International Drivers of Corruption
Some global mechanisms allow corruption to be a profitable crime. Find out how to deal with the negative impact this brings to developing countries.
Globalisation has been beneficial in many ways. However, the structures that facilitate legitimate businesses and international financial transactions are also used for illicit purposes: laundering proceeds of corruption, generating illicit flows out of development countries, paying bribes or evading taxes. These mechanisms create incentives for corrupt behavior in developing and developed countries and need solutions at local and international levels.
Explore this U4 Theme Page to find out more. Among other things:
- Understand the basics about these mechanisms’ impact upon corruption and development
- Find what the international community is doing to address the problem
- Learn how anti-money laundering rules can be used to counter corruption
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Featured
Author:
Financial Action Task Force
Release date:
February 2012
The FATF Recommendations
The Financial Action Task Force (FATF) is an intergovernmental body responsible for setting standards on anti-money laundering. Although not legally binding, FATF 40+9 recommendations are the de facto AML policy around 180 countries in the world. A 2-year process of revision of recommendations has resulted in a new set, published in February 2012. For those working with illicit financial flows out of developing countries, it is important to know FATF's recommendations to understand how rich governments dealing with abuse of their financial systems for the purpose of laundering corruption money, tax evasion and proceeds of other crimes.
Publications
Extractive sectors and illicit financial flows: What role for revenue governance initiatives?
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Latest Expert Answers
Foreign exchange controls and assets declarations for politicians and public officials
Evidence of illegal cross-border flows in South Asia and their impact on corruption
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Videos
Illicit financial flows and their impacts on development
Lecture by Raymond Baker from Global Financial Integrity (1 Oct 2010)
Recommended Reading
Author:
Financial Action Task Force
Release date:
February 2012
The FATF Recommendations
The Financial Action Task Force (FATF) is an intergovernmental body responsible for setting standards on anti-money laundering. Although not legally binding, FATF 40+9 recommendations are the de facto AML policy around 180 countries in the world. A 2-year process of revision of recommendations has resulted in a new set, published in February 2012. For those working with illicit financial flows out of developing countries, it is important to know FATF's recommendations to understand how rich governments dealing with abuse of their financial systems for the purpose of laundering corruption money, tax evasion and proceeds of other crimes.
Author:
Sharman, JC
Release date:
November 2011
The money laundry: Regulating criminal finance in the global economy
A generation ago not a single country had laws to counter money laundering; now, more countries have AML policies than have armed forces. In this book, Sharman investigates whether AML policy works and why it has spread so rapidly to so many states with little in common. He asserts that there are few benefits from such policies. Testing its effectiveness, Sharman had no difficulty in establishing untraceable shell companies in countries ranging from Somalia to the United States and Britain.
Glossary
Asset forfeiture
Asset recovery
Capital flight
Criminal forfeiture
Customer due diligence
Double tax agreements (Double Taxation Treaties)
EU Third Directive on Money Laundering
Enhanced due diligence
Financial Action Task Force (FATF)
Financial Intelligence Unit (FIU)
Forty Recommendations (Plus 9 Special Recommendations)
Illicit financial flows
Money laundering
Non-cooperative countries and territories (NCCTs)
Off-shore financial centre
Politically Exposed Persons (PEPs)
Shell bank
Suspicious Activity Reports (SARs)
Tax Information Exchange Agreements (TIEAs)
Tax havens (see secrecy jurisdictions)
Transfer mispricing
Underground banking
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