draining development.pdf - Khazar University

14 Draining DevelopmentTwo results emerge. First, the exposure of developing countries to taxhavens is on a par with, if not more severe than, that of high-incomeOECD countries. Thus, efforts to ensure that developing countries benefitfrom moves to require greater transparency in terms of internationaltax cooperation in particular may be of great value. Second, the differencesin developing-country exposure across different income groupsand regions are substantial, and recognition of this must lead to moredetailed and careful study and, over time, policy responses.OECD member countries and others, through the intergovernmentalFinancial Action Task Force, have invested considerable effort in theimplementation of a comprehensive set of laws and regulations againstmoney laundering in all nations; this is seen as a major tool to preventillicit outflows. 11 Michael Levi, a criminologist at Cardiff University, in“How Well Do Anti–Money Laundering Controls Work in DevelopingCountries?” (chapter 12), examines how well the AML system in developingcountries has worked for those countries. Levi finds evidencethat, for many countries, perhaps particularly those most in need ofeffective AML controls, the regime has minimal capacity to detect orpunish violations. Indeed, there are few instances in which domesticAML controls have generated cases against kleptocrats or their families.Levi examines five cases of grand corruption to show the extent to whichthe flows of funds could plausibly have been detected by a domesticsystem of rules and finds the results quite mixed. He concludes by notingthe many difficulties of creating an effective AML regime if the governmentis thoroughly corrupted, reinforcing a message in the Danieland Maton chapter.Though illicit flows are a relatively recent issue, components of theresponse to the flows have been prominent for some time. In particular,there has been growing emphasis since the 1990s on the recovery of stolenassets and the spread of AML controls around the globe.Tim Daniel and James Maton, London-based lawyers at EdwardsWildman UK who have represented governments in successful suitsagainst corrupt officials in a number of developing countries, describeand analyze experiences in attempting to recover stolen assets in “TheKleptocrat’s Portfolio Decision” (chapter 13). Though success is rarelycomplete in that not all the assets are recovered, Daniel and Maton findgrowing willingness on the part of British and Swiss courts to render