Money laundering control and suppression of financing of terrorism : some thoughts on the impact of customer due diligence measures on financial exclusion

Purpose – The purpose of this paper is to explore the relationship between anti-money laundering (“AML”) and combating of financing of terrorism (“CFT”) customer due diligence (“CDD”) measures in the financial services industry, and exclusion from financial services.
Design/methodology/approach – An introduction to the concept of financial exclusion is provided as well as an overview of international AML/CFT CDD standards. The paper highlights a softening of national CDD measures in South Africa and the UK to lessen the impact on financial exclusion.
Findings – Countries should consider the impact that CDD requirements may have on financial exclusion when they design their AML/CFT systems.
Research limitations/implications – Multi-discilinary research is required to improve the understanding of the broader interaction between AML/CFT objectives, financial exclusion and economic development, especially in countries with a large informal economy.
Practical implications – CDD requirements may unnecessarily exacerbate financial exclusion if they are not formulated with care to reflect the reality of the particular country setting.
Originality/value – The paper offers insights into the international standards resulting to the identification of clients and the experiences in the UK and South Africa regarding the implementation of these standards on financial exclusion.

Dynamic due diligence : an entrepreneurial business planning method for evaluating mergers and acquisitions: theory, case application and general implications

This paper presents a method for conducting dynamic due diligence to evaluate Mergers and Acquisitions; demonstrates its effectiveness in a particular case; and extrapolates its theoretical and practical implications to the general case. It may be called the ‘ECIPP’ method - an acronym for: Establishing mandates; Creating projections; Identifying issues; Prioritizing procedures and Performing them.

Two established alternative due diligence methods are examined. The prevailing finance-theory-based procedure has the virtues of simplicity and elegance; the vice is abstraction. The prevailing practitioner-based regime has the virtues of thoroughness and concreteness but the vices of rigidity and inefficiency. Resolving the tradeoffs inherent in both static prescriptions provides an opportunity for a dynamic, innovative approach derived from grounded theory and an application of Hindle’s (1993) theory of venture renaissance through application of an enhanced paradigm of Entrepreneurial Business Planning. The ECIPP method retains simplicity, concreteness and thoroughness but eliminates abstraction, rigidity and inefficiency.

This is demonstrated in a case. ChildCo’s CEO had only one month to complete his M&A evaluation; no expertise or previous experience; severely limited budget for the exercise and had been flatly informed by prevailing M&A experts that what he wanted could not be done. Using the ECIPP method, the CEO and the author did it: on time, within budget and to the satisfaction of a previously skeptical board of one of the world’s largest multi-national companies including arguably the world’s most professional corporate M&A division.

The replicability logic of the case research permits two generalisations. (1) ECIPP extends the range and utility of Entrepreneurial Business Planning as a management technology, well beyond the constraints to which it is usually confined. (2) The ECIPP method of dynamic due diligence is an innovation worthy of mature consideration and further investigation by theorists and practitioners in the M&A field, in the disciplines of both Finance and Entrepreneurship and, well beyond, in the realms of general management theory, methodology and practice.

Supplier integrity due diligence in public procurement: limiting the criminal risk to Australia

The potential for criminals and terrorism financiers to secure lucrativegovernment contracts poses a risk to Australia’s anti-money laundering,anti-corruption and counter-terrorism financing objectives. This articlecompares the customer due diligence measures that banks are required to implement to prevent money laundering and terrorism financing with the general supplier due diligence practices and processes of key Australian government departments and agencies. It identifies various weaknesses in current procurement practices relating to standard contracts and argues that these render Australian public procurement vulnerable to criminal abuse, threaten compliance with its sanctions regime and potentially undermine the crime combating objectives of its money laundering and terrorism financinglaws. The article recommends that the national interest calls for awhole-of-government approach to improve supplier due diligence in public procurement.

The tri-dimensional role of information security in E-business : a managerial perspective

The effective management of information and its associated infrastructure is critical in electronic business. Failure to exercise due diligence in information assurance and security may lead to lost revenue or business opportunities, brand and reputation erosion, adverse media publicity, scrutiny from consumer advocates and even lawsuits. Traditionally, information security was approached in terms of goals. Yet, the goalsoriented approach may be a flawed one. In this paper, we adopt a conceptual analytical approach and propose a tri-dimensional understanding of information security in electronic business. Our approach can help managers better understand and communicate the information security’s role in e-business and the inter-dependencies between business and legal requirements, for devising the goals, objectives and policies relevant to their organization.

A conceptual framework of e-fraud control in an integrated supply chain

The integration of supply chains offers many benefits; yet, it may also render organisations more vulnerable to electronic fraud (e-fraud). E-fraud can drain on organisations’ financial resources, and can have a significant adverse effect on the ability to achieve their strategic objectives. Therefore, efraud control should be part of corporate board-level due diligence, and should be integrated into organisations’ practices and business plans.
Management is responsible for taking into consideration the relevant cultural, strategic and implementation elements that inter-relate with each other and to coordinating the human, technological and financial resources necessary to designing and implementing policies and procedures for controlling e-fraud. Due to the characteristics of integrated supply chains, a move from the traditional vertical approach to a systemic, horizontal-vertical approach is necessary. Although the e-fraud risk cannot be eliminated, risk mitigation policies and processes tailored to an organisation’s particular vulnerabilities can significantly reduce the risk and may even preclude certain classes of frauds.
In this paper, a conceptual framework of e-fraud control in an integrated supply chain is proposed. The proposed conceptual framework can help managers and practitioners better understand the issues and plan the activities involved in a systemic, horizontal-vertical approach to e-fraud control in an integrated supply chain, and can be a basis upon which empirical studies can be build.

The money laundering risk posed by low-risk financial products in South Africa : findings and guidelines

Purpose – The purpose of this paper is to investigate the level and nature of criminal abuse of financial products that are classified as posing a low anti-money laundering/combating of financing of terrorists (AML/CFT) risk in South Africa to determine the effectiveness of the simplified due diligence measures that apply to these products.

Design/methodology/approach – The paper presents empirical research on the views of bank officials and law enforcement officials regarding the criminal abuse of South African financial products that are subject to simplified customer due diligence controls.

Findings – South Africa's AML/CFT laws allow certain deposit-taking institutions and money remitters to implement simplified customer due diligence measures in relation to specific low-risk products that are mainly designed to allow previously unbanked persons to access financial services. The paper finds that the products have been abused by criminals but that the incidence of such abuse and the amounts involved are low. The paper investigates possible weaknesses in the current system that allow limited criminal abuse to occur. It concludes with a number of guidelines that emerge from the study and are of value to regulators that wish to implement a similar system.

Originality/value – The South African AML/CFT scheme in relation to low-risk products is of interest to many international regulators that are grappling with the interplay between effective AML/CFT controls and the impact of strict controls on the ability of socially and economically excluded persons to access appropriate financial services. This paper provides evidence that appropriately designed controls can facilitate financial inclusion while limiting the risk of criminal abuse.

How we finance our new and growing firms

Entrepreneurs are the engines that drive new companies and financing is the fuel that propels them. One form of that financing is called informal investing, sometimes called ''business angel activity'' (which we reserve for more professional and commercial investors). Informal investors use their own money and carry out their own due diligence to invest in the entrepreneurial opportunities of other entrepreneurs.

Aligning anti-money laundering, combating of financing of terror and financial inclusion : Questions to consider when FATF standards are clarified

Purpose – The purpose of this paper is to identify key questions that should be addressed to enable the Financial Action Task Force (FATF) to provide guidance regarding the alignment of anti-money laundering, combating of financing of terror and financial inclusion objectives.
Design/methodology/approach – The paper draws on relevant research and documents of the FATF to identify questions that are relevant to consider when it formulates guidance regarding the alignment between financial integrity and financial inclusion objectives.
Findings – The FATF advises that its risk-based approach enables countries and institutions to further financial inclusion. It is, however, not clear what the FATF means when its uses the terms “risk” and “low risk”. It is also unclear whether current proposals for financial inclusion regulatory models will necessarily limit money laundering (ML) aswell as terror financing risks to levels that can be described as “low”. The FATF will need to clarify its own thinking regarding low money laundering and low terror financing risk before it will be able to provide clear guidance to national regulators and financial institutions.
Originality/value – This paper was drafted to inform current FATF discussions regarding guidance on financial inclusion. The questions are relevant to all stakeholders in financial regulation.

Balancing the benefits and risks of public–private partnerships to address the global double burden of malnutrition

Objective: Transnational food, beverage and restaurant companies, and their corporate foundations, may be potential collaborators to help address complex public health nutrition challenges. While UN system guidelines are available for private-sector engagement, non-governmental organizations (NGO) have limited guidelines to navigate diverse opportunities and challenges presented by partnering with these companies through public–private partnerships (PPP) to address the global double burden of malnutrition.

Design: We conducted a search of electronic databases, UN system websites and grey literature to identify resources about partnerships used to address the global double burden of malnutrition. A narrative summary provides a synthesis of the interdisciplinary literature identified.

Results: We describe partnership opportunities, benefits and challenges; and tools and approaches to help NGO engage with the private sector to address global public health nutrition challenges. PPP benefits include: raising the visibility of nutrition and health on policy agendas; mobilizing funds and advocating for research; strengthening food-system processes and delivery systems; facilitating technology transfer; and expanding access to medications, vaccines, healthy food and beverage products, and nutrition assistance during humanitarian crises. PPP challenges include: balancing private commercial interests with public health interests; managing conflicts of interest; ensuring that co-branded activities support healthy products and healthy eating environments; complying with ethical codes of conduct; assessing partnership compatibility; and evaluating partnership outcomes.

Conclusions: NGO should adopt a systematic and transparent approach using available tools and processes to maximize benefits and minimize risks of partnering with transnational food, beverage and restaurant companies to effectively target the global double burden of malnutrition.

Leading the quality management of online learning environments in Australian higher education

The paper presents the findings of the first year of a nationally funded Australian Learning and Teaching Council (ALTC) project on the quality management of online learning environments by and through distributed leadership. The project is being undertaken by five Australian universities with major commitments to online and distance education. Each university, however, has a distinctive location, history and profile in the sector. The first year of the project has seen the development of a quality management framework with six interrelated elements. The framework is being applied, refined and validated in the second year of the project. Allied with the development of the framework, was the conduct of focus groups at each of the five partner institutions in the middle of the first year. These focus groups composed a range of staff involved collectively in the leadership of the organisation's online learning environment. Prominence was given to the nature and value of strategic planning, due diligence conducted in selecting and mainstreaming technologies, evaluation approaches informing decision making, and the various relationships between different leadership levels and domains. A number of key issues which emerged relating to the elements identified in the framework are examined.

Alteration of the pharmacokinetics of COL-3, a matrix metalloproteinase inhibitor, due to actue gastrointestinal tosicity of doxorubicin

Purpose Combination of COL-3, a matrix metalloproteinase inhibitor, and doxorubicin (DOX) might be a promising anticancer regimen. The present study was to examine the potential pharmacokinetic interactions and toxicity profile following their coadministration in rats.
Methods Normal rats were treated with single agent or different combinations with oral or intravenous COL-3 and DOX, and the bile-duct cannulated (BDC) rats received oral COL-3 plus DOX. In a separate disposition study, the effects of DOX on the biliary, urinary, and fecal excretion of COL-3 were examined. In addition, the effects of DOX on in vitro protein binding, metabolism, and transport of COL-3 across Caco-2 monolayers were investigated.
Results COL-3 did not affect the pharmacokinetics of DOX in rats. However, treatment with DOX significantly decreased the oral absorption, and prolonged the elimination, of COL-3 in the normal rats, but not in the BDC rats. DOX did not alter the biliary and urinary excretion of COL-3, but significantly decreased the fecal excretion of COL-3. DOX significantly enhanced the basolateral to apical flux of COL-3 across Caco-2 monolayers, but had no apparent effects on the protein binding and metabolism of COL-3. The combination of DOX with oral COL-3 did not significantly (p > 0.05) increase the acute diarrhea score and intestinal damage compared to rats receiving DOX alone.
Conclusions These results indicated that DOX altered the oral absorption and elimination of COL-3, largely resulting from gastrointestinal toxicity caused by biliary excretion of DOX. Further studies are required to explore the efficacy and optimized dosage regimen of this promising combination.

Estimating the increasing cost of commercial buildings in Australia due to greenhouse emissions trading

The ratification of the Kyoto Protocol by most industrial nations will result in an international greenhouse emissions trading market by or before 2008. Calculating the quantity of embodied energy in commercial buildings has therefore taken on added significance because it is in the creation of energy that most greenhouse gas that causes global warming is released. For energy efficient commercial buildings in Australia, the embodied energy can typically represent between 10 and 20 years of operational energy. When greenhouse emissions trading is introduced in Australia the cost of energy will rise significantly, particularly electricity which relies primarily on burning fossil fuels for generation. This will affect not only the operating energy costs of buildings (light, power & heating/cooling) but also the cost of building materials and construction. Early estimates of the potential cost of future greenhouse emission permits in Australia vary between $IO/tonne to $180Itonne. This cost would be imposed primarily on the producers of energy and passed on by them to consumers via higher energy costs. For a typical commercial building this could lead to an increase in the total procurement cost of buildings of up to 20% due to the energy embodied during the construction or refurbishment of the building. To assist in evaluating these potential cost increases McKean & Park, Sinclair Knight Merz and Deakin University have developed a web-based Carbon Cost Calculator for commercial buildings.