draining development.pdf - Khazar University

How Well Do Anti–Money Laundering Controls Work in Developing Countries? 40910. Kaufmann notes that the range is US$600 billion–US$1.5 trillion; so, US$1 billionis (almost) at midpoint. The methodology is set out in his appendix.11. One of the common mistakes is to equate the losses arising from corrupt contractswith the bribes (and the sums laundered therefrom). Logically, the bribepayer’sincome and the bribe recipient’s income both count as proceeds of corruption.So, in the context of this chapter, it is what happens to the profits andwhere the funds are disbursed and distributed that count.12. Technically, under some legislative systems, such as in England and Wales, theentire purchase price constitutes the proceeds of corruption and is liable topostconviction confiscation. However, analytically, such sums are not availablein bribes and certainly not for redistribution or savings, unless the goods orservices supplied are wholly fictitious. See also the discussion of the meaning oflaundering in the text.13. This can be a particular problem for offenses such as illicit enrichment, which isa criminal offense in many former British colonies and mandated in the Conventionof the Organization of American States, but not implemented by Canadaor the United States because of an assessed incompatibility with the constitutionsof these two countries. The OECD Anti-Bribery Convention aims tomake transnational bribery criminal whether or not the act is criminal in thereceiving country.14. Whether such claims are true, even if believed by their authors, remains an openquestion. It is difficult to generalize from ex post statements about motivationsand future intents.15. It is important to bear in mind, though, that we may misjudge or be misinformedabout the likely consequences of accepting criminal money.16. Hawalas are informal systems for transferring money that are traditional inArab countries and South Asia.17. The longer-term impact of the UBS settlement with the U.S. authorities overmoney flows from Switzerland, of the information leaks from Bank Julius Baerin Zurich and from LGT Bank in Liechtenstein, of the subsequent tax settlementswith Germany, and of the market anticipation of the more general effectsof such cases remains to be determined.18. The report (Goredema and Madzima 2009, 29) notes as follows:If endemic, corruption can render the AML system dysfunctional by clogging itwith a large volume of cases to deal with:• Because of its connection to money laundering, corruption will try to preventthe adoption of effective measures against money laundering, and maysucceed in doing so if not detected and confronted;• The implementation of AML measures that have been adopted can beimpeded by corruption, such as by interfering with the capacity of mandatedinstitutions to perform their duties, or influencing the relevant officials;