James Basham

Kurzexposé zum Promotionsvorhaben von James Basham

Affluent, consenting, and protected consumers: A case study on the promotion of elder financial exploitation as a checkbox suspicious activity

Anti-money laundering regulations have had a remarkable diffusion throughout the globe. In short, they are a system of information reporting from financial institutions to a state agency based on the recognition of suspicious activity by firms. Suspicious activity reports (SARs) have become synonymous with anti-money laundering efforts. In the United States the receiving state agency is the Financial Crimes Enforcement Network (FinCEN), and in Germany Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin).

Financial institutions, mostly banks, play the key actors in the system and also bear much of the financial cost for implementation, and for failure. There has been no lack of missteps by financial institutions in complying with these regulations as demonstrated by the numerous penalties over the last two decades. There is also substantial scepticism within the academic literature whether the anti-money laundering and counter-terrorist finance regime as a whole can be considered effective. Despite this contested track-record, the system of suspicious activity reporting has spread successfully.

Most studies of system diffusion have focused on the standard explanatory tools including emulation, competition, mimicry, and coercion. These analyses have focused on the national or supranational levels, or the role of intergovernmental organizations ‘spreading the gospel’ of anti-money laundering law (Pieth and Aiolfi, 2004: 12). Because nation states and international organizations are studied, it is often concluded that these actors gain the most. The critical literature on security and governmentality has also drawn this conclusion, with a particular focus on those excluded by the system, e.g., religious minorities, migrants (de Goede, 2012). There is no doubt from the literature that the security – or insecurity – of nation-states plays an important role in the diffusion of suspicious activity reporting.

The question remains, however, what social groups – if any – benefit from the system. The mainstream literature has concluded that banks cannot be the beneficiaries due to the financial costs and liability, and the critical literature has concluded that the population is worse-off as well. Is a coercive surveillance apparatus, costly to implement with contested effectiveness, the only outcome of the system; are there no social groups which actively consent, benefit and even encourage this diffusion?

It is clear how some activities become thought of as suspicious and become commonplace ‘suspicious activities.’ For instance, there is no explanation necessary for why terrorist financing became thought of as a type of suspicious activity after 11 September 2001. Suspicious activities like these have become part of the ‘common sense’ conception for regulators, financial institutions, and even the public at large. But the types of activities considered reportable has expanded considerably in the last twenty years. How does the expansion of what is considered suspicious lead to the spread of the system as a whole, especially in cases without any large triggering event?

The specialized literature has called for more qualitative studies on overall system effectiveness (Verhage, 2016) and there remains a gap in the literature on how additional activities ‘becomes suspicious’. In order to add to these two areas – effectiveness and diffusion – a mixed-method qualitative case-study will be undertaken on a type of suspicious activity not immediately identifiable as money laundering or terrorist financing: the typology of elder financial exploitation. How and why did this become an established ‘suspicious activity;’ does the advancement of the typology contribute to overall system diffusion; are there beneficiaries that have gone unnoticed which may shed light on effectiveness and maintenance of the established order; and finally, what can other social groups promoting their own projects learn regarding the use of established institutions.