Compliance risks for crowdfunding. A neglected aspect of money laundering, terrorist financing and fraud

Abstract

Purpose

This study aims to highlight the risks and threats posed by crowdfunding. It also looks at the new European Union regulation on crowdfunding, which is intended to give participants confidence that there will be specific minimum regulatory standards to protect parties against mis-selling issues affecting some platforms.

Design/methodology/approach

This paper is based upon a thorough literature review.

Findings

Crowdfunding is an essential alternative for financing commercial and non-commercial projects. Although it is a fast-growing digital financial tool, it can also be considered extremely risky. It can be an ideal platform for money laundering and can facilitate the financing of terrorism and fraud.

Originality/value

Crowdfunding is still in its infancy, so the literature has not yet sufficiently addressed the compliance risks of crowdfunding. As a result, there is a significant research gap. Thus, this study aims to analyse and propose suggestions to mitigate the risks that all crowdfunding stakeholders may face when deciding to participate in a crowdfunding activity or when they want to set one up.

Citation

Teichmann, F., Boticiu, S.R. and Sergi, B.S. (2024), "Compliance risks for crowdfunding. A neglected aspect of money laundering, terrorist financing and fraud", Journal of Financial Crime, Vol. 31 No. 3, pp. 575-582. https://doi.org/10.1108/JFC-05-2022-0116