The efficiency of the mechanisms to detect money laundering in the banking system

Abstract

In the recent years, money laundering has become one of the most discussed topics on social media. The role of the banking system in the prevention and detection of money laundering is crucial, since the introduction of illicit funds in the financial system is usually done through banks. Focusing on the mechanisms adopted by a relevant bank in Portugal and on the national and international legislations and standards, I find that the Portuguese Anti-Money Laundering system might be losing value due to an unclear and undetailed regulation that often results in sanctions to the subject entities and considerably reduces the efficiency of the Anti-Money Laundering system. I defend that money laundering should not be simply treated as an additional risk for risk management purposes of banks and should not be a source of competitive advantage to strategically surpass competitors through confidential risk models. I suggest an intensive analysis culminating on the standardization of the referred mechanisms, aiming at generating a benefit to society rather than a competitive advantage to individual banks. The aforementioned standardization should be built upon the best practices currently tackling the threat of money laundering in the banking system.

Date of Award	17 Feb 2017
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Tommaso Ramus (Supervisor) & José Corrêa Guedes (Co-Supervisor)