdictional allocation of multinational banking income : aligning taxation principles with economic activity

This thesis argues that one type of multinational entity – the multinational bank – poses particularly significant challenges to the international tax regime in terms of its current profit allocation rules. Multinational banks are a unique subset of multinational entities, and as a consequence of their unique traits, the traditional international tax regime foes not yield an optimal interjurisdictional allocation of taxing rights. The opportunity for tax minimisation, achievable because of the unique traits, and realised through exploitation of the traditional source and transfer pricing regime, results in a jurisdictional distribution of taxing rights which does not reflect economic reality. There are two distinct ways in which the traditional international tax regime fails to reflect economic activity. The first way that economic activity may not be reflected in the distribution of the taxing rights to income from multinational banking is through the application of traditional source rules. The traditional sources rules allocate income where transactions are completed rather than where the intermediation services are arranged. As a result of their unique commercial role as financial intermediaries, by separating intermediary economic activity from legal transactions with third parties, multinational banks may distort the true location of the activity giving rise to income. The second way in which the traditional tax regime may fail to reflect economic activity is through the traditional transfer pricing regime requiring related or internal transaction to be undertaken at an arm’s length price. The arm’s length pricing requirement is theoretically deficient in its failure to recognise the highly integrated nature of multinational banking. In practice, the arm’s length pricing requirement is also difficult, if not impossible, to apply to multinational banks because of the requirement of comparability. The difficulties associated with the current model have resulted in a subtle move by multinational banks towards global formulary apportionment. This thesis concludes that, for the international taxation of multinational banks, the current source regime should be replaced with a system that allocates profits for tax purposes on the basis of income source, with source determined using a unitary taxation or global formulary apportionment system. It is argued that global formulary apportionment is a theoretically superior model that provides both jurisdiction to tax and allocated profits on the basis of the economic activity that generates the income.

Phenomenological inquiry into the experience of web project managers

The advent of the Internet and the World Wide Web has been instrumental in bringing about the growth in the implementation of web-based information systems (WBIS). Such systems are designed with the aim of improving productivity, data accuracy, and the reduction of paperwork and administrative overheads. Moreover, unlike their conventional non-web-based predecessors, the WBIS are commonly aimed at users who are casual and untrained, geographically distributed and non-homogenous. The dissemination of WBIS necessitates additional infrastructure support in the form of a security system, workflow and transaction management, and web administration. WBIS are commonly developed using an evolutionary approach, whereby the version of the application, acquired from the vendor, is first deployed as a pilot, in order to gather feedback from the target users before the evolutionary cycles commence. While a number of web development methodologies have been proposed by existing research, there is a dearth of empirical evidence that elucidates the experiences of project initiators in pursuing the evolution of web services, a process that undoubtedly involves dealing with stakeholder issues. This research project presents a phenomenological investigation of the experiences of project managers with the implementation of web-based employee service systems (ESS), a domain that has witnessed a sharp growth in Australia in recent times. However, the project managers’ rich, multidimensional account of their experiences with the implementation of ESS revealed the social obstacles and fragility of intra-organizational relationships that demanded a cautious and tactful approach. Thus, the study provides a socio-organizational perspective to web projects in contrast to the functionalist paradigm of current web development methodologies. The research also confirms that consideration of the concerns of stakeholders by project managers is crucial to the successive cycles of ESS evolution. Project managers address stakeholder concerns by pursuing actions that are aimed at encouraging ESS usage, but at the same time, such actions can have consequences necessitating subsequent iterations of system enhancement and improvement. Finally, the research also discovered that despite the different socio-political climate prevalent in various organizations, in which ESS are being implemented, the experiences of project managers in dealing with stakeholder concerns can be captured and independently confirmed in terms of their perceived relevance and usefulness in problem-solving within the application domain.

Comprehensive embodied energy analysis framework

The assessment of the direct and indirect requirements for energy is known as embodied energy analysis. For buildings, the direct energy includes that used primarily on site, while the indirect energy includes primarily the energy required for the manufacture of building materials. This thesis is concerned with the completeness and reliability of embodied energy analysis methods. Previous methods tend to address either one of these issues, but not both at the same time. Industry-based methods are incomplete. National statistical methods, while comprehensive, are a ‘black box’ and are subject to errors. A new hybrid embodied energy analysis method is derived to optimise the benefits of previous methods while minimising their flaws. In industry-based studies, known as ‘process analyses’, the energy embodied in a product is traced laboriously upstream by examining the inputs to each preceding process towards raw materials. Process analyses can be significantly incomplete, due to increasing complexity. The other major embodied energy analysis method, ‘input-output analysis’, comprises the use of national statistics. While the input-output framework is comprehensive, many inherent assumptions make the results unreliable. Hybrid analysis methods involve the combination of the two major embodied energy analysis methods discussed above, either based on process analysis or input-output analysis. The intention in both hybrid analysis methods is to reduce errors associated with the two major methods on which they are based. However, the problems inherent to each of the original methods tend to remain, to some degree, in the associated hybrid versions. Process-based hybrid analyses tend to be incomplete, due to the exclusions associated with the process analysis framework. However, input-output-based hybrid analyses tend to be unreliable because the substitution of process analysis data into the input-output framework causes unwanted indirect effects. A key deficiency in previous input-output-based hybrid analysis methods is that the input-output model is a ‘black box’, since important flows of goods and services with respect to the embodied energy of a sector cannot be readily identified. A new input-output-based hybrid analysis method was therefore developed, requiring the decomposition of the input-output model into mutually exclusive components (ie, ‘direct energy paths’). A direct energy path represents a discrete energy requirement, possibly occurring one or more transactions upstream from the process under consideration. For example, the energy required directly to manufacture the steel used in the construction of a building would represent a direct energy path of one non-energy transaction in length. A direct energy path comprises a ‘product quantity’ (for example, the total tonnes of cement used) and a ‘direct energy intensity’ (for example, the energy required directly for cement manufacture, per tonne). The input-output model was decomposed into direct energy paths for the ‘residential building construction’ sector. It was shown that 592 direct energy paths were required to describe 90% of the overall total energy intensity for ‘residential building construction’. By extracting direct energy paths using yet smaller threshold values, they were shown to be mutually exclusive. Consequently, the modification of direct energy paths using process analysis data does not cause unwanted indirect effects. A non-standard individual residential building was then selected to demonstrate the benefits of the new input-output-based hybrid analysis method in cases where the products of a sector may not be similar. Particular direct energy paths were modified with case specific process analysis data. Product quantities and direct energy intensities were derived and used to modify some of the direct energy paths. The intention of this demonstration was to determine whether 90% of the total embodied energy calculated for the building could comprise the process analysis data normally collected for the building. However, it was found that only 51% of the total comprised normally collected process analysis. The integration of process analysis data with 90% of the direct energy paths by value was unsuccessful because: • typically only one of the direct energy path components was modified using process analysis data (ie, either the product quantity or the direct energy intensity); • of the complexity of the paths derived for ‘residential building construction’; and • of the lack of reliable and consistent process analysis data from industry, for both product quantities and direct energy intensities. While the input-output model used was the best available for Australia, many errors were likely to be carried through to the direct energy paths for ‘residential building construction’. Consequently, both the value and relative importance of the direct energy paths for ‘residential building construction’ were generally found to be a poor model for the demonstration building. This was expected. Nevertheless, in the absence of better data from industry, the input-output data is likely to remain the most appropriate for completing the framework of embodied energy analyses of many types of products—even in non-standard cases. ‘Residential building construction’ was one of the 22 most complex Australian economic sectors (ie, comprising those requiring between 592 and 3215 direct energy paths to describe 90% of their total energy intensities). Consequently, for the other 87 non-energy sectors of the Australian economy, the input-output-based hybrid analysis method is likely to produce more reliable results than those calculated for the demonstration building using the direct energy paths for ‘residential building construction’. For more complex sectors than ‘residential building construction’, the new input-output-based hybrid analysis method derived here allows available process analysis data to be integrated with the input-output data in a comprehensive framework. The proportion of the result comprising the more reliable process analysis data can be calculated and used as a measure of the reliability of the result for that product or part of the product being analysed (for example, a building material or component). To ensure that future applications of the new input-output-based hybrid analysis method produce reliable results, new sources of process analysis data are required, including for such processes as services (for example, ‘banking’) and processes involving the transformation of basic materials into complex products (for example, steel and copper into an electric motor). However, even considering the limitations of the demonstration described above, the new input-output-based hybrid analysis method developed achieved the aim of the thesis: to develop a new embodied energy analysis method that allows reliable process analysis data to be integrated into the comprehensive, yet unreliable, input-output framework. Plain language summary Embodied energy analysis comprises the assessment of the direct and indirect energy requirements associated with a process. For example, the construction of a building requires the manufacture of steel structural members, and thus indirectly requires the energy used directly and indirectly in their manufacture. Embodied energy is an important measure of ecological sustainability because energy is used in virtually every human activity and many of these activities are interrelated. This thesis is concerned with the relationship between the completeness of embodied energy analysis methods and their reliability. However, previous industry-based methods, while reliable, are incomplete. Previous national statistical methods, while comprehensive, are a ‘black box’ subject to errors. A new method is derived, involving the decomposition of the comprehensive national statistical model into components that can be modified discretely using the more reliable industry data, and is demonstrated for an individual building. The demonstration failed to integrate enough industry data into the national statistical model, due to the unexpected complexity of the national statistical data and the lack of available industry data regarding energy and non-energy product requirements. These unique findings highlight the flaws in previous methods. Reliable process analysis and input-output data are required, particularly for those processes that were unable to be examined in the demonstration of the new embodied energy analysis method. This includes the energy requirements of services sectors, such as banking, and processes involving the transformation of basic materials into complex products, such as refrigerators. The application of the new method to less complex products, such as individual building materials or components, is likely to be more successful than to the residential building demonstration.

Technology licensing and grantbacks under hidden information

This paper explores technological transfer via licensing under hidden information. The transaction features a quality choice of technology to be transferred between a licensor and a licensee that has private information about its ability to implement and refine the technology. The model accounts for the possible damage that drastic refinements and reverse licensing can do to the licensor's market position, and makes predictions on the structure of licensing contracts. We show under what conditions a licensing contract will include a further contractual provision such as a grantback clause. Finally, the welfare implications of grantback inclusion are assessed.

Introduction of electronic trading in index futures : volatility and volume effects

There is continuing debate in the US over full introduction of electronic trading in those index futures contracts that are still traded at the CME via open outcry. Since the late 1990s major international exchanges trading index futures contracts have converted to full electronic trading. Recent empirical studies have focused on effects on bid/ask spreads and related price volatility following these changes. We take a different approach and investigate and test for structural change in conditional volatility and volume effects following the shift to electronic trading in the Australian Share Price Index futures contract. Multiple Switching point GARCH models are employed with the data sampled at 5, 15 and 30-minute intervals from transaction records supplied by the Sydney Futures Exchange. There is significant evidence of structural changes in both the persistence of volatility shocks and simultaneous volume effects following the change to screen trading in this futures market.

Public space : its mythopoetic foundations and the limits of the law

Drawing on William Dawes' unpublished notebooks on the Indigenous languages spoken around Sydney Cove at the time of white settlement, this article hopes to provoke critical reflection on the limits of the law. Dawes' record of communication with Patyegarang documents a transaction that was both political and erotic, both about the law and in defiance of it. In performances that were gestural as well as verbal, they marked out a middle ground where the laws governing both of them were placed in parentheses and new, provisional, rules of exchange improvised. This article notices the existence of this middle ground, and marks its disappearance in subsequent legal discourse about the status of Indigenous people. Ultimately, it offers a reflection on the laws that govern the meeting place which the middle ground underwrites. That is, before public space became fixed for the legally binding discourse of politics, it was mobile and self-constituting. Is this simply a myth or is it a mythopoetic mechanism for rethinking the grounding of law in Australia? If it is the latter, then the next step will be to establish a middle ground of exchange with Indigenous law-giving systems.