draining development.pdf - Khazar University

How Well Do Anti–Money Laundering Controls Work in Developing Countries? 397Accounting for the Lack of ImpactIt is not only in the rich world that strategic approaches have been appliedto address serious crimes. Governance issues have been significant amongdevelopment activists for some time. Corruption and the related financingand financial consequences have ascended the ladder of politicalattention in the 21st century, exemplified by the more active profile of theOECD Working Group on Bribery in International Business Transactionsand by development of the UNCAC, now in force. Nonetheless, untilrecent G-20 pronouncements and the Seoul Action Plan 2010 and thefollow-up in 2011, there has been comparatively little talk, at least in thedeveloped world, about the need for a war on corruption and only amodest, though increasing focus among official mainstream AML bodieson the role that AML can play in combating corruption (FATF 2010).Stimulated by nongovernmental organizations such as TransparencyInternational and Global Witness, as well as a succession of major scandals,greater attention has been focused on the role of major offshorefinancial centers in laundering the proceeds of grand corruption, as intermediarytransit points in concealing bribes, or as the site of accounts heldby or on behalf of kleptocrats. 23 Prior to the development of a variety ofscandal-driven regulations introducing PEP regimes, offshore financialcenters offered two advantages to corrupt public servants and to their(official and unofficial) families with respect to the deposit and long-termstorage of large sums of money: (1) trustworthiness toward their clientsand (2) a studied lack of interest in the origins of the capital. The newAML regime should have removed the latter advantage by making it difficultfor people to store and transform the proceeds of corruption (andother crimes) without risky, active criminal conspiracy by financiers,which might be detected by regulators or criminal investigators (police oranticorruption officials) in their own countries or elsewhere. Other chaptersin this volume deal with the extent to which this may still be the case.However, the discussions among nongovernmental organizations ongrand corruption and AML have understandably focused exclusively onthe role of financial institutions in the developed world in holding theaccounts of PEPs and failing adequately to scrutinize outgoing bribepayments and the incoming proceeds of bribery. Partly because of thispolitical pressure and partly because of the way that corruption has been