Anti-money laundering and counter-terrorist financing threats posed by mobile money

Abstract

There has been an increase use of mobile money involving retail users and financial institutions (Scobey-Thal, 2015). In 2015, the GSMA (an organization that represent the interests of mobile operators worldwide) states that there are more than 411 million mobile money accounts around the world. Furthermore, mobile money accounts have penetrated 85% of countries, often where a majority of the population do not have access to a formal financial institution (GSMA, 2015). Cisco Systems Inc. (2017) estimates that by 2021, more people will have access to mobile phones than there will be access to running water. Given the enormous growth in the mobile market, it is internationally recognised that this penetration should be capitalised on in the form of financial inclusion. However, with such benefits, come new challenges and the success of mobile money depends on the industry’s ability to adjust to a rapidly changing financial landscape (GSMA, 2015). A combination of exponential mobile growth and emerging financial services creates new opportunities for criminals to exploit vulnerabilities in the system. Although there have not been many cases of mobile money laundering, it is important to consider the potential to commit fraudulent activities. Technology advancements continue to change the very architecture of financial services by becoming complex value chain networks. As these services continue to diversify, there is an urgent need for more adaptive and fluid regulation (Braithwaite, 2013) to identify, address and mitigate threats as they arise (Lokanan, 2017). As a result, anti-money laundering (AML) and counter terrorist financing (CTF) regimes remain operationally fluid, whilst accrediting global financial integrity. This concern lays the foundation for our research question: What can be done to mitigate anti-money laundering and counter-terrorist financing threats posed by mobile money? In this regard, the purpose of the paper is to explore the various characteristics of mobile money that presents a threat to anti-money laundering and counter terrorist financing regimes. The rest of the paper proceeds as follows. First, we conduct a literature review on mobile money. Second, we described the methodology used to identify the main themes in the study. Third, we conducted an analysis of the themes identified in relations to the three stages of money laundering and law enforcement. In this section, we assess the varying threats associated with the mobile money. Finally, we conclude the paper with recommendations on how the threats associated with mobile money can be mitigated.