Research Proposal Assignment: Impact Of Money Laundering In Sri Lanka

Question

Task:
Prepare a research proposal assignment exploring the impact of money laundering on the economy of Sri Lanka. Also, state the importance of prevention and detection systems of money laundering in Sri Lanka.

Answer

Abstract
The given research proposal assignment has been developed to hold approval for a dissertation which is to be based on the study developed to understand the impact of money laundering on the economy and the effectiveness of preventing as well as detecting the same in Sri Lanka. The research proposal significantly identified the aim of the research, the objectives and the research question that is to be met by the research study effectively. The research proposal further identified the research process that is to be taken into account to complete the research through gathering significant data. The proposal identified positivism philosophy and deductive approach is to be applied in the research while a brief literature review of the research topic has been demonstrated.

Introduction
Background
Money laundering is a criminal act that has been putting a significant effect on the overall aspects of managing the global economy. The existence of money laundering has been estimated to be ranging between US$800 billion to US$2 trillion annually and has further entitled as a serious issue that is to be managed in the global economy¹. Sri Lanka is one such country whose inclusion in the EU listing of deficient Anti-Money Laundering (AML) and Counter-terrorist financing (CTF) framework has led to the development of the company's vulnerability for being at the highest risks of money laundering. Thus, creating an undertaking of the current approaches and the strategies that are being followed in Sri Lanka has been demonstrated.

Aim
The aim of the proposed research is to identify the impact that Money Laundering has on the economy and further demonstrate the importance of prevention and detection systems of money laundering in Sri Lanka.

Objectives

• To identify impact of money laundering on the economy
• To discuss the existence of money laundering cases in Sri Lanka
• To discuss the solution present for money laundering
• To develop identification of the regulations and policies of money-laundering prevention and detection in Sri Lanka

Research questions
Primary question
What is the impact of money laundering on the economy and the prevention as well as detection strategies in Sri Lanka?

Secondary questions

• What is the impact on the economy due to money laundering?
• What are the possible causes and effects of money laundering in Sri Lanka?
• What strategies are taken into account to address money laundering in general?
• What is the impact of money-laundering prevention and detection solutions in Sri Lanka?

Significance of the study
The research study is significant as the research will be effective in developing an identification of the impact that is caused on the existence of money laundering in the Sri Lankan economy. The research will also hold a discussion on the cases of money laundering that has already occurred in Sri Lanka. The discussion will create an evaluative understanding on the impact imposed by such cases on its economy. The research is significant as the incidents of money laundering are increasing globally. There have been significant activities and laws reformed in Sri Lanka to prevent the occurrence as well as to detect the presence of such activities in the financial sector.

Research Methodology
Research philosophy and approach
The proposed research is to be developed by following the positivist research paradigm or philosophy. The use of positivism research philosophy has been considered in order to ensure that the factual data is obtained to meet the research objectives and the answer to the research questions developed². The use of positivism research philosophy will be effective in providing factual information and knowledge is to be obtained through observation being made on the data obtained in the research paper. It will allow the research results to be obtained to meet the research questions. The research approach that is to be taken into account in the given research is to be based on the application of deductive research approach, which will help in establishing the research process, by basing on the scientific investigation prospects³. The use of a deductive approach in the research will collectively allow demonstration of the views of the researchers who had worked in the identified topic previously. It will also help in demonstrating accountability to information presented to be following the pathway of positivism philosophy.

Research strategy
The proposed research will be using the research strategy that is to be based on a quantitative research strategy as well as a qualitative research strategy. The research will be holding accountability to the use of both numbers as well as theories in order to involve the prospect of research workings and meet the established objectives as well as develop answers to the research questions. The use of both the research typically identifies the prospects of mixed methods that helps in holding a comparison of the research findings and ensures that the data that has been collected is based on the overall parallel information that has been derived from both the resources simultaneously. It is important to note that the use of mixed methods indicates that the research design will be based on the evaluation as well as analytical research design that helps in allowing the development of research data through focus maintained on personal as well as theoretical experiences⁴. The proposed research will be using both forms of research data that addresses the development of an identification of the money laundering activities as well as different types of productive measures that have been taken into account in Sri Lanka to address the same.

Data collection strategy, sampling and sample size
The data collection strategy that is to be taken into account in the proposed research will be the application of both primary and secondary research methods. The application of primary research and secondary research will be focused on the gathering of mixed data. The primary research is to be carried out by means of survey questionnaires and interview questions to be asked to employees who are working as well as customers of the financial sector service⁵. In addition, the interview processes take into account managers who are working in the financial institutions present in Sri Lanka without holding much specificity of the selection of the companies. The sampling strategy that is to be taken into account and to proceed with research is based on non-probability sampling theories, through the application of the simple random sampling technique allowing equal opportunity to be provided to the participant selection for the primary data collection process. The survey is to be carried out on 130 participants and the interview is to be conducted on five managers. The secondary data is to be gathered from theories, articles, journals, company reports, financial case reports and law reports present in the Sri Lankan business dictionary for successful management of the secondary data collection⁶.

Data analysis strategy
The data analysis strategy that has been taken into account in the given research is based on statistical data analysis process for the primary data to be gathered demonstrating the presence of evaluation techniques and analytical administration of the research process. For the secondary data gathered there will be the application of thematic analysis to draw out the findings of the research.

Literature Review
Money Laundering and its impact on the economy
Money laundering is the criminal activity that involves processes that are completed by presenting unlawfully acquired proceeds that are being made to appear and have been developed as well as derived from important sources as needed. The prospect of holding money laundering has been based on the following three-stage processes that typically involve the transfer of cash obtained from the induction of illegal activities in the financial institutions. Then there is the presence of obliterating the trails and the other origins of the funds and further developing a final reintroduction of the money to the legitimate economy while creating the development of an impression of legitimacy⁷. The existence of such activity has been creating a major impact on society and has been intrinsically interviewed with the prospects of criminal activity. The existence of money laundering has a ritual impact on the overall existence of tax as well by reducing the revenue that is generated by the governmental and financial institutions from the tax collected. The existence of money laundering increases the existence of illegal businesses that hold an unfair competitive advantage over the ones that are operating legitimately. The existence of money laundering often leads to the reduction in the overall prospect of generating a profit and makes it a secondary aspect to be entertained in the business economy. Money laundering has been influencing the organisations based on removal of corruption in similar pattern through individualistic influences. They are further processing to become unproductive and the efficiency in the organisation to remove such activities from the society is further threatened and reduced⁸. Different studies have predicted that crime and corruption have seen a major rise in terms of money laundering activity, which is regarding the economic development of a country and reducing the growth rate of the economy strategically. It can be noted that the prospect of holding and managing the damage to the economy caused by money laundering is conducted with the availability of fewer resources. It further directs towards the development of fights to remove illegal activity on money transferring and strict imposing of AML as required. There would be difficulty in removing the rate of corruption and further needs to the requirement of gaining assistance from the international community in whichever mannerism the removal of corruption activities can be placed⁹.

Money laundering prevention and detection effectiveness in Sri Lanka
Media reports have critically suggested that activities based on illegal process and criminal determination such drug trafficking are the sources of money laundering in Sri Lanka. One such case of money laundering in Sri Lanka is the active involvement of government agency, Police Narcotic Bureau (PNB) in money laundering through drug trafficking. The PNB case indicated that the involvement of certain Police Narcotic Bureau (PNB) in the activities of drug dealing has been determined to the prospect for setting up the drug trafficking activities, which has been determined to be the major source of money laundering activities in Sri Lanka. Different stories have revealed different aspects of money laundering in the country to be present through the prospects of financial transactions and the luxury properties that are being owned by alleged criminals. It is also demonstrated through the existence of gaps in the legal framework, which is conducting the flow of money laundering activities in Sri Lanka¹⁰. This has further led to the country listing among the AML deficient countries.

The Financial Intelligence Unit (FIU) has been established under the Financial Transaction Reporting Act No.6 of 2006 Sri Lanka to ensure that it is critically administering the laws, which are applicable to money laundering as well as countering financial activities of terrorism. It can be noted that the agenda of FIU has been measuring the strategic alignment of Sri Lanka legal frameworks to be further assessed and introduced in the legal forums to meet the global standards of monitoring such money laundering based criminal activities¹¹. Thus, there has been the development of three acts, which have been demonstrated as follows.

Prevention of Money Laundering Act No.5 of 2006: The given act was accepted to ensure the prohibition of the money laundering activities in Sri Lanka and has been able to provide important instrument, which will be effective in combating as well as preventing the act of laundering. The act critically helps in the formation and engagement to be established directly or indirectly in the transactions activities that are based on the property movement, which has been developed or released from the use of unlawful activities. The act also helps criminalize the activity of possessing, importing to Sri Lanka and concealing or moving out of Sri Lanka of properties or high valued objects as well as illegal objects. The objects must have been derived and released in any unlawful activity to be sectioned under the identified law¹².

Financial Transaction Reporting Act No.6 of 2006: The given act has been developed within the Central Bank of Sri Lanka and has been acting as the National Agency to drive knowledge that is related to financial transactions, which are highly suspicious. The FIU has imposed guidelines to be followed by the financial institutions to maintain records of transactions as well as the other activities, which are related to the transaction processes.

Convention on the Suppression of Terrorists Financing Act, No.25 of 2005: The given act allows criminalising the activities that are based on imposing terrorist threats while supporting the money laundering process¹³.

References
Arandara A., "Regional And International Coorporation And Assets Recovery From Illicit Proceeds Of Crime." Unodc.Org, [website] 2021, https://www.unodc.org/documents/southasia/Presentations/Sri_Lanka_-_Presentation.pdf (accessed 4 June 2021).

Azungah T., "Qualitative Research: Deductive And Inductive Approaches To Data Analysis", Qualitative Research Journal, vol. 18, no. 4, 2018

Casrilanka, "6.1.Prevention Of Money Laundering Act" Casrilanka.Com, [website] 2021, https://www.casrilanka.com/casl/images/stories/EDBA/6.1.%20prevention%20of%20money%20laundering%20act.pdf (accessed 4 June 2021).

Daily FT, "Understanding The Risks Of Money Laundering In Sri Lanka | Daily FT" Ft.Lk, [website] 2019, https://www.ft.lk/Opinion-and-Issues/Understanding-the-risks-of-money-laundering-in-Sri-Lanka/14-674510 (accessed 4 June 2021).

Froehlich D., Van Waes S. and Schäfer H., "Linking Quantitative And Qualitative Network Approaches: A Review Of Mixed Methods Social Network Analysis In Education Research", Review of Research in Education, vol. 44, no. 1, 2020

Gunawardena N. and Maharoof S., "Understanding The Risks Of Money Laundering In Sri Lanka - The Lakshman Kadirgamar Institute" The Lakshman Kadirgamar Institute, [website] 2019, https://lki.lk/publication/money-laundering/ (accessed 4 June 2021).

Levchenko V. and others, "MONEY LAUNDERING RISK IN DEVELOPING AND TRANSITIVE ECONOMIES: ANALYSIS OF CYCLIC COMPONENT OF TIME SERIES", Business: Theory and Practice, vol. 20, no. 0, 2019

Ryan G., "Introduction To Positivism, Interpretivism And Critical Theory", Nurse Researcher, vol. 25, no. 4, 2018

Schoonenboom J. and Johnson R., "How To Construct A Mixed Methods Research Design", KZfSS Kölner Zeitschrift für Soziologie und Sozialpsychologie, vol. 69, no. 2, 2017

Thennakoon N., "The Gulf Between The Rule Of Law And Money Laundering In Sri Lanka", SSRN Electronic Journal, 2020