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.
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Tracking and returning stolen assets is a difficult task. Practitioners expected that the UN Convention against Corruption, UNCAC, would facilitate these processes but asset recovery is still a lengthy and difficult undertaking. Institutional obstacles, such as the often cited lack of political will, compound with legal barriers such as excessive bank secrecy and discrepancies in legal systems. For developing countries this means that money that should be put to development purposes remains out of reach. This World Bank publication brings an overview of the most common institutional, legal and operational obstacles as experienced by practitioners around the world
Politically Exposed Persons (PEPs) are at an advantage when it comes to using money laundering mechanisms to hide stolen funds. Not only they have access to intermediaries capable to advise them on how to do it but they also, in general, control institutions in their own country, which facilitates access to financial markets and allows them to block attempts to investigate stolen assets. This FATF report analyses the most common methods employed by PEPs to launder proceeds of corruption and reviews the weaknesses in the anti-money laundering system that need to be addressed in order to reinforce it against abuse.