Greetings to you.

Firstly, money laundering has different meanings in different jurisdictions. 

Second, I appreciate your thought of trying to understand money laundering and corporate governance. As far as my knowledge of review of literature goes I have not come across a specific topic like this.

In my opinion you can look at jurisdictions that identify "misuse of financial systems" as money laundering. 

Best

To my mind financial crime compliance (FCC) represents the link between corporate governance and anti-money laundering regimes. In the UK the FCA controls that companies have a sound FCC system in place to prevent ML.

If you examine the main methods employed in money laundering, few are dependent on corporations. Those that do use corporations typically use private corporations - where most popular corporate governance concerns are less relevant. The unwilling use of corporations for laundering (particularly banks) may reflect on internal governance structures (internal controls - including those pertaining to identity verification) and compliance with regulatory reporting requirements (such as transaction thresholds).

Money laundering through the use of front companies, shell companies and other company structures often use companies both domestic and foreign entities. The foreign entities are usually in jurisdictions with strong secrecy protections.

Dear Lyne,

By looking at the usual corporate governance mechanisms in a firm I am wondering whether they can grasp money laundering transgressions. For example, the board of directors will usually get very aggregated  reports from management on the firm's operations. Thus, the directors who are not executives at the same time will not be able to discover or to prevent any unlawful action on their own. Even the audit committee does not carry out any audit investigations on its own, but is rather a point of liaison for the external auditors.

However, the internal audit function can be helpful and thus the reporting line of the internal auditors is to be considered (they should report to the audit committee and not to the CFO, for example).

Also, as we know from numerous real life examples of corporate failure, before the bombshell is dropped often there is critical press coverage or academic comments on that very company which can be considered red flags. For example, if a financial institution enters a new local market that is known for money laundering, or if it engages with local regimes supposed to commit financial crimes, it is possible that these issues will be commented on by the press and by the academia. In our information era it is hardly possible for a director not to come across such coverage in the media.

Well, in your research paper you can try to explain how corporate governance arrangements can help knowledgeable directors to control management in order to prevent transgressions when the first red flags are raised.

Paul