Tools to de-shadow the activities in the financial services sector

Abstract

The article outlines the basics of the spread of shadow activity in the financial services sector. Three types of shadow activities in the financial services sector are characterized: hidden (mostly related to tax evasion – deliberate concealment / understatement of profits from doing business in the financial services domain); informal (its entities are most often employees forced to carry out unregistered activities, hide additional income, in particular, due to the high burden on the payroll, as well as households that transfer certain funds to each other and other material values through informal channels); illegal (de facto related to the illegal conversion of funds by various methods and tools) activities. Threats and risks to the socio-economic development of the state and its financial security due to the shadow activities in the financial services sector are specified. The main forms of shadow activities in the financial services sector (shadow transactions with cash; receiving uncontrolled profits through payment systems and payment cards; legalization (laundering) of proceeds from crime; shadow transactions with securities) and the tools to de-sadow them are substantiated. The paper emphasizes that the principles of de-shadowing the activities in the financial sector should include systemic (key principle), corporate social responsibility in the financial services sector, objectivity, determinism, coherence, transparency. The paper argues that financial monitoring is one of the most important tools for de-shadowing the activities in the financial services market (in particular, in terms of combating illegal activities). The priorities of counteracting the use of offshore jurisdictions for the purposes of tax avoidance by enterprises of the financial services sector, which include the implementation of organizational and informational, budgetary, fiscal, financial, and economic measures, are outlined.