draining development.pdf - Khazar University

How Well Do Anti–Money Laundering Controls Work in Developing Countries? 383may originally have been paid externally. PC (I) might be anticipated tovary positively with the desire and the expectation of kleptocrats toremain in power and need the funds so stored to sustain political andmilitary support.One component of the AML regime involves steps to prevent peoplefrom integrating the proceeds of crime into the legitimate economy;though this may act as a deterrent to the involvement of people in crimeor shorten the length of criminal careers, it may also prevent peoplefrom “going legit” (becoming actually respectable rather than onlyapparently respectable). It is a tenable explicit policy aim to show criminalsthat, however much they may reform, they can never enjoy the fruitsof their crimes, including the fruits derived from legitimate investmentsmade possible through crime (the doctrine of the fruit of the poisonedtree). This would nullify the personal ambition to become socially integratedof persons such as the bankruptcy fraudster who was interviewedby Levi (2008) and observed that he only wanted to make enough moneyto be able to afford to be honest. 14 The netting out of harms lies outsidethe scope of this chapter, but the interviews conducted for this reportwith a convenience sample of public officials in some developing countries(including countries in the former Soviet ambit) since 1988 suggestthat some of the officials are privately ambivalent about whether it is abad thing to accept tainted funds into their economies. Such thoughtsmight invite negative reactions if expressed in official meetings and arenormally suppressed for that reason. 15 Irrespective of personal greed andbenefits, politicians may obtain political and social credit from inwardinvestment, whatever the source of the funds, if it creates employmentand a multiplier effect from expenditure. In major financial centers inthe developed world, it is difficult to acknowledge inflows of criminalfunds as an acceptable economic benefit, and the OECD Anti-BriberyConvention expressly excludes economic interests as justifications fornot prosecuting transnational bribery.Informal value transfer systems, including hawala-type money movements,have received some significant interest, especially post-9/11 (Passas2005; Rees 2010). 16 Most of this interest has focused on the transmissionof terrorist finance to operational sites from Muslims in developingand developed countries and on terrorist finance and the proceeds oforganized crime remittances from developed countries to developing