Illegal Financial Transactions Research Articles

Transfer Pricing Documentation: Globalization and Regional Optimization

The study was conducted in order to assess and analyse the impact of globalization and regional optimization on the activities of economic entities that are required to prepare transfer pricing documentation. The methodological background of the study involved the following methods: generalization, explanation, grouping, induction and deduction, as well as analysis and synthesis, which were used to clarify the main scientific categories of research and substantiate the research results. Methods of schematic and graphical representation were used to visualize analytical data, formulate assumptions and substantiate the obtained results. The main focus of the study is on the analysis of the causes of global economic risks and the role of transfer pricing documentation, whose quality will help mitigate the negative consequences of undesirable events for the global economic system. The study found that not all countries apply the international instrument — Multilateral Convention to Implement Tax Treatment Related Measures to Prevent BEPS (MLI). Many countries that have started to use MLI reporting, have no uniform standardized rules for the preparation of transfer pricing documentation. The legislation only defines the list of information to be submitted by taxpayers, provided that the results of their business activities meet certain criteria. The development of a unified methodology for valuing financial assets for tax purposes and preventing their use in illegal financial transactions are the promising areas for further research.

The Flight and Fall of King Juan Carlos I

The article examines the factors that eroded the authority of the royal court of Juan Carlos I which is a key institution in the Spanish governance system. Juan Carlos is regarded for his patriotic stance during the transition from dictatorship to democracy and his pivotal role in the suppression of the military coup of February 23, 1981. Political pluralism and democratism also contributed to the authority of Juan Carlos. For many years, monarchy has been perceived as a guardian of stability in the country and was acceptable even to millions of republican-minded citizens. The author tracks how the Spanish public opinion turned away from Juan Carlos after the disclosure of illegal financial transactions and ugly details of his private life. The King was forced to abdicate and transfer the power to his son Felipe.

Identification of the"financial cooperation" concept in the context of the development of russian-chinese trade and economic relations

The article is devoted to the issues of improving the categorical and conceptual frame-work in the financial and economic sphere, the relevance of which is associated with the development of existing and the emergence of new forms of international cooperation. The author’s definition of “financial cooperation” is formulated and the corresponding argument of this term is presented according to the assessment of bilateral Russian-Chinese trade and economic relations, including border trade in the Far Eastern region. Conclusions are based on the analysis of a set of information sources from statistical data on the dynamics of bilateral trade volumes, conclusions obtained by Russian and Chinese researchers, as well as materials from international forums and intergovernmental agreements. The analyzed data are given before the start of the COVID-19 pandemic, since this factor had a negative impact on the decline of all indicators of the world economy and can not be indicative when analyzing changes. At the same time, it was between Russia and China that there was an almost six-month time gap in the closure of borders, which contributed to the uneven export and import transport flows. The research results of Russian and Chinese scientists and the implementation of international regulatory documents are also used to identify problems of interaction between various financial institutions in the context of digitalization of financial and trade relations and countering illegal financial transactions, as well as the possibilities of retaliatory measures against economic sanctions. Financial cooperation is considered by the authors as an integral element of international cooperation in general, taking into account the specifics, on the one hand, the geographical location and historically formed political and economic ties between neighboring countries, on the other hand, the globalization of financial institutions themselves due to the development of digital technologies and communication systems. In addition, the prospects for further development of Russian-Chinese financial cooperation after over-coming the crisis phenomena caused by the pandemic are analyzed in accordance with the directions of strategies within the framework of the Russia-Mongolia-China economic corridor “One Belt, One Road”.

DETERMINING THE RELATION BETWEEN THE STATE OF FINANCIAL INTERMEDIARIES AND ECONOMIC GROWTH IN UKRAINE USING VAR MODEL

The article is devoted to determining the relation between the state of banks and non-bank financial intermediaries and economic growth in Ukraine using vector autoregression (VAR) model. We start by analyzing the allocation of financial resources between banks and non-bank financial intermediaries in Ukrainian financial system. Then we build a model, which takes into account quarterly real GDP growth as a measure of economic growth, weighted average interest rates on new loans to residents, quarterly growth of net assets of commercial banks and quarterly growth of assets of non-bank financial intermediaries for the period from the second quarter of 2012 to the second quarter of 2020. The model was also used to forecast the dynamics of stated indicators for the next ten quarters. To determine the impact of changes in the parameters of the model on one standard deviation on GDP growth we construct impulse response functions and to find out how strongly an external shock on some parameters of the model will affect other parameters we build forecast error variance decomposition. It was found that there is higher correlation between assets of non-bank financial intermediaries and GDP, than between GDP and assets of banks. Therefore, the state of non-bank financial intermediaries better reflects the real state of the economy in the country. It is proposed to take this pattern into account by the subjects of state financial monitoring in order to improve the domestic system of prevention and counteraction to legalization (laundering) of the proceeds of crime. For example, statistically significant deviations of the growth rates of assets of non-bank financial intermediaries from the growth rates of real GDP can be interpreted as a sign of the institution’s connection with illegal financial transactions, in particular legalization (laundering) of proceeds of crime, and therefore can be used in the initial stages of detection of illegal financial transactions while screening non-bank sector in order to find sings of such transactions. Keywords: financial intermediaries, banks, non-bank financial institutions, vector autoregression, economic growth.

Analysis of Possibilities to Automate Detection of Unscrupulous Microfinance Organizations based on Machine learning Methods

Microfinance is a way to fight poverty, and therefore is of high social significance. The microfinance sector in Russia is progressing. However, the engagement of microfinance organizations in illegal financial transactions associated with fraud, illegal creditors, money laundering, significantly limits their potential and has negative impact on their development. The aim of the paper is to study the possibilities to automate detection of unscrupulous microfinance organizations based on machine learning methods in order to promptly identify and suppress illegal activities by regulatory authorities. The author cites common fraudulent schemes involving microfinance organizations, including a scheme for cashing out maternity capital, a fraudulent lending scheme against real estate. The author carried out a comparative analysis of the results obtained by classification methods — the logistic regression method, decision trees (algorithms of two-class decision forest, Adaboost), support vector machine (algorithm of two-class support vector machine), neural network methods (algorithm of two-class neural network), Bayesian networks (algorithm of two-class Bayes network). The two-class support vector machine provided the most accurate results. The author analysed the data on microfinance institutions published by the Bank of Russia, the MFOs themselves, and banki.ru. The author concludes that the research results can be of further use by the Bank of Russia and Rosfinmonitoring to automate detection of unscrupulous microfinance organizations.

ПРОТИВОДЕЙСТВИЕ НЕЗАКОННЫМ ФИНАНСОВЫМ ОПЕРАЦИЯМ С ИСПОЛЬЗОВАНИЕМ ИНСТИТУТА БАНКРОТСТВА

ПРОТИВОДЕЙСТВИЕ НЕЗАКОННЫМ ФИНАНСОВЫМ ОПЕРАЦИЯМ С ИСПОЛЬЗОВАНИЕМ ИНСТИТУТА БАНКРОТСТВА

Monitor and detect suspicious transactions with database forensics and Dempster-Shafer theory of evidence

The digital investigators have now approached databases for investigating the cyber crimes. The illegal financial transactions on the web which goes undetected can now be revealed through database forensics. In response to this, we have proposed a methodology to detect the illegal financial transactions through database audit logs. The aim here is to monitor the database, detect the suspicious transactions and report the risk level of these transactions. Different databases are monitored to extract SQL transactions through their respective audit logs. The SQL transactions obtained are transformed and loaded in a standard XML format which contains financial records along with its metadata. Initially, we process the financial transaction records with rule-based outlier detection algorithm and classifies the transactions as per RBI rules. The suspected transactions obtained as outliers are marked with initial belief values. To verify the uncertainty of the suspected transactions we apply Dempster-Shafer's theory of evidence which combines various evidence of suspected transactions obtained through audit logs. The experiments performed manifest the risk level of suspected transactions.

К оценке криптовалют

The article estimate some aspects of the functioning of cryptocurrency, as a relatively new financial market instrument, the main participants in this market segment, cryptocurrency exchanges, taking into account key criteria: accessibility, mobility, operational efficiency. The aspects of regulation at the world and national levels are investigated.
 The authors give an assessment of the mechanism for regulating cryptocurrencies in separate countries ,which recognize this instrument and actively regulate it (Ar-gentina, Canada, Japan, Malazia, Switzerland),as well as countries, which reject (Vi-etnam) or just tolerate cryptocurrency, but do not have the regulatory framework for it use.
 Obviously, cryptocurrency is a relatively new instrument of the financial market, but its value not depend with amount of labour invested, as it is traditionally charac-teristic for conventional goods and services.
 The research shows that bitcoin still remains the most widespread type between other different kinds of cryptocurrencies.
 A significant aspect of cryptocurrencies functioning is their regulation. In our country there is no legislative certainty yet, but some steps have been made in this di-rection.
 In the long term, cryptocurrencies will be regulated at the international level, and the emphasis will be on preventing the use of their illegal financial transactions and for money laundering.

Monitor and Detect Suspicious Transactions With Database Forensic Analysis

The extensive usage of web has given rise to financially motivated illegal covert online transactions. So the digital investigators have approached databases for investigating undetected illegal transactions. The authors here have designed and developed a methodology to find the illegal financial transactions through the database logs. The objective is to monitor database transactions for detecting and reporting risk level of suspicious transactions. Initially, the process extracts SQL transactions from logs of different database systems, then transforms and loads them separately in uniform XML format which gives the transaction records and its metadata. The transaction records are processed with well-defined rules to get outliers present as suspicious transactions. This gives the initial belief of the transactions to be suspicious. The belief value of transactions is further rationalised using Dempster-Shafer's theory. This verifies the uncertainty and risk level of the suspected transactions to assure occurrences of fraud transactions.

Russian microfinance organizations: Development trends and the problem of involvement in illegal financial transactions

Russian microfinance organizations: Development trends and the problem of involvement in illegal financial transactions

Уголовная политика и устойчивость кредитно-финансовой системы

The article is devoted to ensuring the financial security of the Russian state in connection with the implementation of the criminal policy. It underlines the need of decriminalization of the area of economic activity for the related legal relations protection. It defines the economic security threat to the country in the context of state strategic planning. It pays special attention to combating crime in the financial sphere. It covers changes in legislature in this sphere that result in expansion of legal practice of prosecution for crimes committed in such area, and that are aimed at preventing illegal financial transactions, as well as the organization of inter-agency cooperation in criminal cases of this category. Microfinance institutions in the form of firm-“ephemeral”, “pyramid schemes” and participating in illegal lending market, which is due to the ability to create imperfection of legal regulation of their activities are detected as a significant threat to stability of functioning of the financial and credit system. It indicates that the mechanism of criminal repression without other complex legislation is inadequate method to counter such crimes. It contains results of the analysis of prevention and detection of criminal acts of problems in this area and proposals for their resolution, including the normative character, and others.

Money Spending or Money Laundering: The Fine Line between Legal and Illegal Financial Transactions

In this Article, I will examine the history of legislative efforts to combat money laundering in the United States, including the intent and purpose of the Money Laundering Control Act 1986.13 I will then analyze how courts have addressed the challenge of characterizing dual-purpose transactions by developing factors whose presence may show that a transaction was entered into with an intent to conceal. In addition to providing an analysis of several cases where courts grappled with the challenges of characterizing dual-purpose transactions, I will also examine the development of a “heightened” evidentiary standard that is often applied to scrutinize whether sufficient evidence exits to characterize a dual-purpose transaction as money laundering rather than money spending. Finally, I will make recommendations for minimizing the challenges of characterizing dual-purpose transactions.

Why Has North Korea Responded Positively to the Nuclear Talks in 2007?

IntroductionI have repeatedly pointed out the adverse impact of numerous U.S. economic sanctions on North Korea's trade. I have written, for instance, that the large trade deficit, unless compensated somehow, is not sustainable.1 Further, since China and were the only two steady importers of North Korean products from 2000 to 2005, if one or both countries turned against North Korea by joining the economic sanctions, it would be difficult for North Korea not to feel the impact. And so it came to be. Japan rapidly tightened its economic relations with North Korea during the past year or two, I wrote in 2007, a total ban of imports from North Korea, over the issues of kidnapping and nuclear weapons, leaving China as the only country that has a key influence on North Korea's trade. Prospects are that North Korea's exports may decline, making North Korea's trade deficit issue even more difficult.2 Even with these premonitions, it was a pleasant surprise to see the way in which North Korea responded to the nuclear talks later in 2007.The objective of this paper is to explore the economic reasons behind North Korea's positive response to the nuclear talks in 2007, by hypothesizing that the North Korean leaders altered their approach partly because of the adverse impact of economic sanctions on North Korea's trade that had reached an unsustainable stage, and partly because of a greater calculation of benefits and costs by the North Korean leaders since the collapse of the Soviet Union, the process of which began in 1989.Key Economic Sanctions against North KoreaThe economic sanctions that have been imposed against North Korea since the beginning of the Korean War in 1950 are chronologically explained elsewhere by me.3 Among the many sanctions imposed on North Korea are three that currently have a direct impact on North Korea's trade. One is the U.S. denial of a most-favored nation (MFN) trade status on North Korea's exports, which was imposed on September 1, 1951. Because of the widespread use of the MFN tariffs, these are known as Normal Trade Relations (NTR) tariffs. Without MFN status, tariffs on North Korean exports to the United States can be so high that it would be impossible for North Korea to even consider exporting anything to the United States.Another important sanction was levied when North Korean agents blew up Korean Air 858 on November 29, 1987, when the plane was on its way from Baghdad to Bangkok. The explosion killed 115 passengers and crew members. On January 20, 1988, North Korea was placed on a list of countries that support international terrorism, on the basis of the U.S. Export Administration Act of 1979. The importance of this sanction is that placement on the list made it impossible for North Korea to borrow development funds from international financial institutions, including the World Bank and the International Monetary Fund.4The third key economic sanctions may be termed collectively the U.S.-led Proliferation Security Initiative, announced by President George W. Bush in May 2003, which is designed to interdict weapons of mass destruction shipments to and from countries of proliferation concern, such as North Korea.5 Ever since President Bush labeled North Korea, Iran, and Iraq as an axis of evil in his State of the Union address on January 29, 2002, there had been a gradual tightening of sanctions until 2007. The October 2002 discovery of North Korea's nuclear program, and North Korea's subsequent announcement that it was renewing the program, broke the terms of the 1994 Agreed Framework, and led to a rapid downturn in the relations between North Korea and the United States. The worsening relations were followed by a broad tightening of North Korea's illegal financial transactions. The broad tightening culminated in Banco Delta Asia's termination of business dealings with North Korea as of February 16, 2006. Banco Delta Asia had long been suspected of handling North Korea's illicit activities overseas, such as laundering of counterfeit U. …