Financial Crime

Money laundering and terrorism financing are the two most common forms of financial crimes in developing countries. In recent years, worldwide efforts to combat these financial crimes have assumed heightened importance and gained greater visibility. These are global problems that not only threaten security, but also undermine economic prosperity by compromising the stability, transparency, and efficiency of financial systems (see below).

Contributing to the difficulties of fighting financial crimes are the rampant rate of corruption, the wide use of cash in business transactions, porous borders that cannot be regulated, a lack of enforcement, and a lack of institutional capacity. Many countries do not have either the financial crime controls in place or the legal capacity to address these issues.

Critical to curbing money laundering and the financing of terrorism, however, is a cooperative approach among many different international bodies. Several international organizations have established an international standard response against money laundering and terrorism financing. They are setting up a collaborative framework to conduct comprehensive assessments of countries’ compliance with the recommendations.

Governments have the responsibility to develop and implement a legal framework along with laws and regulations that will put them on a track toward compliance with international standards on financial crime preventions. These include laws on anti-money laundering and antiterrorism financing and a law that appoints and creates a financial intelligence unit (FIU). National banks, which are often the primary regulatory authority over the banking sector, need to build the capacity to investigate or monitor complex financial transactions. More important, court systems must also increase their capacity to investigate and prosecute complicated financial crimes.

Impact of Illicit Financial Flows

According to the World Bank:

• Financial institutions that accept illegal funds cannot rely on those funds as a stable deposit base and thus face the threat of liquidity and solvency.
• Local merchants and businesses may find that they cannot compete with companies organized to launder and conceal illicit funds because any such companies offer their services and goods at below-market rates and even at a loss.
• Money laundering may also distort some economic sectors and create instability in their markets.
• Currencies and interest rates can be distorted by money launderers’ investment practices, based as they are upon factors other than market returns.
• The loss of investor confidence that follows revelations of large-scale involvement in such activities can sharply diminish opportunities for growth.

The principles of Fraud and Financial Crime Investigation

This section covers legal statues, case law and the many accepted professional practices for the investigation of financial crime. It introduces techniques and strategies for the detection of fraud offences that will challenge delegates to critically analyse their current understanding of the subject.

The section offers a critical awareness of legal and ethical issues and developments.

Proceeds of Crime, Money Laundering and Financial Investigation

This section offers information on how criminal proceeds are obtained and disseminated both locally and internationally. It explores the development of international cooperation and recommendations adopted to fight money laundering and organised crime internationally.