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Effectiveness of Policies and Decision Making in International Market

University: ITCM College London

  • Unit No: 4
  • Level: Undergraduate/College
  • Pages: 12 / Words 3035
  • Paper Type: Assignment
  • Course Code: D/508/0491
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International banking laws are enacted by the UK government to protect and control foreign banking activities with regard to domestic proceedings and changes. Further, it is with the motive of protecting consumer’s interests against fluctuating interest rates on bank loans. The report will evaluate the reason behind international regulations which are enacted to control activities of bank in foreign markets. In addition, it will outline the use of money laundering duties and loan structures which are used in financial sector. Thus, it will identify effectiveness of policies and decision making which assist in facilitating loan and financial activities in international market.

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1.1 Rationale behind regulations which enforced to control banking activities in international market

Rationale behind imposing laws is to control banking activities and money transfers in international market. It assists in protecting interests of bank against crime and disguised activities (Klioueva, Rademaker, and Huitinga, 2018). There are enormous activities that are being carried out within banking and to have proper balance between all functions and operations, there are various factors such as different regulations that are essential to have a proper control over these.

The basic forte of enforcing regulations for managing banking activities and operations in international market is that it provides stability along with maintaining the safety concerns (Cranston, 2018). It is important because the capital requirements of these regulations can help the banking sectors to maintain competitiveness in the international market (Manjula, and Shanmugan, 2016).

There are various schemes associated with these regulations that have been implemented in order to avoid bank runs. Therefore, regulations are considered as one of the important measures needed to be implemented properly so that the functions and operations of international market can seem easy and possible enough to control and manage all factors and activities of the bank.

Capital Adequacy Ratio (CAR) also plays an important feature of the regulations because there can be various number of depositors dealing with different amounts so it helps in providing safety and security to these people for having trust of their money to be safe (Agarwal, Lucca and Trebbi, 2014). The regulations have been subjected with accordance with the government and may involve different factors such as some needs, restricting features, guidelines etc. The forte of these regulations  creates a sort of transparency within all the functions so that no sort of fraud can take place.

Regulations play a very major and important role to ensure that all processes and activities within banking sector in international markets may perform effectively and successfully, whether it is about the public or social requirements of people, or implementation of proper regulations can help the banking industry to maintain a balance between different functions.

1.2 Scope of regulations

The source of governing International-banking laws is Financial Services and Markets Act 2000 (FSMA). The three main regulators of UK banking operations are, Prudential Regulation Authority (PRA), Bank of England and Financial conduct authority. The scope of foreign banking regulations is on prudential matters, conduct of business and authorisation. The regulations are enforced according to international banking activities like, market abuse regulations that are (EU) 596/2014 on market abuse (Banking regulation in the UK: overview, 2017). This law helps the banking institution in protecting finance activities from new market operations, platforms and changing dynamics of financial system. Further, there is Short Selling Regulation 236/2012 which helps in protecting short selling international banking activities and credit default swaps.

The scope of these laws and regulations is wide enough because in the absence of proper legislations, various types of discrepancies may occur within different activities of the banking. Also, in situations where laws and regulations involves all the standard factors and issues associated. Therefore, the involvement of efficient policies, frameworks and procedures can help in maintaining a balance because banking sector is considered as one of the major factors for maintaining economy and there are various types of different carrier opportunities available from the same (Besley, 2015). Therefore, it can be considered that it is essential to focus and follow each single regulation to help in managing the economic status along with other necessities of people.

Considering all the elements of regulations and laws is one of the essential features to be considered within banking sector because it helps in an overall managed and balanced set of operations (Paulet, Parnaudeau and Relano, 2015).

Apart from this, there were EU banking regulations which were amended to protect banking activities across foreign boundaries such as Markets in Financial Instruments Regulation, 2016/1011 Bench marking regulations which is used by institution to measure performance of invested funds and financial contract made in foreign markets. Hence, from the discussion, it can be outlined that international Banking Law acts as a support system for institutions in promoting and conducting banking activities across international boundaries.

1.3 Significance of laws which lay impact on banking activities in international market

Government regulations on internal banking activities which help in overcoming various challenges of industry which can be disastrous for exchange business functions such as money lending, loans grants etc. The regulations are the key points which help in dealing with payment challenges, which arise due to international payments via non-banks firm such as retail business.

For example, the UK governmental regulations for banking are protecting finance activities of a bank firm which access money in international market but are facing threat from non-bank firms like Money-gram and Western union.

Further, changing consumer preferences over international banking services is another challenge that can be overcome with the help of regulation (Banking regulation in the UK: overview, 2017). Like, with emerging technologies buyers have diverged their payment activities to contactless cards, online payments, mobile payments.

Market challenges such as emergence of euro markets, capital based financing are becoming threat firm to accessing capital in international market. However, legislations by the government are being support to improving markets' situation by promoting high quality security in international finance services.

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Further, as per enforcement of international banking regulation, the services of banks are turning more significant. A foreign banking operation develops competition because of which it becomes difficult for the banks to re price their loans and to gain attentiveness of public across international boundaries (Klioueva, Rademaker and Huitinga, 2018). For instance, European security markets are improving risk sharing among banks where small banks are financing loans and large banking institutions are providing security by marketing. However, Capital market union is also developing convergence in areas of insolvency law and also developing markets which are distressed by debt due to crisis. Thus, CMU will help banks to work through non- performing loans quickly for managing future debts and shocks.

Regulatory challenges which is related to dynamic finance trends interrupts sustainability of business models and operations. However, implementing regulations assist in effective management of change in finance services without turbulence. Thus, in accordance to discussion, it can be stated that international banking legislation protects banking institution from fraud, misrepresentation and fluctuation of capital markets.


2.1 Rationale behind use of money laundering duties which are imposed on banks

Money laundering is the term which defies the process of criminal disguise from the movement of cash from its source. It helps in protecting source because it can be misrepresented and can be disguised (Proctor, 2010). There are various acts which aim at protecting misrepresentation of finance activities because these are the only activities which become threat to foreign banking activities.

Further, various regulations are amended according to dynamic trends and increasing crime activities such as The Proceeds of Crime Act 2002 that was amended by Serious Crime Act 2015 and Crime and Courts Act 2013. This act was enforced by association against stripping criminals who focused on acquiring gains through illegal proceedings such as drug and human trafficking.  The rationale behind implementation of Money Laundering Act is to prevent crime offense, taxation of profits from crime, and unethical activities.

Money laundering is done for luxury assets, financial investment and industrial investment.  The individual seeks for loan from banking institution with the helps of false documents or by forgery like, payment to X or company by using invoice of Y company, wire transferring and general by bank transfers.  Theses are the common tactics with the helps of money laundering occurs.

Further, to prevent money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, act was enforced to protect banking activities from terrorist financing which comprise control over prepaid cards and e money transfers (Schneider, 2010). The motive behind implementing Money Laundering Act is to establish safe and secure system for online baking traction.

With the emergence of technological advancement and improved business communication and safety in banking activities which has been prevailing with advancement. However, these acts help in managing safety of online money exchange and investment across international boundaries (Rui, 2015). Moreover, The Money Laundering Regulations 2001 prevents institutions from transfer of funds, terrorism financing, crime activities etc.

On the other hand, there is Anti-Money Laundering Act which aims at protecting money transfers that is flow of money by banking institution across foreign boundaries. There are numerous people who generate revenue from unethical practices where the focus of an individual is on making money (Helgesson and Mörth, 2016). However, with emergence of online transaction and payment system, it has become easier for people to manage money laundering in ethical ways.

Thus, implication of laundering act helps in preventing hazardous banking activities and unethical ways of money generation. Hence, as per the discussion over money laundering and motive, it can be stated that the acts are enforced by the government to prevent unethical activities for regulating finance across international boundaries. Are you looking for an expert to write my assignment for me We are able to help out thousands of students with assignment help experts?

2.2 Effectiveness of money laundering duties which are imposed on banks

Money laundering is and unethical process of revenue generation, where the focus of criminals is to make money from crime activities. For which the individuals focuses on trading ad there it included banking activities. However, the regulations imposed on banking institution for money laundering is to prevent unethical money flow and transfers in other countries. Further, it helps in maintaining adequacy of set of procedures and security of online transaction.

Generally money laundering is done for luxury assets, financial investment and industrial investment, which is protected by Money Laundering Regulations 2001, the act is focused on  preventing flow of money via banking and online transactions. It aims at verifying documents and borrowing and exchange details before funding transfer (Boles, 2017). Verification of money transfer is the process which is helping UK government in promoting e money concept without risk of unethical money laundering activities.

Effectiveness of money laundering duties on banking services across international boundaries is reflected by easily online transfers and borrowing from banks. Moreover, with the helps of internation banking services it has become easy of economy for analysing and tracking money laundering activities because of integrating dirty money into one financial system (Schneider, 2010).

Thus, the effectiveness of regulation are reflected in safe money transfers across international boundaries with the help of easy exchange system. Further, it has established safe model of taking grants from international banks which has become made easy aces and flow of money in public.


3.1 Main forms of loan structures which are used in financial sector

There are different types of loans and borrowings which are released by banks for specific purpose with complete verification of documents in order to prevent money laundering (Bank finance, 2017). There are various types of bank finances which are divided in three categories that is long termed, medium term and short term's which are described below:

Short term finance

Overdrafts: It is the conjunction with business bank of person which is flexible because it is a source of working capital and is financed by banks for short term needs (Paulet, Parnaudeau and Relano, 2015).

Bridging finance: This is the financial help enabled by business bank to maintain flow of cash for awaiting funds such as drawn down of commercial mortgages, grant cheques, agreements of loans etc.

Medium term finance

Term loans: These are the loans which are released by bank to business person for specific purpose. The loans are variable on both types of interest rate that is variable and fixed as per convenient for borrower (Gabbi and et.al., 2015). The terms loan is considered as mature after period of seven and more years. It is basically released on fixed assets such as, machinery, gadgets etc.

Asset finance and leading: It is buying of asset on leasing finance where the banks pays for purchase of equipment with the motive of regular exchange of payment. This helps in maintaining flow of cash and flexibility in equipment purchase of people (Bank finance, 2017).

Long term finance

Commercial mortgages: This finance is provided by firm to people for buying of business premises. However, there are different types of mortgages that is pension, repayment, commercial endowments (Bai, Krishnamurthy and Weymuller, 2018).

Fixed asset loans: This is the type of loan which can be turned into cash and is generally on property, machinery, plans, etc. This offers convenient stricture of loans from banks because it is based on fixed interest rates which is charged as per current economic conditions.

3.2 Effectiveness of decision making and policy which facilitate finance and loan activities

Decision making of banks on loans grants is the only effectiveness which regulated adequacy of finance sector. It is important for the banking institution to be focused on proper verification of individual background who is seeking for grants and his or her purpose. Further, banking supervisors aims at drawing at the details about individuals records as per accounting policies and practices (Santiago, 2018). This assist in gaining satisfaction over the documentation of person who has applied for grant.

Decision making over loans and financial transfers by banking institution is the crucial functions which can assist in controlling frauds on money exchange and money laundering across international boundaries. In addition, credit risk is the most common issue of finance services because there are situation where the individuals are unable to repay. In theses situation bank targets asset of people but there are cases where the individual are unable to collect sufficient amount (Klioueva, Rademaker, and Huitinga, 2018). However, there are conditions which needs to considered and verified by banking institution when accepting proposal for loans, mortgages etc.


The report summarized about international banking law which helps in safe and easy money exchange, borrowing and lending. However, from the discussion it has been identified that scope of foreign banking regulations is on prudential matters, conduct of business and authorisation. Further, it has been discovered about money laundering process where the public focuses on taking grants from international bank for unethical activities in order to make their illegal money legal for economy. It outlined regulation which helps in preventing safe transfer, exchange and borrowings form banking institution. Thus, it concluded by analysing form of loan structure which are used in financial sector such as asset finance, term loans, commercial mortgages.


  • Agarwal, S., Lucca, D. and Trebbi, F., 2014. Inconsistent regulators: Evidence from banking. The Quarterly Journal of Economics. 129(2). pp.889-938.
  • Bai, J., Krishnamurthy, A. and Weymuller, C.H., 2018. Measuring liquidity mismatch in the banking sector. The Journal of Finance, 73(1), pp.51-93.
  • Besley, T., 2015. Law, regulation, and the business climate: The nature and influence of the World Bank Doing Business project. Journal of Economic Perspectives. 29(3). pp.99-120.
  • Boles, J.R., 2017. Anti-Money Laundering Initiatives for the South African Real Estate Market. Journal of Comparative Urban Law and Policy. 1(1). p.14.
  • Cranston, R., 2018. Principles of banking law. Oxford university press.
  • Gabbi, G. and et.al., 2015. Financial regulations and bank credit to the real economy. Journal of Economic Dynamics and Control. 50. pp.117-143.
  • Helgesson, K.S. and Mörth, U., 2016. Involuntary Public Policy‐making by For‐Profit Professionals: European Lawyers on Anti‐Money Laundering and Terrorism Financing. JCMS: Journal of Common Market Studies. 54(5). pp.1216-1232.
  • Klioueva, N.M., Rademaker, M.C. and Huitinga, I., 2018. Design of a European code of conduct for brain banking. Handbook of clinical neurology. 150. pp.51-81.
  • Manjula, R.P. and Shanmugan, D.R., 2016. A Study on Customer Preference Towards Cyber Crime With Banking Industry. International Journal of Multidisciplinary Research and Modern Education. 2. pp.597-603.
  • Paulet, E., Parnaudeau, M. and Relano, F., 2015. Banking with ethics: Strategic moves and structural changes of the banking industry in the aftermath of the subprime mortgage crisis. Journal of business ethics. 131(1). pp.199-207.
  • Proctor, C., 2010. The law and practice of international banking. Oxford University Press.  (Vol. 313).
  • Rui, H.O.U., 2015. A Brief Analysis of the Money Laundering Risks Existing in the Emerging Business of Commercial Bank. Journal of Jilin Financial Research. 5. p.011.
  • Santiago, F., 2018. Banking Responsibility to Customers. European Research Studies Journal. 21(1). pp.321-330.
  • Schneider, F., 2010. Turnover of organized crime and money laundering: some preliminary empirical findings. Public choice. 144(3-4). pp.473-486.
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