draining development.pdf - Khazar University

378 Draining Development?driving up the latter’s costs of doing business and the cost of remittancesby expatriates to poor countries. However, cooperation over tax issues bysome banks (and some governments) remains an item of serious contention(Chaikin 2009; Sharman 2011; Shaxson 2011).In regard to the methods of laundering, the conventional wisdomsince the 1980s is that they entail a three-stage process of (1) the placementof funds into the financial or other sector, (2) layering steps tomake the money trail harder to follow, and (3) integration of the cleansedcapital into the legitimate economy after the illegitimate origins havebeen obscured. This process does not necessarily involve internationalmoney flows, especially not in cases of self-laundering (see below).Nonetheless, the existence of international flows of funds, criminal precursors(such as chemicals), and international illicit markets (such asdrugs, people smuggling, and human trafficking) provides leverage forpeer pressure between states in the form of mutual evaluations (Levi andGilmore 2002). Such evaluations have long been extended to corruptionthrough the Council of Europe’s Group of States against Corruptionand, more tentatively, to those nations that have ratified the UnitedNations Convention against Corruption (UNCAC). A different form ofexpert evaluation occurs within the framework of the OECD Conventionon Combating Bribery of Foreign Public Officials in InternationalBusiness Transactions (more well-known as the OECD Anti-BriberyConvention).To implement AML controls, a broad network of FATF-Style RegionalBodies has been developed; AML legislation has been adopted; and anever-widening range of private sector businesses and professions hasbecome involved. These last include car dealers, jewelers, money exchangesand transmitters, real estate vendors, and, in Europe, but in few placeselsewhere, lawyers who are required to make reports to their national FIUson their subjective suspicions about their clients. Much less commonly,they also include objective cash receipts that exceed a modest level. 6The privacy of high net worth individuals with regard to their owngovernments, foreign governments, and the risk of criminal extortion isa matter of great political sensitivity. Thus, the person who runs an FIU(for example, typically, the central bank, the attorney general, or thepolice) makes a great difference in the extent to which the FIU is trustedby those it regulates and with whom it has to cooperate. 7 This also makes