Journal of Illicit Trade, Financial Crime, and Compliance
The Journal of Illicit Trade, Financial Crime, and Compliance (JITFCC) will serve as the premier academic and professional platform for scholars, policymakers, law enforcement agencies, and compliance professionals. Under the leadership of Professor Nikos Passas - a globally recognized authority on financial crime and illicit networks - and in partnership with the Anti-Corruption Academy of India (ACA), where Prof. Passas serves as Chair of the Academic Council, the journal will bridge theory and practice in combating transnational financial crimes.
Does Creativity Affect Fraud Assessment and judgment? An Experimental Analysis
This study examines how creative potential and loss aversion influence fraud risk assessments under uncertainty and outcome feedback. Because audit evidence is persuasive rather than conclusive, fraud detection inherently involves ambiguity, judgment, and professional skepticism. We argue that individual differences in creative potential may influence how auditors interpret uncertain information and maintain alternative fraud hypotheses, while loss aversion may shape fraud judgments through competing concerns about audit failure and false fraud allegations. Using a controlled experiment that systematically varies outcome probabilities in a Rock-Paper-Scissors task, we compare the judgments of 61 experienced auditors with those of more than 200 non-professional investors. The results show that realized outcomes are the primary determinant of fraud risk assessments, indicating that judgments are mainly evidence-driven. Among auditors, higher creative potential is associated with higher fraud risk assessments, whereas no comparable relationship is observed among non-professional investors. However, we find no evidence that creative potential moderates the integration of outcome information into fraud judgments. Loss aversion exhibits statistically significant but comparatively small effects across the analyses. Overall, the findings suggest that creativity functions as an individual-level cognitive resource that supports the interpretation of ambiguous information, while observable evidence ultimately dominates fraud risk judgments as more diagnostic information becomes available. JEL Classification: M40, M42, M48.
Copyright (c) 2026 Marcel Tümmler, Reiner Quick (Author) https://creativecommons.org/licenses/by-nc/4.0
Divergent Anti-money laundering Regulatory Architectures for Accounting Professionals: A Comparative Study between China and Ireland
This article compares the AML regulatory architectures governing accounting professionals in China and Ireland, a comparison made possible by China’s 2025 Anti-Money Laundering (AML) Law, which extends regulation to accounting firms. It asks under what conditions criminal liability for AML failures can be activated. Treating regulatory architecture as three tiers the supervisory model, operational obligations, and the criminal liability regime it finds a structural asymmetry. In Ireland, accountants are supervised under a self-regulatory model that channels breaches toward internal discipline rather than criminal referral. The standalone offences, despite their low threshold, are therefore not activated a constraint that is relational, lying not in the offences but in the supervisory model surrounding them. In China, the absence of standalone AML offences means such failures are pursued under Article 191 of the Criminal Code as money laundering by omission, whose causation requirement is doctrinally hard to satisfy for procedural breaches; the constraint is inherent in the criminal liability regime. Both regimes are thus left without activation, by opposite routes. Addressing this requires, in Ireland, a referral mechanism linking the disciplinary process to criminal investigation; and in China, a standalone offence for AML failures that does not require proof of a laundering outcome.
Copyright (c) 2026 Zhen Lin (Author) https://creativecommons.org/licenses/by-nc/4.0
From Compliance Officer to Distributed Intelligence Operative in National Security Architecture: Viewing MLRO as a National Security Asset
Money Laundering Reporting Officers (MLROs), embedded across private financial institutions, constitute an under-recognized national security asset. Generating raw financial intelligence that flows through Financial Intelligence Units to inform law enforcement and counter-terrorism operations, MLROs are systematically misclassified under compliance-centric governance, degrading intelligence quality and creating measurable security vulnerabilities. Drawing on intelligence cycle theory, securitization studies, principal-agent frameworks, and the sociology of security professions, this paper introduces the Distributed Financial Intelligence Architecture (DFIA) as its core theoretical contribution. The DFIA is operationalized through three provisional indicators, SAR Actionability Rate, FIU Processing Efficiency Score, and Intelligence Outcome Attribution Rate, enabling it to function as a falsifiable rather than merely descriptive construct. The intelligence cycle is applied in two explicit registers: descriptively, for the phases in which structural equivalence between MLRO operations and intelligence production obtains; and normatively, to identify the governance failures the proposed reforms are designed to correct. The paper establishes a probabilistic causal chain from aggregate MLRO performance, through FIU effectiveness and FATF Immediate Outcome ratings, to sovereign national security posture, and proposes five institutional reforms to operationalize this architecture.
Money Laundering Reporting Officers (MLRO)
Public-Private Intelligence Partnerships
Distributed Financial Intelligence Architecture (DFIA)
Copyright (c) 2026 Vipul V. Tamhane (Author) https://creativecommons.org/licenses/by-nc/4.0
Major Improvements: Review on the Revision of Anti-Money Laundering Law of PRC
This paper introduces the domestic and international background and the process of the revision of the Anti-Money Laundering Law of the People’s Republic of China, compares the original law with the new one, demonstrates the significant meaning of what has been revised both in normative and practical aspects and puts forward some comments. The revised law improves or innovates regulations on the following eight aspects, which are the definition of anti-money laundering, the scope of extraterritorial application, the anti-money laundering obligations of specific non-financial institutions, the regulations on beneficial owners, administrative penalties, cooperation and data protection, client due diligence, and transaction reporting system. This paper describes eight major improvements in detail and comments on them in order to show a high level of legislation, and to make a well understanding of these “shinning points” which help to enhance the quality, efficiency and status of China's anti-money laundering work.
Copyright (c) 2026 Ping HE, Shuyuan ZHAO (Author) https://creativecommons.org/licenses/by-nc/4.0
Illicit Online Pharmacies (IOPs), Counterfeit Medicines, and the Enabling Financial Ecosystem
A sharp rise in illicit online pharmacies (IOPs) over the last decade poses significant threats to public health and safety because the unregulated medicines sold are often of inferior quality with no active ingredients or contain harmful chemicals. American consumers provide a major market for online pharmacies, of which 95% operate with flagrant disregard for the law [1, 2]. This article is based on research conducted by the authors analyzing hundreds of online pharmacies, with particular attention to the payment methods used by IOPs, a problem not previously examined in depth in other studies of online pharmacies. The research concluded that the predominant payment method was cryptocurrency, followed by credit cards and third-party payment processors. Use of cryptocurrency on a significant scale is often indicative of financial crime. We observed significant growth of illicit activity during the pandemic and IOPs followed the same trend as customers turned increasingly to online platforms for all forms of purchases. Unfortunately, the problem of dangerous and substandard medicines sold through IOPs continues on a massive scale in the post-pandemic era. New and dangerous products have joined the offerings initially studied, including counterfeit oncology drugs, weight loss drugs, and other newly developed medicines added to the profiles of IOPs. Therefore, IOPs are an increasingly pervasive form of illicit trade undermining human, national, and international security as well as intellectual property rights, and are often facilitated by an unaware and sometimes complicit financial community.
Copyright (c) 2026 Louise Shelley, Layla Hashemi, Edward Huang (Author) https://creativecommons.org/licenses/by-nc/4.0
The Evolution of Corruption and Crimes at Kapitan Andreevo Border Checkpoint: The Impact of EU Accession
This paper aims to explore the evolutionary mechanisms of corruption and criminal modus operandi at land border spaces against the accession to the European Union (EU) and subsequent changes in regulations and control capacity. Such changes can have a significant impact on corruption risks and criminal strategies, and this paper will attempt to understand how and why. The analysis focused on a specific case study: Bulgaria and the Kapitan Andreevo border checkpoint (BCP). There are many reasons to justify this choice. Firstly, it is a vital connection between Bulgaria and Turkey, and between EU and non-EU regions. Despite its importance, corruption risks are present for public officials, citizens and businesses in this area. This provides an opportunity to gain insight into the mechanisms of corruption and criminal behaviors, as well as how they evolve. Bulgaria's accession to the European Union introduced a shift in the regulatory environment and the quality of controls at this border checkpoint. This marked not only Bulgaria's inclusion in the EU's legal order, but also a transformation in how the country's border infrastructure operated.
Copyright (c) 2026 Jacopo Costa, Claudia Baez Camargo, Noemi Jäger, Saba Kassa (Author) https://creativecommons.org/licenses/by-nc/4.0
Forward to the Past: Sanctions and Strategic Trade Control in the Age of Algorithms, Semiconductors and Artificial Intelligence
This paper analyzes how software and artificial intelligence enhancements, applied throughout the lifecycle of advanced and off-the-shelf semiconductors, enable performance elasticity—allowing standard hardware to achieve enhanced or restricted capabilities, including the development of weaponized variants. We examine how the potential for weaponizing hardware-software synergies is challenging traditional strategic trade controls and arms embargoes. In the Wassenaar Arrangement, the leading nonproliferation regime for conventional arms and dual use technologies, Russia’s obstruction has frustrated the work on necessary controls. We are also discussing how these disruptions and technological advances are exploited by adversarial actors for the illegal transfer of semiconductors to the embargoed Iran, North Korea and Russia. Our research indicates that these illegal transfers are not stopped with the recent shift by the US and EU towards "Know-Your-Product" (KYP) lifecycle governance. Their technical definitions still overlook and underregulate the versatility of the software/AI’s performance elasticity and consequently, their compliance guidance is not proactive.
Copyright (c) 2026 Enrico Carisch, Saurabh D. Chowdhury, Durra Sahtout, Sune Danielsson (Author) https://creativecommons.org/licenses/by-nc/4.0
Editorial: Inaugural Issue of the Journal of Illicit Trade, Financial Crime, and Compliance (JITFCC)
It is a privilege to introduce the inaugural issue of the Journal of Illicit Trade, Financial Crime, and Compliance (JITFCC). The creation of this journal reflects an urgent global need: to better understand, map, and respond to the accelerating complexity of illicit markets, the proliferation of financial crime, and the widening compliance challenges that confront governments, international organizations, regulatory bodies, private-sector actors, and civil society. Illicit trade today presents itself as a multidimensional phenomenon that transcends borders, jurisdictions, regulatory frameworks, and technological divides. Whether we are examining the illicit flow of goods, the circumvention of sanctions regimes, the exploitation of financial infrastructures, or the governance failures that motivate or enable criminal activity, it is clear that these issues cannot be studied in isolation. They unfold across interconnected networks of commerce, politics, finance, and technology. For this reason, JITFCC is conceived as a deliberately interdisciplinary platform — one that welcomes expertise from criminology, law, economics, political science, international relations, finance, public administration, data science, and operational practice.
State-Corporate Crime, Systemic Risk, and Governance Failures in Mass Transportation: Insights from the Tempi Train Tragedy
This paper analyzes the Tempi railway tragedy of 28 February 2023 as a case of state-corporate crime and institutional corruption rather than a mere accident, focusing on the systemic endangerment of Greece’s mass transportation system. Drawing on qualitative content analysis of official documents and media records, 76 semi-structured interviews, and ongoing participant observation, the study reconstructs how safety-critical investments and controls were undermined by corrupt practices, regulatory neglect, and austerity-driven privatization. The analysis shows how criminogenic asymmetries, dysnomie, and the normalization of deviance allowed unlawful and “lawful but awful” policies to hollow out the railways’ safety function while serving mutually reinforcing state and corporate interests. These governance failures obscured systemic risk, facilitated the misrepresentation of violations as “human error,” and weakened transparency, accountability, and effective compliance in the rail sector. By situating Tempi within a comparative framework of state-corporate crimes and transport disasters, the paper highlights the blurred boundaries between financial crime, institutional corruption, and regulatory failure in critical infrastructure. It concludes with policy and compliance recommendations aimed at strengthening structural accountability, restoring institutional integrity, and reducing systemic risk in mass transportation governance.
Regulatory Neglect and Compliance Failures
Advisory Misconduct in Mutual Funds: Investor Reactions, Capital Flows, and Governance Responses
We evaluate the investor flows and company responses following mutual fund advisory misconduct from 2000 to 2015. An average 31.25% reduction in monthly fund flows occurs one year after misconduct, and the effect increases with investor monitoring. Additional analysis shows that sentiment-driven flows and disclosure-related misconduct mainly drive the negative effect. In response, mutual funds reduce contractual incentives, impose investment restrictions, increase liquid assets, or even replace malfeasant advisors. These measures alleviate the adverse effects of misconduct. Overall, our study highlights the impact of misconduct on investor flows and on the development of responsive policies in the mutual fund industry. JEL Classification: G02; G23; G28.
Eurojust's Resource Paradox: Mandate-Resource Misalignment in Digital Judicial Cooperation
The Eurojust Single Programming Document (SPD) 2026–2028 articulates a forward-leaning vision for the agency as a central, digital, and globally connected hub for judicial cooperation. It simultaneously reveals a widening gap between an expanding mandate and constrained resources [1]. Drawing on the SPD's workload projections, budgetary trajectory, and programmatic priorities, this article argues that Eurojust's strategy is appropriately diagnostic but operationally reactive, primarily because it is tethered to demand-driven caseloads and capped by the current Multi-Annual Financial Framework (MFF). The result is a "resource paradox": new tasks without commensurate funding, a ceiling on efficiency gains, and negative priorities that directly affect complex case support, cybersecurity posture, external cooperation, and the integrity of core digital initiatives. The article examines the risks embedded in Eurojust's digitalization program (notably CMS integration, JUDEX, and interoperability) and in expanded third-country cooperation, and proposes actionable reforms: (i) treat the SPD as an investment-grade business case; (ii) establish a realistic resource baseline in the forthcoming Eurojust Regulation revision; (iii) fund cybersecurity to the level of systemic risk; and (iv) embed robust safeguards for data protection, fundamental rights, and accountability across interoperable systems and external partnerships.
Copyright (c) 2025 Journal of Illicit Trade, Financial Crime, and Compliance
Difficulties Encountered by Small Stockholders in Russia: Lack of Adequate Information
This comment highlights the challenges faced by small investors and taxpayers in Russia, including official decisions that contradict existing legislation, misquotation of legal codes by civil servants in formal correspondence, backdating of official letters, embezzlement of registered mail, and excessive bureaucratic obstacles even in simple transactions.
Strengthening AML/CFT Cooperation for Cryptoassets in Latin America: Comparative Analysis of Chile, Argentina, and Peru (2020–2025)
The expansion of cryptoasset usage in Chile, Argentina and Peru between 2020–2025 has driven regulatory reforms aligned with FATF recommendations, yet with uneven effects on anti-money laundering enforcement and cross-border financial investigations. Based on documentary and comparative analysis, this study identifies three critical gaps that limit cooperative effectiveness in the region: non-equivalent legal definitions for virtual assets and service providers (VASP), partial implementation of the Travel Rule and persistent challenges in generating digital evidence that meets interoperable admissibility standards. These gaps reduce transactional traceability and the reliability of Suspicious Transaction Reports, while enabling high-risk practices such as illicit use of stablecoins, mixers and low-visibility cross-border crypto transfers. The article argues that the formal adoption of international standards has progressed faster than operational capacity within AML/CFT systems, creating conditions for regulatory arbitrage and crypto-enabled financial crime. A phased strengthening agenda is proposed, focusing on minimum conceptual harmonization, improved evidentiary interoperability, and the development of technical capacities for supervision, VASP compliance and digital legal cooperation among financial intelligence units, market supervisors and central authorities.
Leveraging the Lanham Act for Anti-Counterfeiting: A Case Study of Gilead Sciences’ Successful Civil-to-Criminal Enforcement Strategy in the U.S. Pharmaceutical Market
Over the past five years, Gilead Sciences has used civil enforcement of the Lanham Act, which governs United States trademark law, to stop counterfeiters slipping fake and adulterated HIV medicines into the legitimate drug supply chain. Subsequently, Gilead referred evidence gathered during civil litigation to criminal investigators. This approach led to the fast dismantling of a counterfeit drug operation, effective civil penalties, and the prosecution of bad actors engaging in the distribution of adulterated medicine, forgery, fraud and money laundering. The effective use of Lanham Act civil actions to support criminal prosecutions creates a civil-to-criminal pipeline of counterfeit enforcement. This is a novel model that should be replicated by other healthcare industries in the U.S. and in other countries that have legal frameworks to enable it. By analyzing Gilead’s efforts in this arena, we show these acts have protected patient safety. We believe other pharmaceutical manufacturers have a public health imperative to implement it.
Intellectual property in pharmaceuticals
Absence of Period of Limitation in India’s Prevention of Money Laundering Act, 2002: Analysing Its Impact on Legal Certainty and Fundamental Rights
Under the Prevention of Money Laundering Act, 2002 (PMLA), there is no statutory limitation period for initiating an investigation, attachment of property, or filing of prosecution complaints under Sections 3, 5, or 8, even though money laundering is considered a “continuing offence”. Critics suggest that it leads to violation of fundamental rights enshrined in the Constitution. Absence of time bar, prolonged pendency of cases and enhanced power to the Enforcement Directorate (“ED”) are some of the major issues surrounding this legal framework. The researchers have used a Doctrinal approach to analyse this issue, relying on secondary sources. The researchers, through this article, analyse the evolution and judicial interpretation of the “continuing offence” as per Section 3 PMLA, discuss the consequences of the absence of temporal bounds on pending cases, conviction rates, pre-trial detention through ED Annual Reports (2005–2025). The researchers have tried to study global models and propose suggestions that are workable.
Prevention of Money Laundering Act (PMLA)
Have Financial Sanctions Lost Their Bite Due to Emerging Alternative Financial Practices in Global Trade?
The U.S. dollar is often considered the decisive chokepoint in international financial and related sanctions. Why? Because sanction or embargo violations require enabling financial payments – assumed to be in most cases U.S. dollars – and therefore must pass through U.S.-controlled dollar clearing systems. Inevitably, these payments will be visible to U.S. enforcement authorities and therefore subject to intervention and seizures. Consequently, any transfers of restricted commodities, weapons of mass destruction (WMD) technologies, conventional weapons, other military goods, or other sanctioned activity have long been believed to be discoverable by their U.S. dollar payments. The reality, however, tells a different story. For decades, Chinese and Russian arms have flowed steadily to embargoed destinations such as Sudan, Central African Republic, Mali, Yemen, and others. China, Russia, and their proxies have also served as secretive transshipment points for technologies, commodities, and manufactured goods to be exported to Sudan, North Korea, Iran, and other countries subject to international sanctions and embargoes. The presence of billions of U.S. dollars’ worth of restricted military goods in embargoed countries and regions demonstrate that the U.S. dollar chokeholds are too often illusory. Motivated by mostly legitimate but political objectives, a dramatic increase of bilateral currency swap agreements is the most powerful de-dollarization mechanism in international trade and lending. But they stake out the environment for the effective concealment of illicit payments of embargoed goods and services, and amplify sanctions-defying practices like Russia’s barter agreements, China’s lender-controlled commodity revenue accounts, and international criminal network’ moneylaundering with cryptocurrency or theft of virtual assets. These trends are substantially enabled by China’s rise as the world’s largest creditor [1], especially to distressed economies, [2] and Russia’s reduction of its reliance on the U.S. dollar by developing alternate payment platforms with China [3]. These factors significantly undermine the effectiveness of U.S. dollar clearing systems and consequently defeat financial sanctions’ coercive purpose. Drawing on the author’s extensive experience as a financial sanction investigator and ongoing observations of China’s and Russia’s financial practices in sanctioned jurisdictions – supported by recent research from academic and government institutions – this article issues an urgent call for policymakers to strengthen the effectiveness of their coercive conflict-resolution policies.
Rebooting International Criminal Justice Cooperation Against Illicit Trade and Financial Crime
With the wavering commitment of many states to the rule of law and their diminishing support for multilateral institutions, rule-based international cooperation against illicit trade and financial crime has become more transactional and problematic. Incentives for engaging in long-term, multilateral, rule-based formal agreements are rapidly vanishing. Yet, international cooperation remains essential to any effective action against illicit trade and financial crime. A fresh approach to international criminal justice cooperation is required, but at present the leadership needed for such a transformation is missing. Despite ongoing work at the global level to develop new cooperation treaties – for example with respect to cybercrime or crime against the environment – states seem to have lost faith in the value of working together at that level. Some states are attempting to redefine the rules that will guide them, as well as how and with whom they will cooperate in the future. If illicit trade and transnational crime are thought to be out of control and democracies seen as incapable of countering those threats, what are the prospects for a different international cooperation architecture? Global cooperation against transnational crime and illicit trade can prevail over global dysfunction if states and their leaders are willing to change course. That new course of action, however, has yet to be traced.
Challenges of Artificial Intelligence and Money Laundering in The Application of International Criminal Law
On May 31, 2024, the European Union approved a new anti-money laundering directive, 1640, and two other regulations, 1620, which establishes the European Anti-Money Laundering Authority, and 1624, which provides directly applicable rules on preventing money laundering by the financial system. The European Union also adopted Regulation 1689 on artificial intelligence (AI) on June 13, 2024. The three regulations and the Directive represent a huge challenge for the application of international criminal law due to the emergence of AI, with a dizzying and frightening development. Methodology This paper studies the challenges of artificial intelligence and money laundering in the application of international criminal law using the abstract logical method specific to criminal law, combined with the use of the explanatory causal method in criminological aspects.
Copyright (c) 2026 Miguel Abel Souto (Author) https://creativecommons.org/licenses/by-nc/4.0