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Showing papers in "Journal of Financial Crime in 2022"


Journal ArticleDOI
TL;DR: In this paper , the authors examined whether female chief financial officers (CFOs) are associated with the occurrences of financial reporting fraud and found that firms with a proportional number of female CFOs should be less likely to commit financialreporting fraud.
Abstract: Purpose The purpose of this study is to examine whether female chief financial officers (CFOs) are associated with the occurrences of financial reporting fraud. This study offers new theoretical and empirical evidence on whether firms with more female CFOs are more (less) likely to engage in financial reporting fraud. Design/methodology/approach This study is based on a sample of US-listed firms from 2011 to 2021. The authors speculate that female CFOs play a weaker role in the occurrences of financial reporting fraud. So, firms with a proportional number of female CFOs should be less likely to commit financial reporting fraud. Findings The data provide support for the predictions of this study. This study suggests a negative and significant association between the dummy variables for female CFOs and the occurrences of financial reporting fraud. The authors find that this association is contingent on governance mechanisms [e.g. ownership structure, politically connected CEOs and firms' conditions that do (or do not) invest in a gender-diverse board]. Originality/value This study offers different perspectives on the impact of female CFOs on the occurrences of financial reporting fraud. The results of this study are distinguishable from prior studies. This study moves the analytical focus from the macro level (gender diversity or female corporate leaders) to the micro level (female CFOs) to understand firms' propensity to commit financial reporting fraud. Additionally, this study is based on factual financial reporting fraud cases, considering the US firms' fraud characteristics.

9 citations


Journal ArticleDOI
TL;DR: In this paper , the authors aim to reframe the whistleblowing process by examining individual and situational factors that have been overlooked by prior studies, such as ethical climate, public service motivation (PSM), organisation identification and psychological safety.
Abstract: Purpose This paper aims to reframe the whistleblowing process by examining the individual and situational factors that have been overlooked by prior studies. Ethical climate, public service motivation (PSM), organisation identification and psychological safety are inquired. Design/methodology/approach The present study sample was drawn from a population of Indonesian local governments located in east Java, Indonesia. Particularly, self-administered questionnaires were hand-distributed to the employees in the four local governments. Of 2,169 questionnaires distributed to the employees, 1,687 questionnaires were returned to the researcher. However, the researcher removed 33 returned questionnaires because of poor data quality, such as incomplete answers. Thus, only 1,654 questionnaires were analysed in this study. Findings The findings support the idea of an ethical climate that can encourage the individual to blow the whistle. However, its effect is indirect. The predictive power of ethical climate on the individual’s whistleblowing intentions depends on the meditating roles of PSM, psychological safety and organisation identification. Interestingly, the mediating effects of PSM, psychological safety and organisation identification are extremely acknowledged when individuals have an opportunity to choose internal or external disclosures. Originality/value This study produces a different approach to understanding people’s intentions to report any wrongdoings. This study is dissimilar from prior studies in terms of the theoretical paradigm and research design. Previous studies mostly used students as their experiments. In contrast, the current study recruited employees who work in local governments. This situation fundamentally affects the understanding of the impact of an ethical climate on the individual intention to blow the whistle.

8 citations


Journal ArticleDOI
TL;DR: In this article , a systematic review of the literature on the metaverse and analysis of the fraud triangle was conducted to examine the different fraud risks it poses for organizations (including boards of directors, forensic accountants, auditors and accountants).
Abstract: Purpose The purpose of this study is to examine the risks of the metaverse ecosystem. This study provides an overview of the metaverse and its evolution and discusses the various fraud risks it poses for organizations (including boards of directors, forensic accountants, auditors and accountants). Given the advantages of the metaverse and the growing interest it is attracting from organizations, this paper sheds light on the importance of mitigating its risks. Design/methodology/approach Based on a systematic review of the literature on the metaverse and analysis of the fraud triangle, this study examines the different fraud risks it poses. More specifically, this study analyzes 21 articles on the metaverse published between 2021 and 2022 and attempts to answer the following research questions: What are the risks inherent in the metaverse? What are the fraud risks associated with it? What are the opportunities and pressures it brings? What is the rationalization underlying its use? This study conducts the analysis on two levels, that of the individual (user) and that of the organization. This paper summarizes the findings of publications on the metaverse in 2021 and 2022 to discover its various definitions and the opportunities and risks it represents. Findings This paper offers an insightful discussion of the advantages and risks the metaverse can bring. Because this analysis shows that any organization could be vulnerable to metaverse risks, this study provides organizations with strategies to deter, detect and prevent fraud and reputational risks. Regulatory bodies, financial authorities, board of directors and fraud investigators should all consider these risks before investing in the metaverse. Originality/value This paper adds new insights to the scarce research on the metaverse and cybersecurity by exploring the opportunities and risks it presents. It has several implications for organizations, boards of directors, management and regulatory authorities.

8 citations


Journal ArticleDOI
TL;DR: In this paper , the authors examine the effect of gender board diversity on corporate fraud and find that firms with more female corporate leaders are more likely to engage in corporate fraud, while firms with a state-owned background are less likely to commit corporate fraud.
Abstract: Purpose This study aims to examine the effect of gender board diversity on corporate fraud. Particularly, it is to gain empirical evidence whether firms with more female corporate leaders are more (less) likely to engage in corporate fraud. Design/methodology/approach The authors use data of fraud firms from Accounting and Auditing Enforcement Releases. As a focus of the study, the authors take the fraud sample observations from the last 10 years, from 2011 to 2021. The idea is that the number of firms sectioned due to corporate fraud reached a peak in such periods. Findings In the context of non-state-owned enterprise environments, the authors find female corporate leaders are less likely to engage in corporate fraud. However, among firms with a state-owned background, the authors’ empirical evidence shows that the roles of female corporate leaders remain under-represented in the boardrooms. As reported, the presence of female corporate leaders does not bring a significant impact on enhancing group ethical decision-making and governance quality. This situation does appear when political connections between firms and governments or politicians are prevalent. Research limitations/implications This study has practical and theoretical implications. Given the increased pressure on companies around the globe to have more females in their boardrooms, this study provides insight into the effect of female corporate leaders on the prevalence of corporate fraud. As such, this study offers critical consideration for policymakers and regulators. Moreover, an analysis of whether and when the gender board diversity is associated with the firm’ propensity to perpetrate corporate fraud, particularly from the US corporate fraud, is sorely lacking. This study contributes to such gaps. Originality/value This study provides insightful discussion about the topical issue of whether, and under what circumstances, female corporate leaders influence (or do not influence) corporate fraud.

7 citations


Journal ArticleDOI
TL;DR: A systematic literature review approach is used in this paper to systematically review the literature published in past 20 years on bank frauds and present a holistic view on causes and consequences of bank fraud and measures to curtail this menace.
Abstract: Purpose Banking industry peculiarly has become soft target for several pernicious deceptive and fraudulent activities. The purpose of this paper is to systematically review the literature published in past 20 years on bank frauds and present a holistic view on causes and consequences of bank frauds and measures to curtail this menace. Towards the end the paper provides avenues for future research. Design/methodology/approach A systematic literature review approach is used in this study and articles are selected via pre-set inclusion criteria. The literature is mapped on the basis of databases, year of publication, country of study and journal of publication. This paper is based on 70 selected articles published in four prominent databases between 2000 and 2021. Findings This study reveals that frauds in banking industry have become a matter of grave concern for almost all countries across the globe, causing significant financial and non-financial damages to banks, customers, other stakeholders and economy. Numerous factors such as pressure and opportunity are responsible for fraud occurrence. This study further evinced that banking institutions inevitably should have a robust fraud risk management in place to prevent, detect and respond to defalcation. Originality/value To the best of the authors’ knowledge, this is the only paper among 70 selected articles which systematically reviews the literature published in past 20 years and provides a comprehensive view on all aspects related to bank frauds.

6 citations


Journal ArticleDOI
TL;DR: In this article , the authors focus on the different types of insider-led cyber frauds that gained mainstream attention in recent large-scale fraud events involving prominent Indian banking institutions and propose a framework to ensure a sustainable cyber fraud mitigation ecosystem within the scope of the study.
Abstract: Purpose This paper aims to focus on the different types of insider-led cyber frauds that gained mainstream attention in recent large-scale fraud events involving prominent Indian banking institutions. In addition to identifying and classifying cyber fraud, the study maps them on a severity scale for optimal mitigation planning. Design/methodology/approach The methodology used for identification and classification is an analysis of a detailed literature review, a focus group discussion with risk and vigilance officers and cyber cell experts, as well as secondary data of cyber fraud losses. Through machine learning-based random forest, the authors predicted the future of insider-led cyber frauds in the Indian banking business and prioritized and predicted the same. The projected future reveals the dominance of a few specific cyber frauds, which will make it easier to develop a fraud mitigation model based on a victim-centric approach. Findings The paper concludes with a conceptual framework that can be used to ensure a sustainable cyber fraud mitigation ecosystem within the scope of the study. By using the findings of this research, policymakers and fraud investigators will be able to create a more robust environment for banks through timely detection of cyber fraud and prevent it appropriately before it happens. Research limitations/implications The study focuses on fraud, risk and mitigation from a victim-centric perspective and does not address it from the fraudster’s perspective. Data availability was a challenge. Banks are recommended to compile data that can be used for analysis both by themselves and other policymakers. Practical implications The structured, sustainable cyber fraud mitigation suggested in the study will provide an agile, quick, proactive, stakeholder-specific plan that helps to safeguard banks, employees, regulatory authorities, customers and the economy. It saves resources, cost and time for bank authorities and policymakers. The mitigation measures will also help improve the reputational status of the Indian banking business and prolong the banks’ sustenance. Originality/value The innovative cyber fraud mitigation approach contributes to the sustainability of a bank’s ecosystem quickly, proactively and effectively.

6 citations


Journal ArticleDOI
TL;DR: In this paper , the authors argue that authorities' efforts to combat money laundering rely on rigid legal definitions and flawed ideals that fail to address the money-laundering problem and propose a new approach to combating money laundering that better incorporates the actors involved in money laundering and the spaces in which it occurs.
Abstract: Purpose Money laundering poses significant challenges for policymakers and law-enforcement authorities. The money-laundering phenomenon is often acknowledged as a type of “serious and organised crime” yet has traditionally been described as a complicated three-stage process, involving the “placement, layering and integration” of criminal proceeds. This article aims to reexamine the money-laundering concept within the realm of organised crime and critique its legal underpinnings. Design/methodology/approach This paper explores how criminal actors collude in organised money-laundering schemes to circumvent laws and frustrate the efforts of officials, while advancing the regulatory-spatial paradigms of which organised money launderers operate. In doing so, it reframes the debate towards the “who” and “where” of money laundering. Findings This paper argues that authorities’ efforts to combat money laundering relies on rigid legal definitions and flawed ideals that fail to address the money-laundering problem. Originality/value There has been little scholarly debate that questions the fundamental approach to conceptualising money laundering. This paper proposes a new approach to combating money laundering that better incorporates the actors involved in money laundering and the spaces in which it occurs.

5 citations


Journal ArticleDOI
TL;DR: A review of the empirical literature dealing with the association between family firms and tax avoidance can be found in this article , where the authors present a tax management behavior in family firms to avoid its adverse effect on tax revenues.
Abstract: Purpose This paper aims to review the empirical literature dealing with the association between family firms and tax avoidance. Design/methodology/approach Empirical papers are collected based on electronic searches in several editorial sources (e.g. Elsevier, Emerald, Meridian Allenpress, Springer, Sage, Taylor and Francis and Wiley-Blackwell) in family-related, accounting and finance journals. Key words used to identify relevant studies are “family firms” or “family ownership” combined with “tax avoidance”, “tax aggressiveness”, “tax evasion” and “tax heaven”. This search yields 21 published papers over the period of 2010–2022. Findings The summary of empirical studies examining the relationship between family firms and tax avoidance suggests that the majority of them have been conducted in Germany, USA and Taiwan and other European civil law countries. The association between family firms and tax avoidance is negative in USA, Finland and Belgium. By contrast, the relationship between family firms and tax avoidance is positive and significant in other developed (Germany and Italy) and developing economies (Brazil, India, Malaysia and Tunisia). In Taiwan, the impact of family firms on tax avoidance depends on corporate opacity that mitigates the negative impact of family firms on tax avoidance. Practical implications With respect to regulators, this review informs fiscal authorities that family firms are associated with high levels of tax aggressiveness in some settings (e.g. Brazil, Germany, Italy and Tunisia). Accordingly, they should be aware about this tax management behavior in family firms to avoid its adverse effect on tax revenues. With respect to auditors, this study alerts them about the necessity to consider fiscal audit risk linked to family firms when planning their audit missions especially in countries characterized by high level of corporate opacity. Originality/value This literature review represents a first historical record and an introduction for accounting scholars who aim to investigate the topics linked to tax aggressiveness in the family firms’ context. It also highlights some limits related to this stream of research and offers future research perspectives.

4 citations


Journal ArticleDOI
TL;DR: In this paper , the authors explored the effect of corruption in the Eastern European legal system as it implicates German-speaking jurisdictions in cases of international cooperation, especially pertaining to white-collar crimes and mutual legal assistance.
Abstract: Purpose This paper aims to explore the effect of corruption in the Eastern European legal system as it implicates German-speaking jurisdictions in cases of international cooperation, especially pertaining to white-collar crimes and mutual legal assistance. This field report considers how during the course of the career of a prosecutor, corruption comes into play and creates a culture which prevents the execution of justice in the native country and in collaboration with the European Union. The invocation of compulsory measures in criminal case proceedings is examined carefully. Design/methodology/approach The first author is an internationally active lawyer and provides an insight referring to the personal experience of Eastern European prosecutors and the wider impression he has gained of the system in which they operate. This is enforced by his teaching at the International Anti-Corruption Academy in Vienna, where he trains public prosecutors from Eastern Europe and through this collaboration, learns of their experience in the system. The impressions gained from real life are supported by an extensive understanding of the literature, often showing that a key problem is the lack of open discussion on the matter. Findings German-speaking countries cannot make international proceedings dependent on the findings from Eastern European prosecutor offices. Although there are highly qualified prosecutors at work, there is a systemic corruption evident which threatens the reliability of investigative results. Corruption is evident from the inception of a prosecutor’s career to the most senior positions, showing that bribes account for an adverse selection of prosecutors. Originality/value This is a report based on first-hand sources. It elucidates the existing literature with testimony of the current culture and its tangible influence. The implications for international proceedings are paralleled with the history of possible corruption in a prosecutor’s career, the juxtaposition of which depicts a striking reality. Above all, the cyclical nature of corruption in the legal system is highlighted.

4 citations


Journal ArticleDOI
TL;DR: In this paper , the authors analyzed the legal issues on disgorgement and fund regulation in Indonesia, the USA and the UK and constructed the ideal law regarding the fund distribution mechanism.
Abstract: Purpose The purpose of this paper is two-fold: to analyze the legal issues on disgorgement and disgorgement funds in Indonesia, the USA and the UK and to construct the ideal law regarding disgorgement and disgorgement fund. Design/methodology/approach The type of legal research in this paper is normative legal research. The research approach used is a comparative approach and a legal approach. The legal materials used are all regulations on the disgorgement law and the disgorgement fund that apply in Indonesia, the USA and the UK. The technique of collecting legal materials is done by using library research techniques. Findings The rapid growth of the capital market in Indonesia still faces various legal issues such as various market manipulations, insider trading and illegal investment management activities. Based on the results of a comparative study, Indonesia does not yet have a calculation mechanism regarding the imposition of disgorgement on violators. Unlike Indonesia, the USA has the rules of practice and rules on fair funds and exchange commissions, and the UK has the decision procedure and penalties manual, which regulates the mechanism for calculating the imposition of disgorgement. Indonesia is solely able to use administrative action in imposing disgorgement, while in the USA and the UK, it can be through courts or direct administrative actions. These legal issues have resulted due to the lack of confidence by international investors and the growth of the investment climate in Indonesia itself. Research limitations/implications This study examines the regulation of disgorgement and disgorgement funds in Indonesia, the USA and the UK. However, the focus of research in this paper is limited to legal issues that occurred in Indonesia. Practical implications The results of this study may help to construct the ideal regulations on disgorgement and disgorgement funds in various countries and protect the capital market of the investors. Social implications The results of this study are expected to be helpful for the investment climate in various countries, especially developing countries. Originality/value The ideal legal construction regarding disgorgement, namely, parties to the mechanism for imposing disgorgement; disgorgement filing mechanism; sanctions in disgorgement; disgorgement fund sources; provider of fundholding accounts; mechanism for calculating disgorgement imposition; disgorgement fund distribution mechanism.

3 citations


Journal ArticleDOI
TL;DR: In this article , the authors argued that misappropriation of public funds should be construed as illicit financial flows (IFFs) which, undoubtedly, have an adverse effect on the realisation of the right to development.
Abstract: Purpose This paper advances the argument that misappropriation of public funds should be construed as illicit financial flows (IFFs) which, undoubtedly, have an adverse effect on the realisation of the right to development. Furthermore, by detailing the nature of IFFs, this paper aims to demystify the shallow understanding of what is IFF or what are IFFs and why misappropriation of public funds should be seen in that light. Design/methodology/approach This paper examines and interrogates the different judgements that have been delivered in cases tried and finalised by the special criminal court (SCC). With viewpoints that are backed by a theoretical understanding of Cameroonian criminal law in particular and criminal law in general, an analysis of the underlying intentions, motives and trajectories in the commission of misappropriation of public funds corroborate the view that the offence must be construed as IFFs. The data used in this paper are primary. Findings A few pertinent findings were made in the course of this research. Firstly, the offence of misappropriation of public funds and IFFs are not distinct, and any effort to limit the use of “funds” to finances will ultimately miss the point as property with financial value will definitely amount to funds. Secondly, through misappropriation of public funds/property, IFFs have been committed based on the trends and figures disclosed in the judgements of the SCC. Finally, the right to development requires resources and by stealing public funds, resources are deprived, thereby compromising the realisation of development and the right to development. Originality/value This paper examines the impact of IFFs on the right to development within the context of Cameroon. By diagnosing the definition of the crime of misappropriation of public property or funds, the paper argues that such an offence must be seen as IFFs given its nature, the motive and intention underlying its perpetration. By taking such perspectives, this paper not only adds to the literature thereon but further brings in new perspectives on those aspects of Cameroonian criminal law.

Journal ArticleDOI
TL;DR: In this paper , the authors investigate factors that may influence an individual's willingness to engage in a ransom payment and find that women and younger age groups are significantly more willing to pay a ransom, as are those who store photos.
Abstract: Purpose Ransomware is a relatively new form of financial extortion that is proving a major cyber-security threat to individuals and organisations. This study aims to investigate factors that may influence an individual's willingness to engage in a ransom payment. Design/methodology/approach This study ran a large survey (n = 1,798) on a representative sample of the UK population. This study elicited willingness to pay (WTP) ransomware and also reasons for not wanting to pay a ransom to criminals. This study then used non-parametric tests and regression analysis to identify factors that influence WTP. Findings This study finds that women and younger age groups are significantly more willing to pay a ransom, as are those who store photos. There is a strong positive relationship between concern for data breach and WTP a ransom. Originality/value To the best of the authors’ knowledge, this is the first large scale study to look at WTP ransomware. This study identifies a range of factors that can help inform law enforcement to target advice about ransomware attacks.

DOI
TL;DR: In this article , a watershed reconception of compliance in light of the Global Financial Crisis of 2008 (GFC) is presented, where the influence of financial incentivization and structural weakness is highlighted above all.
Abstract: Purpose The concept of compliance is in danger of becoming obsolete as a result of its generalization and overuse. This paper aims to refine the concept of a culture of compliance and its effective implementation in association with financial regulations, in line with the societal expectations of compliance. Design/methodology/approach This paper begins by assessing the watershed reconception of compliance in light of the Global Financial Crisis of 2008 (GFC). The influence of financial incentivization and structural weakness is highlighted above all. Recommendations focusing on the significance of the corporate context are made from this and viewed in relation to the growing relevance of compliance in regulating cyberspace. Findings Individuals and their decision-making are heavily influenced by the culture of their environment. Clearly, defining the values behind regulations encourages employees to follow the rules based on the principles that underlie them rather than out of fear of punishment, risk aversion or a sense of the “tick-box” duty. This contributes to the longevity of healthy compliance rather than a compliance fatigue. Originality/value By casting a look back at the development of compliance, the modern social expectations of compliance can be elucidated and, in turn, translated into mechanisms for corporations to effectively use. The literature on compliance has grown substantially but often limits itself to commentaries on the history of non-compliance or sector-based investigations. Hinged between the past and future of compliance, this study contributes to bridging a considerable gap in the literature by using a wider lens and positive redefinition of compliance.

Journal ArticleDOI
TL;DR: In this paper , the authors analyzed the behavioural component with corporate governance lapses for creating a trail and to what extent it can contribute to forensic analysis to help reduce and prevent fraud in the future.
Abstract: Purpose The banking sector requires a major comeback with the series of bank frauds that has shook the nation. The rising non-performing assets (NPAs) and corporate frauds find their roots in the top-level management or executive levels. The purpose of this study to analyse the behavioural component with corporate governance lapses for creating a trail and to what extent it can contribute to forensic analysis to help reduce and prevent fraud in the future. Design/methodology/approach This study is investigative in nature. This study uses case study approach by taking into account the major Advance–NPA–Fraud cases over period of 2010–2022. RBI data for bank advances, NPAs and advances-relate frauds from 2005 to 2019 were studies and interpreted for creating a trend and pattern for the reduction and prevention of frauds. Findings The authors found that behavioural factors and personalities affect the systems and culture of the company, thereby giving a jolt to the corporate governance mechanisms along with various entities like depositors, consumers and shareholders. Practical implications Assessing the behavioural aspects for risk mitigation remains unexplored in the banking sector. The personality dimension can help in contributing to comprehending the mental aspects and the reasons behind the combination of dark triads with economic offences. Originality/value This study is beneficial to all the beneficiaries of the banking sector and the economy at large in understanding the implications of risks because of patterns formed by emotions and vulnerability towards economic and fugitive economic crimes.

Journal ArticleDOI
TL;DR: In this paper , the authors highlight the risks and threats posed by crowdfunding and propose suggestions to mitigate the risks that all crowdfunding stakeholders may face when deciding to participate in a crowdfunding activity or when they want to set one up.
Abstract: Purpose This study aims to highlight the risks and threats posed by crowdfunding. It also looks at the new European Union regulation on crowdfunding, which is intended to give participants confidence that there will be specific minimum regulatory standards to protect parties against mis-selling issues affecting some platforms. Design/methodology/approach This paper is based upon a thorough literature review. Findings Crowdfunding is an essential alternative for financing commercial and non-commercial projects. Although it is a fast-growing digital financial tool, it can also be considered extremely risky. It can be an ideal platform for money laundering and can facilitate the financing of terrorism and fraud. Originality/value Crowdfunding is still in its infancy, so the literature has not yet sufficiently addressed the compliance risks of crowdfunding. As a result, there is a significant research gap. Thus, this study aims to analyse and propose suggestions to mitigate the risks that all crowdfunding stakeholders may face when deciding to participate in a crowdfunding activity or when they want to set one up.

Journal ArticleDOI
TL;DR: In this paper , a systematic literature review based on five journal publishers' articles/journals from the Web of Science, Scopus and Google Scholar databases was conducted to understand the importance of internal functions in combating the risk of corruption with a more consistent and committed commitment to implementing an integrated governance, risk management and compliance.
Abstract: Purpose Business Principles for Countering Bribery, 2003, helps companies design and implement anti-bribery policies, one of anti-corruption. Since then, the business environment has changed, can carry out anti-corruption activities from within the organization through a management system. Currently, the business world recognizes the existence of an integrated governance, risk management and compliance (GRC), where one of the goals is to overcome the risk of corruption in the organization. Therefore, this study aims to clarify the concept of integrated GRC implementation within the organization through previous studies from 2007 to 2021. Design/methodology/approach This study was designed in a systematic literature review based on five journal publishers’ articles/journals from the Web of Science, Scopus and Google Scholar databases. Keywords used to search consist of Anti-Corruption (AC); Governance (G); Risk Management (RM); Compliance (C); GRC. The four keywords G, RM, C and GRC, are filtered based on articles that correlate with AC. Findings Overall, this review shows a few concepts for integrated GRC implementation in organizations that effectively support the prevention and detection of corruption. Although no empirical research has been found in the literature review, these three GRC silos – governance, risk management and compliance – support anti-corruption. In other words, it is hoped that the successful implementation of the integrated GRC in the future can improve the anti-corruption capabilities to be achieved in every organization. Research limitations/implications Research only discusses one internal function within the organization, of the many internal functions that are known to detect and prevent corruption. Practical implications Organizations can use this review to understand the importance of internal functions in combating the risk of corruption with a more consistent and committed commitment to implementing an integrated GRC. Originality/value As far as the authors’ search is concerned, there is no review of the concept of integrated GRC implementation against anti-corruption. It invites researchers to examine the actual implementation of this integrated GRC in organizations.

Journal ArticleDOI
TL;DR: In this article , the authors discuss how the failed finance companies in Sri Lanka used fair value accounting practices as an opportunistic earnings management practice to launder money under weak corporate governance structures.
Abstract: Purpose The purpose of this paper is to discuss how the failed finance companies in Sri Lanka used fair value accounting practices as an opportunistic earnings management practice to launder money under weak corporate governance structures. Design/methodology/approach This paper uses a qualitative design under the philosophy of interpretivism. The case study research strategy is used inductively to investigate how fair value accounting had been used for money laundering. Findings The dishonest intention of major shareholders and board of directors had forced failed companies to misuse fair value accounting to manipulate performance and use them for personal benefits which were detrimental to the depositors and stability of the companies. The weak corporate governance structures which were developed because of regulatory forbearance were influential for manipulations. The concentrated ownership had reduced agency conflicts between shareholders and managers because major shareholders were the members of the board of directors. The appointed committees were not effective because of an inadequate number of independent directors with sufficient expertise. The reduced agency conflict between shareholders and managers has exaggerated the agency conflict with depositors. Therefore, it is recommended to dilute ownership concentration to establish good corporate governance structures and make stable institutions. Research limitations/implications This study does not discuss the dishonest fair value accounting practices of all licensed finance companies because of the sensitivity of the matter for surviving companies. Originality/value This paper is an original work of the authors which discusses how fair value accounting practices had been used to launder money in failed finance companies in Sri Lanka as an emerging market context.

Journal ArticleDOI
TL;DR: In this paper , the authors explored the contributions that public sector audit through reforms can make in dealing with the issues of occupational fraud in Ghana and concluded with specific requirements including the use of fraud investigators and modern forensic techniques in a collaborative effort with guidelines from the Supreme Audit Institution.
Abstract: Purpose This paper aims to explore the contributions that public sector audit through reforms can make in dealing with the issues of occupational fraud in Ghana. Design/methodology/approach The issues surrounding the Ghana Audit Service (GAS) reports issued to parliament were reviewed using socio-legal methodology. The discussion as well as the theoretical contribution is informed by stakeholder theory. Findings The findings show matching of irregularities as reported by regular audit reports to schemes of occupational fraud and abuse as well as how the power to surcharge and disallow would serve as a deterrence mechanism in the fight against occupational fraud. Practical implications This paper concludes with discussions on specific requirements including the use of fraud investigators and modern forensic techniques in a collaborative effort with guidelines from the Supreme Audit Institution to minimise fraud. Originality/value This study, to the best of the authors’ knowledge, is the first to explore the role of GAS in minimising occupational fraud.

Journal ArticleDOI
TL;DR: In this article , the authors explored legal challenges regarding the regulation and supervision of Islamic Fintech and to construct Sharia compliance regulations to strengthen the supervision of the Islamic finance operation in Malaysia, Indonesia, and United Kingdom.
Abstract: Purpose This article aims to explore legal challenges regarding the regulation and supervision of Islamic Fintech and to construct Sharia compliance regulations to strengthen the supervision of Islamic Fintech operation. Design/methodology/approach This type of research is legal research, adopting the statute approach, comparative approach, and conceptual approach. The focus of the study is Indonesia with comparative studies with Malaysia and the United Kingdom. Findings Malaysia, Indonesia, and the United Kingdom are all on the top five countries in the Global Islamic Fintech (GIFT) Index. The list comprises countries that are most conducive to the growth of the Islamic Fintech market and ecosystem. However, weak supervision and low Sharia compliance are still becoming prominent challenges in the implementation of Islamic Fintech, while Sharia compliance is the core principle for Islamic finance regulation. Another finding is that a good ecosystem of Islamic Fintechs needs supportive regulations and policies, a Sharia Supervisory Board, and standards of Islamic Fintech Shariah governance. Research limitations/implications This study examines the regulation and supervision of Islamic Fintech in Indonesia, Malaysia, and the United Kingdom countries whose Islamic Fintech industry is growing rapidly. Practical implications This study is a strong reference for countries with potential Islamic finance, especially when they are constructing the Sharia compliance regulations to strengthen the regulation and supervision of the Islamic finance industries. Social implications Sharia compliance regulations can be a subsystem in the Islamic financial ecosystem to encourage Sharia economic growth in various countries. Originality/value To ensure Sharia compliance, it is recommended to take some steps: (a) creating the Sharia compliance regulations; (b) creating the Sharia supervisory boards; and (c) standardizing the Sharia governance of Islamic Fintech.

Journal ArticleDOI
TL;DR: In this article , the authors examined the effect of five components of the fraud pentagon theory on the perception of external auditors: pressure, opportunity, rationalization, competence, and arrogance.
Abstract: Purpose This study aims to examine the fraud tendency on the perception of external auditors triggered by five components of the fraud pentagon: pressure (P), opportunity (O), rationalization (R), competence (C) and arrogance (A). In addition, ethical values (EV) are placed as a moderating variable for this relationship. Design/methodology/approach This is a quantitative study with a survey to external auditors around Indonesia. A moderation model for a research framework was developed to investigate the moderating role of ethical values. Findings The findings have shown that the five components of the fraud pentagon theory are not fully proven as triggers of fraud in the perception of external auditors. Only C and A have a significant value in influencing the perception of fraud tendency (PFT). Other findings also provide evidence that EV moderate the relationship between C and A to PFT. This shows that EV can be used as an anti-fraud strategy in the external auditor environment. Originality/value The originality of this paper is one of the first study that examines the fraud pentagon theory in the field of behavioral accounting. In addition, this paper contributes to the integration of ethical values as an anti-fraud strategy in the external auditor environment.

Journal ArticleDOI
TL;DR: It is found that Bitcoin is common among crypto-money launderers, though most also use some form of alt-coin, and that the use of third-party currency exchanges is a prevalent method to create illicit funds and conceal proceeds of crime.
Abstract: Purpose This study aims to explain how cryptocurrency is leveraged for illicit purposes across the global financial system. Specifically, it establishes how cryptocurrency has been changing the nature of transnational and domestic money laundering (ML). It then assesses the effectiveness of conventional anti-money laundering (AML) policy and legislation against the proliferation of crypto laundering, using Canada as a critical case study. Design/methodology/approach Data was collected from court cases and secondary sources to build cross-case trends of cryptocurrency use in ML. Illicit International Political Economy forms the theoretical foundation for this study, whose contribution is situated in the current literature on crypto-ML. Findings This study finds that Bitcoin is common among crypto-money launderers, though most also use some form of alt-coin, and that the use of third-party currency exchanges is a prevalent method to create illicit funds and conceal proceeds of crime. The findings validate two hypotheses that illicit use of crypto is prevalent in the first two stages of ML, and that crypto is most often used in conjunction with other fiat currencies. Although law enforcement is improving on monitoring and understanding popular cryptocurrencies such as Bitcoin, alt-coins pose a significant challenge for criminal intelligence. New regulations for third-party currency exchanges are having a positive impact on curtailing crypto-laundering but are shown to be insufficient per se to contain the use of crypto in criminal activity. Originality/value This study contributes to a more robust understanding of the use of virtual currency in transnational and domestic ML. It contributes to an emerging body of literature on the role of technological change in enabling the global flow of illicit funds. It also informs public policy on virtual currency in general, and on AML regulation in Canada in particular.

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TL;DR: In this article , the authors examined the prevalence of corruption in Nigeria's corporate sector and the relationship between a sound legal system (through application of the rule of law) and the establishment of a good corporate governance regime.
Abstract: Purpose The purpose of this paper is to examine the prevalence of corruption not as it concerns corruption generally but specifically in relation to corporations in Nigerian. It examines the corporate sector and how a good legal regime can be used to prevent frauds and promote a more efficient corporate governance structure in the country. Design/methodology/approach This paper adopts the doctrinal approach through a critical evaluation of concepts. Using existing literature in the subject area, it evaluates the prevalence of corruption in Nigeria’s corporate sector and the relationship between a sound legal system (through application of the rule of law) and the establishment of a good corporate governance regime. Findings This paper finds that there have been numerous corrupt practices involving corporations in Nigeria. Notwithstanding the prevalence of corporate corruption in this sector, there has been no serious interrogation of these anomalies, leading to stultification in the growth and development of this sector of the Nigerian economy. Originality/value Against the background that very little has been devoted to examining the causes of corporate corruption in developing economies (for instance, Nigeria) and what can be done to reduce its occurrence, this paper offers a fresh insight into the causes of corruption and the correlation between good corporate governance anchored on law and the development of a corporate sector. It extends the body of knowledge in this area by offering suggestions that can help reduce the occurrence of corruption in the Nigeria’s corporate sector.

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TL;DR: In this paper , the authors investigate how bribery and fake news in Eastern European countries can affect businesses across Europe, focusing on the challenge of corruption encountered by international managers and the necessary precautions before committing financial resources to these countries.
Abstract: Purpose This study aims to illustrate how bribery and fake news in Eastern European countries can affect businesses across Europe. Countries such as Romania, Bulgaria, Slovenia and Hungary represent sizeable and potential markets. Thanks to their European Union membership and low labor costs, these markets could offer many investment opportunities to international managers. Consequently, this study focuses on the challenge of corruption encountered by international managers and the necessary precautions before committing financial resources to these countries. Design/methodology/approach For this study, 10 informal interviews with presumed providers of illegal services were used to investigate the previously unexplored innovative research question. Informal interviews were conducted with individuals who can be assumed to have experience or knowledge in the field of corruption in multinational corporations. Findings The results show the potential impact of corruption on international managers in Eastern Europe. Originality/value This study contributes to the literature by examining two forms of corruption: bribing journalists to publish fake news to harm commercial rivals and bribing public officials to manufacture legal proceedings against business competitors. The following will also highlight how a corrupt judicial system can have implications abroad and what problems this may raise for mutual legal assistance.

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TL;DR: In this paper , the role of transnational corporations (TNCs) in tax evasion practices in Sub-Saharan Africa is investigated and tax havens and offshore financial centres, shaped by globalisation, are major structures facilitating the sophisticated tax schemes of highly mobile TNCs.
Abstract: Purpose The mobilising domestic resources, in particular, taxation, is key to unlocking the resources required for public investment in infrastructure, growth and sustainable finance. This study aims to share the perception that the tax arrangements of states and the transnational corporations (TNCs) of developed states have a critical effect on the development prospects of the less powerful states in developing countries. Design/methodology/approach This paper locates the role of TNCs tax practice within the broader dynamics of globalisation and the pursuit of profits, to argue that the drive of TNCs for higher profits can enrich our understanding of why some TNCs engage in tax dodging. This paper used publicly available evidence to shed light on the role played by TNCs in tax dodging practices in developing countries. Findings The evidence shows that tax havens and offshore financial centres, shaped by globalisation, are major structures facilitating the sophisticated tax schemes of highly mobile TNCs. This paper further shows that the corrosive effect of low-tax jurisdictions (“tax havens”) continues to represent a major obstacle to a regulation of global economic relations, which is required for maintaining sustainable social and economic development of poorer states. Research limitations/implications This paper used publicly available evidence to illuminate the role played by TNCs in tax dodging practices in Sub-Saharan Africa. Practical implications This paper, therefore, advocates a radical reform that could minimise the attendant problems created by the activities of TNCs and the enabling structures that facilitate these practices. Social implications Tax dodging has played a major role in causing serious damage to the economic and social landscape in developing countries. This in turn, has undermined social welfare and also investment in the public services, thereby eroding the quality of life and producing a decline in average life expectancy. Originality/value This paper is a general review of literature and evidence on contemporary developmental issues.

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TL;DR: In this paper , a conceptual model of the common fraud types in the FinTech industry is proposed to enhance the understanding of the key fraud-causing elements, and the authors suggest some preventive techniques to prevent corporate frauds.
Abstract: Purpose The fraud landscape for FinTech industry has increased over the past few years, certainly during the time of COVID-19, FinTech market reported rapid growth in the fraud cases (World Bank, 2020). Taking the consideration, the paper has qualitatively understood the loopholes of the FinTech industry and designed a conceptual model declaring “Identity Theft” as the major and the common fraud type in this industry. The paper is divided in two phases. The first phase discusses about the evolution of FinTech industry, the second phase discusses “Identity Theft” as the common fraud type in FinTech Industry and suggests solutions to prevent “Identity Theft” frauds. This study aims to serve as a guide for subsequent investigations into the FinTech sector and add to the body of knowledge regarding fraud detection and prevention. This study would also help organisations and regulators raise their professional standards in relation to the global fraud scene. Design/methodology/approach This paper revisits the literature to understand the evolution of FinTech Industry and the types of FinTech solutions. The authors argue that traditional models must be modernised to keep up with the current trends in the rapidly increasing number and severity of fraud incidents and however introduces the conceptual model of the common fraud type in FinTech Industry. The research also develops evidences based on theoretical underpinnings to enhance the comprehension of the key fraud-causing elements. Findings The authors have identified the most common fraud type in the FinTech Industry which is “Identity Theft” and supports the study with profusion of literature. “Identity theft” and various types of fraud continue to outbreak customers and industries similar in 2021, leaving several to wonder what could be the scenario in 2022 and coming years ahead (IBS Inteligence, 2022). “Identify theft” has been identified as one the common fraud schemes to defraud individuals as per the Association of Certified Fraud Examiners. There is a need for many of the FinTech organisations to create preventive measures to combat such fraud scheme. The authors suggest some preventive techniques to prevent corporate frauds in the FinTech industry. Research limitations/implications This study identifies the evolution of FinTech industry, major evidences of Identity Thefts and some preventive suggestions to combat identity theft frauds which requires practical approach in FinTech Industry. Further, this study is based out of qualitative data, the study can be modified with statistical data and can be measured with the quantitative results. Practical implications This study would also help organisations and regulators raise their professional standards in relation to the global fraud scene. Social implications This study will serve as a guide for subsequent investigations into the FinTech sector and add to the body of knowledge regarding fraud detection and prevention. Originality/value This study presents evidence for the most prevalent fraud scheme in the FinTech sector and proposes that it serve as a theoretical standard for all ensuing comparison.

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TL;DR: In this article , the authors argue that Lerner's belief in a just world (BJW) theory is a helpful framework for understanding the blame faced by online fraud because it posits that behavioural responsibility is central to perceived blameworthiness; and that compensation for a crime determines the level of blame directed towards victims.
Abstract: Purpose Victims of online fraud face a high level of blame from their families, friends, professionals, the broader community and often from themselves. Victims are commonly perceived as stupid, gullible and undeserving of justice. The reasons for this are under-researched, and there are currently no satisfactory explanations of why victim-blaming occurs so frequently in cases of online fraud. This paper aims to propose a potential theoretical explanation for the high level of blame experienced by online fraud victims. Design/methodology/approach Lerner’s Belief in a Just World (BJW) theory is posited as a helpful theoretical explanation for the high level of blame directed towards victims of online fraud. Findings This paper argues that Lerner’s BJW theory is a helpful framework for understanding the blame faced by victims of online fraud because it posits that behavioural responsibility (a trait commonly ascribed to online fraud victims) is central to perceived blameworthiness; and that compensation for a crime determines the level of blame directed towards victims. As victims of online fraud are exceptionally unlikely to receive any type of compensation (whether monetary or otherwise), BJW may help explain the blame directed towards victims. Originality/value Prior scholarship predominantly understands the blame faced by online fraud victims through the lens of Nils Christie’s (1986) “ideal victim” thesis. This paper presents an advance over this existing understanding by illustrating how BJW provides a more detailed explanation for victim blame in online fraud.

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TL;DR: In this article , the authors reviewed the quantum and magnitude of tax avoidance in Nigeria's top seven banks by using recognized tax avoidance proxies of the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standard (IFRS) effective tax rate (ETR) and book-tax gap analysis for the appraisal.
Abstract: Purpose The purpose of this paper is to review the quantum and magnitude of tax avoidance in Nigeria's top seven banks by using recognized tax avoidance proxies of the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standard (IFRS) effective tax rate (ETR) and book-tax gap analysis for the appraisal. Design/methodology/approach Data for the paper came from the annual reports of the banks between 2011 and 2019. The individual bank’s tax data was analyzed for trends and then consolidated to establish the average percentages and the exact amount of the tax the banks evaded each year and cumulatively over the review period. The data were then matched with analytics of the drivers of tax avoidance in the reconciliation statement to highlight essential tax planning items and strategies being exploited by each bank in the pursuit of aggressive tax avoidance behavior. Findings F-test comparing the aggregate means (all banks) for tax evasion proxies of ETR and the book-tax gap was conducted at a 95% confidence interval. The results of this paper indicate no significant difference between the means obtained, thus affirming that the same pattern of tax evasion was consistent among the banks for the years reviewed. Originality/value The findings of this paper highlight the tax avoidance behavior of the referenced banks, identify weaknesses in the corporate tax planning policy pursued and serve to alert policymakers of the need to strengthen the laws and block loopholes that provide rooms for unrestrained tax avoidance behavior in the banking sector.

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TL;DR: In this article , the authors examined Nigeria's anti-corruption crusade in the context of its effectiveness in attracting global support for external loot recovery, and revealed that the politicisation of Nigeria’s anticorruption crusade has undermined international support and created uncertainty in the country's quest for the recovery of its looted national funds.
Abstract: Purpose Corruption is a long-standing challenge in Nigeria. The country’s development crises, including widespread poverty and insecurity, have direct and indirect links to corruption. The paradox of corruption in Nigeria is that political elites have politicised its elimination: while preaching anti-corruption, they are still neck-deep in corrupt practices. The purpose of this study centres on Nigeria’s anti-corruption crusade in the context of its effectiveness in attracting global support for external loot recovery. A related preoccupation of this study is to unravel the extent to which Nigeria’s anti-corruption accomplishments or otherwise have shaped international perception. Design/methodology/approach This study adopts a qualitative research design. It draws from primary data generated from 25 key informant interviews and complemented with secondary data from archival materials to examine Nigeria’s anti-corruption crusade, especially global perception and its overall implication in motorising the country’s quest for external loot recovery. It deploys unstructured interview guide to generate data from the key informants. Findings This study unveils three interrelated issues: since 1999, the promise of eliminating corruption from Nigeria’s body politic has been a recurring campaign theme without corresponding credible action against it. Although anti-corruption agencies exist in Nigeria, the country’s corruption profile is high, an indication of their ineffectiveness. The persistence of corruption has resulted in poor national image, thereby shaping negative international perception about Nigeria. The politicisation of Nigeria’s anti-corruption crusade has undermined international support and created uncertainty in the country’s quest for the recovery of its looted national funds. Practical implications The negative perception of the international community about the commitment of the Nigerian Government in fighting corruption has negative implications on the strategic partnership necessary for loot recovery across the globe. Social implications The overall social implication is loss of global support for Nigeria’s anti-corruption drive, including its quest to recover its stolen national assets and other forms of international assistance for national development. Originality/value The value of this study is two-fold, one, its recency and originality in terms of interrogating the interconnections between domestic efforts at anti-corruption and global perception of such efforts; and two, the contextualisation of the compromised efficiency of Nigeria’s anti-graft agenda and its overall implications in securing global support for external loot recovery.

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TL;DR: In this article , the fundamental conditions which are necessary for the construction of a regulation which will affect a genuine advancement in the context of environmental protection have been examined, and the components of an adequately built regulation are broken down to concretise the notion of efficacy and its proposed universality in a regulatory context.
Abstract: Purpose This paper aims to examine the fundamental conditions which are necessary for the construction of a regulation which will affect a genuine advancement in the context of environmental protection. Design/methodology/approach The component parts of an adequately built regulation are broken down to concretise the notion of efficacy – and its proposed universality – in a regulatory context. This paper takes a comparative approach of regulations and extends to include a consideration of the monitoring and enforcement of regulation as a necessary tenant of an effective regulation. Findings Sustainability regulations have seen a significant development in the 20th century. Notable remain the national discrepancies to so universal problem, as well as an inconsistent acknowledgement of the purpose of sustainability regulations beyond a tick-box compliance commitment. Originality/value The importance of sustainability has been amplified without a due consideration of what its translation into regulation must look like. This paper argues that no meaningful change can be lobbied without understanding how its practical implementation is performed.

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TL;DR: In this paper , the authors discuss recommendations for improving the resources and investment to address economic crime in Sri Lanka and discuss a unique perspective on how a pandemic could be misused to strengthen the autocratic rule and make structural changes to a nation, including constitution amendments.
Abstract: Purpose The purpose of this paper is to understand the dual crisis in Sri Lanka during the pandemic. The health crisis was followed by democratic backsliding which directly impacted the fight for economic crime. The pre-pandemic political commitment to fight corruption is assessed with the pandemic environment and the policy decisions by the Government. Sri Lanka was a detailed case study of how politicians exploited the pandemic environment to suppress democracy and move their semi-autocratic agenda forward. However, Sri Lanka was not the only nation that faced such autocratic sentiments losing the democratic values. This paper discusses recommendations for improving the resources and investment to address economic crime in Sri Lanka. Design/methodology/approach Secondary data was used for the analysis introducing a theoretical framework referring to the work of Michel Foucault and Francis Fukuyama. The secondary data was used to develop an argument aligning political science with economic crime. Findings The Government disciplinary project launched during the pandemic directly impacted Sri Lankan democracy and structural changes made to the constitution. The heavy militarization was a sign of departure of long-cherished values of democracy in the country. Political clientelism backed by nepotism interfered with judicial independence and the fight against economic crime. Many accused, including those responsible for the largest corruption scandal, were not punished. The trust deficit has widened significantly between authorities and the public on fighting corruption in Sri Lanka. Research limitations/implications There are more factors for democratic backsliding than what is presented in this paper. The economic crime environment in Sri Lanka has many dimensions and the paper only highlights a few areas limiting to the secondary data available. Originality/value The paper discusses a unique perspective on how a pandemic could be misused to strengthen the autocratic rule and make structural changes to a nation, including constitution amendments. The pandemic environment was used to commit economic crime and suppress public opinion projecting the health crisis in the lockdown environment.