Counteracting Money Laundering as a Tool to Minimize the Shadow Economy

Abstract

The subject of the research is the establishment of procedures for counteracting money laundering in order to minimize the level of the shadow economy. The relevance of the topic is determined by the following reasons. First, the money laundering risks any business may be subject to, affects the sustainable development of national economies. Second, the criminal income legalization activity is closely connected with the phenomena of capital outflow, corruption, use of offshore zones to conceal sources of income as well as tax evasion and illegal cashing of funds that are factors of the shadow economy. Third, at the end of 2018 in Russia, the Financial Action Task Force (FATF) is going to perform scheduled activities under the fourth round of audits related to assessment of anti-money laundering effectiveness. The purpose of the research was to analyze tools of countering the money laundering that can be used to minimize the level of the shadow economy based on the banking sector of Russia. A model for assessment of potential losses of credit institutions based on the VaR (Value at Risk) model is proposed.