Essays on Effectiveness of the Anti-Money Laundering Legal Framework in Saudi Arabia Literature review

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The paper 'Effectiveness of the Anti-Money Laundering Legal Framework in Saudi Arabia" is a perfect example of a business literature review.   This is a comprehensive review of literature relating to the effectiveness of the existing legal frameworks for preventing money laundering in the banking industry in Saudi Arabia. The review is divided into three major sections as follows: key features of the practice of money laundering, the practice of money laundering in Saudi Arabia and the effectiveness of the anti-money laundering legal framework in Saudi Arabia. The three major sections of the review correspond to the three objectives of the study as follows.

The first objective is to identify the key features of money laundering. With regard to this objective, a brief description of the key stages of the money laundering process is provided. This is followed by a detailed analysis of the impact that money laundering has on the economy of a country in general. Lastly, a brief analysis of literature with regard to current and future trends of the practice of money laundering is provided. The second part of the literature review corresponds to the second objective of the study, which is to establish the extent of the impact of money laundering on the financial system.

In this section, a detailed analysis of money laundering in Saudi Arabia is done. The review of relevant literature is based on how the practice takes place in Saudi Arabia and the relationship between Saudi Arabia and other states in the world with regard to money laundering activities. The third objective of the study is to evaluate the effectiveness of the anti-money laundering legal framework in combating the practice in Saudi Arabia.

Literature that is relevant to this objective is comprehensively reviewed in this section. Money Laundering: Key Features, Impact and Trends There are several definitions of money laundering, however, with reference to Saudi Arabia; the concept can be defined as the actual commitment or attempt of an act of concealing the real source of funds that have been acquired through means which are prohibited by the shari’ ah law (Capital Markets Authority (CMA) 2008, p. 3). This definition, which was developed by the CMA (one of the two main bodies in Saudi Arabia that are concerned with fighting money laundering in the country), means that money laundering is a complex process and that its criminalisation has its basis in the provisions of shari’ ah law. Money laundering is a complex process that takes place in several interrelated stages.

First is the placement stage in which the money that has been acquired from any of the many criminal activities gets infiltrated into the formal financial system. The overriding objective of the process at this stage is to ensure that the money acquired from different criminal activities is introduced into the formal financial system without being detected by the authorities.

Since this is the case, several methods are used to achieve this objective. First, the money may be split into small amounts and deposited into several different accounts over time (Madsen, 2009, p. 107). This is an important way of ensuring that the money gets into the banking system without being detected. Further, large deposits may be made to bank accounts in collaboration with bank employees who have been compromised.

By circumnavigating the existing regulatory frameworks that may require individuals to surrender their identification when depositing large amounts of money that exceed particular set limits, money launders are able to successfully infiltrate the proceeds of crime into the formal financial system. Lastly, by using legal persons as front men, money can be laundered into the legal banking system since it is usually concealed as assets that are controlled by the legal front-men who are able to transact with the banking institutions quite easily.

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