Determining the level of bank connectivity for combating money laundering, terrorist financing and proliferation of weapons of mass destruction
The study aims at developing an approach to determining the bank connectivity level. This will contribute to implementing a risk-oriented approach to counteracting money laundering, terrorist financing and the proliferation of mass destruction weapons. The article proposes to assess the degree of ba...
| Main Authors: | , , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
LLC "CPC "Business Perspectives"
2019-11-01
|
| Series: | Banks and Bank Systems |
| Subjects: | |
| Online Access: | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/12718/BBS_2019_04_Vnukova.pdf |
| _version_ | 1818926519319265280 |
|---|---|
| author | Nataliya Vnukova Sergii Kavun Oleh Kolodiziev Svіtlana Achkasova Daria Hontar |
| author_facet | Nataliya Vnukova Sergii Kavun Oleh Kolodiziev Svіtlana Achkasova Daria Hontar |
| author_sort | Nataliya Vnukova |
| collection | DOAJ |
| description | The study aims at developing an approach to determining the bank connectivity level. This will contribute to implementing a risk-oriented approach to counteracting money laundering, terrorist financing and the proliferation of mass destruction weapons. The article proposes to assess the degree of bank connectivity and determine the impact of these circumstances on money laundering risk using banks from foreign banking groups, whose capital share in the Ukrainian banking system amounts to more than 40 percent. Using the resulting correlation dependencies, two-dimensional binary matrices were constructed, which became the basis for creating graphs of links between banks. The institutions under study are found to be predominantly connected in terms of their sets (varieties), since the average proportion of banks with close direct links is over half, and the non-connectivity coefficient for them is about 40%. Each surveyed bank, on average, has direct links with eight other banks and inverse links with four other banks. Considering banks as tops of the graph, one can assume that there is a hidden relationship between some banks. This approach allows calculating all existing relationships between banks to assess risk. Transforming the graph from non-oriented to oriented made it possible to identify and clearly demonstrate possible directions of links between the investigated financial institutions, which should be further verified to determine the risk of money laundering, terrorist financing, etc. |
| first_indexed | 2024-12-20T02:58:24Z |
| format | Article |
| id | doaj.art-fcef0c9c2a594b8f9dccb33a79159d0e |
| institution | Directory Open Access Journal |
| issn | 1816-7403 1991-7074 |
| language | English |
| last_indexed | 2024-12-20T02:58:24Z |
| publishDate | 2019-11-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Banks and Bank Systems |
| spelling | doaj.art-fcef0c9c2a594b8f9dccb33a79159d0e2022-12-21T19:55:51ZengLLC "CPC "Business Perspectives"Banks and Bank Systems1816-74031991-70742019-11-01144425410.21511/bbs.14(4).2019.0512718Determining the level of bank connectivity for combating money laundering, terrorist financing and proliferation of weapons of mass destructionNataliya Vnukova0Sergii Kavun1Oleh Kolodiziev2Svіtlana Achkasova3Daria Hontar4Doctor of Economics, Professor, Head of the Department of Financial Services Management, Simon Kuznets Kharkiv National University of EconomicsDoctor of Economics, Professor, Rector of Kharkiv University of Technology “STEP”Doctor of Economics, Professor, Head of the Department of Banking, Simon Kuznets Kharkiv National University of EconomicsPh.D. in Economics, Associate Professor of the Department of Financial Services Management, Simon Kuznets Kharkiv National University of EconomicsPh.D. in Economics, Lecturer of the Department of Banking, Simon Kuznets Kharkiv National University of EconomicsThe study aims at developing an approach to determining the bank connectivity level. This will contribute to implementing a risk-oriented approach to counteracting money laundering, terrorist financing and the proliferation of mass destruction weapons. The article proposes to assess the degree of bank connectivity and determine the impact of these circumstances on money laundering risk using banks from foreign banking groups, whose capital share in the Ukrainian banking system amounts to more than 40 percent. Using the resulting correlation dependencies, two-dimensional binary matrices were constructed, which became the basis for creating graphs of links between banks. The institutions under study are found to be predominantly connected in terms of their sets (varieties), since the average proportion of banks with close direct links is over half, and the non-connectivity coefficient for them is about 40%. Each surveyed bank, on average, has direct links with eight other banks and inverse links with four other banks. Considering banks as tops of the graph, one can assume that there is a hidden relationship between some banks. This approach allows calculating all existing relationships between banks to assess risk. Transforming the graph from non-oriented to oriented made it possible to identify and clearly demonstrate possible directions of links between the investigated financial institutions, which should be further verified to determine the risk of money laundering, terrorist financing, etc.https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/12718/BBS_2019_04_Vnukova.pdfbankconnectivitycounteracting money launderingFATF international standardsgraph theoryrisk-oriented approach |
| spellingShingle | Nataliya Vnukova Sergii Kavun Oleh Kolodiziev Svіtlana Achkasova Daria Hontar Determining the level of bank connectivity for combating money laundering, terrorist financing and proliferation of weapons of mass destruction Banks and Bank Systems bank connectivity counteracting money laundering FATF international standards graph theory risk-oriented approach |
| title | Determining the level of bank connectivity for combating money laundering, terrorist financing and proliferation of weapons of mass destruction |
| title_full | Determining the level of bank connectivity for combating money laundering, terrorist financing and proliferation of weapons of mass destruction |
| title_fullStr | Determining the level of bank connectivity for combating money laundering, terrorist financing and proliferation of weapons of mass destruction |
| title_full_unstemmed | Determining the level of bank connectivity for combating money laundering, terrorist financing and proliferation of weapons of mass destruction |
| title_short | Determining the level of bank connectivity for combating money laundering, terrorist financing and proliferation of weapons of mass destruction |
| title_sort | determining the level of bank connectivity for combating money laundering terrorist financing and proliferation of weapons of mass destruction |
| topic | bank connectivity counteracting money laundering FATF international standards graph theory risk-oriented approach |
| url | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/12718/BBS_2019_04_Vnukova.pdf |
| work_keys_str_mv | AT nataliyavnukova determiningthelevelofbankconnectivityforcombatingmoneylaunderingterroristfinancingandproliferationofweaponsofmassdestruction AT sergiikavun determiningthelevelofbankconnectivityforcombatingmoneylaunderingterroristfinancingandproliferationofweaponsofmassdestruction AT olehkolodiziev determiningthelevelofbankconnectivityforcombatingmoneylaunderingterroristfinancingandproliferationofweaponsofmassdestruction AT svítlanaachkasova determiningthelevelofbankconnectivityforcombatingmoneylaunderingterroristfinancingandproliferationofweaponsofmassdestruction AT dariahontar determiningthelevelofbankconnectivityforcombatingmoneylaunderingterroristfinancingandproliferationofweaponsofmassdestruction |