Implementation of State Anti-Corruption and Anti-Money Laundering Policy in the EU Member States by Michele Sciurba

Author:Michele Sciurba
Language: deu
Format: epub
Publisher: Edition Faust
Published: 2018-12-15T00:00:00+00:00

III.3 Ways to Optimize State AML Policy in the Ukraine

International crime in the early 21st century has adapted to national and international regulatory regimes, taking on new and more menacing dimensions. In Ukraine, there have been a number of factors that have contributed to transnational crime, including failures in government policy, economic pressures to participate in the shadow economy and the public tolerance for corruption and lack of civil awareness. Understanding the new face of international crime is one of the most pressing issues facing public administration, law enforcement and the judicial system [ 86 ]. A number of factors, including globalization, the rise of virtual financial markets and currencies and the development of offshore tax havens, have all contributed to current interest of scholars, public officials and government authorities in the topic. In the early 1980s, advanced nations were actively involved in combating money laundering. The high levels of illicit cash proceeds in Commonwealth of Independent States (CIS) countries was reflected in the rapid development of conversion markets, which grew faster than the system of state control over cash flows [ 87 ].

There are a number of incentives for participating in money laundering and the shadow economy. First, there are socio-psychological reasons, reflecting needs for social status or personal needs. Second, there are economic incentives, including high tax rates that encourage entrepreneurs to make under the table cash payments or pay “envelope wages”. The number and complexity of state licensing procedures can also encourage the development of an informal system of bribes and kickbacks to expedite the work of cumbersome state bureaucracies. There are three different models of money laundering. The two-phase model involves introducing “dirty” or illegal profits into the financial system and converting the property or funds into legitimate revenue. The three-phase model is the most common and involves three stages: placement, layering and integration [ 15, p. 15]. Placement is the introduction of funds from illegal profits into the legitimate financial system. After the funds have entered the financial system, they are layered, i.e. their source is disguised through a series of conversions or movements e.g. through transfers to various bank accounts or though fake transfers for payments for goods or services. Once funds have passed through the first two phases, the launderer integrates them or moves the funds back into the legitimate economy e.g. through investments in real estate, luxury assets or businesses. The four-phase model is depicted in Figure 1.

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