Illegal Financing Research Articles

Resisting ruination: the termites of corruption in democratic Spain

ABSTRACT This article examines the processes of ruination that are at work in democratic Spain through Xavier Artigas and Xapo Ortega’s 2014 documentary Termitas: El Observatorio DESC contra Bárcenas, which delves into the “Bárcenas case”, a political scandal involving the illegal financing of the (at the time) ruling conservative party, which showed the role that the judiciary plays in fostering corruption. The documentary argues that the ongoing ruination of democracy in Spain cannot be blamed on individual instances of corruption involving public officials and institutions, but rather that it is ingrained in the structures of the system. To give material shape to this elusive structural corruption, the documentary uses the metaphor of termite infestation, suggesting that fighting it requires more than merely scratching the surface. It demands a four-step process: detect the signs of its presence, locate the nest, be vigilant and, ultimately, exterminate it. Through the work of Ann Laura Stoler and Rob Nixon, the goal of this article is to analyze how the termite metaphor invites us to rethink – figuratively, materially and affectively – systemic corruption as an ongoing process of ruination whose material effects do not unfold instantly, but slowly across space and time. By paying attention to the time gap between the cause of ruination and the eventual manifestation of its long-delayed effects, the documentary makes visible how systemic corruption slowly fades from public memory, resulting in political and legal inaction, and consequently, impunity. The article concludes by suggesting that while the termite metaphor gives systemic corruption a tangible materiality upon which viewers can act, the documentary’s call for the extermination of the termites as the ultimate form of resistance fails to capture its political message.

Modern approaches to global and governmental regulation of virtual assets: what to choose to support digital innovations?

The paper offers a critical outlook at modern approaches to supranational and governmental regulation of the circulation of virtual assets, which have already developed with confidence and which actually determine the conflict between generally global and national views on a very heterogeneous category – virtual assets. The purpose of this article is to summarize some key regulatory approaches spread globally – from global to state levels – regarding the circulation of virtual assets and their critical analysis from the point of view of supporting digital innovation in a national economy. The paper is a continuation of the ongoing wide-ranging expert and political debate about what government officials and presidents should be guided by in matters of circulation of virtual and, in particular, backed (secured) tokenized assets. The logic of the presentation and judgments in the paper is related to the step-by-step consideration of such issues: (1) the basic political approach of the International Monetary Fund and its discussion from a public-management point of view; (2) institutional and administrative risks for governments regarding the full implementation of the IMF’s 2023 policy recommendations on the regulation of virtual assets; (3) widespread standards for the prudent (prudential) circulation of virtual assets, which were developed by other authoritative supranational organizations; (4) an overview of key problems in the coordination of multi- and single-level approaches to the regulation of virtual assets; (5) highlighting 5 regulatory approaches in the ways and scope of governmental (national) regulation of virtual assets currently operating in the world; (6) author’s comparison and assessment of regulatory approaches; (7) assessment of Ukrainian prospects in supporting technological innovations in the field of circulation of virtual assets in the context of the adoption of the new law «On Virtual Assets» in 2023. The author makes the final conclusion that, generally, modern regulatory efforts of supranational and state regulators in the field of circulation of virtual assets are mostly focused on the problems of illegal financing, unfair competition and the integrity of new and old markets of financial assets, as well as focused on requirements for experience and financial stability of private service providers in the field of virtual assets. However, there is a growing understanding that regulators will arrive at a more or less single or multiple regulatory approach, which will be set at the supranational level, and this will only facilitate technological innovation. Such an approach will most likely be combined – based on regulatory flexibility and on the basis of principles (expected results).

The control of tax corruption: evidence from nonfungible token market in China

PurposeIn 2021, nonfungible token (NFT) has emerged and grown as a new digital asset and became a carrier for cryptocurrency holders in China. NFT opens the door of the digital world for creators’ rights and the realization of economic interests. However, potential problems such as money laundering, terrorist financing and tax avoidance risks have increased in China due to the lack of regulations. As tax control is an important tool used by the government to adjust the economy and market, this study aims to investigate the future market capitalization of NFT and provide value orientations to control the NFT market in China with a tax control approach based on the positive experience of other countries.Design/methodology/approachIn this study, least squares and expert estimation are applied to predict the future market capitalization based on the global market, which can provide an understanding of the current NFT market and the significance of its tax control. In addition, the tax control and interpretation of Chinese taxation institutions and structures are also explored.FindingsResults include the probable tax structure or policy that national institutions can carry out over different transactions. Conclusions show that introducing tax control to regulate and monitor the rise of state revenue and decline of illegal financing activities. Establishing tax control in the Chinese NFT market can provide a centralized guarantee to ensure the safety and legality of transactions and enable further progress.Originality/valueThis study puts forward new ideas on the future development of nonprofitable tokens based on blockchain technology from the perspective of taxation in China.

Market-Oriented Transformation and Development of Local Government Financing Platforms in China: Exploratory Research Based on Multiple Cases

In recent years, the disorderly development of local government debt financing and local government financing platforms (GFP) in China has brought huge government debt risks. In order to control the debt increment caused by illegal financing of the GFP, the state has issued a series of documents. Under the new economic form, how to determine the position, choose the road, and plan the path of market-oriented development for high-quality economic development is critical to the GFP. This paper is committed to solving the key points and transformation paths of market-oriented transformation of the GFP. (1) On the basis of literature research, it analyzes the necessity, feasibility, and current transformation difficulties of market-oriented transformation of the GFP. (2) It defines the concept of the GFP and the concept of market-oriented transformation of the GFP. (3) It collates and analyzes the real cases of market-oriented transformation of four local government (county-level and above) financing platforms, studies the key points of transformation, and systematically summarizes the path of market-oriented transformation from three aspects: the goal, work plan, and implementation scheme of transformation and development. (4) Based on the idea of finding problems, diagnosing problems, optimizing, and improving, we put forward optimization strategy suggestions.

Blockchain-enabled fraud discovery through abnormal smart contract detection on Ethereum

Anomaly detection for smart contracts can effectively prevent hidden security risks such as financial fraud, illegal financing, and money laundering. Ethereum is currently the largest platform for smart contracts, and anomaly detection is imminent. However, the data related to smart contracts is huge and contains complex objects and relationships. It is impossible to extract high-order attributes and low efficiency using traditional methods. The key to reduce fraud is extracting features from complex smart contracts and effectively identifying abnormal contracts. Therefore, this paper constructs a Heterogeneous Graph Transformer Networks (S_HGTNs) suitable for smart contract anomaly detection to detect financial fraud on the Ethereum platform. For feature representation, this paper first extracts the features to construct a Heterogeneous Information Network (HIN) for smart contract, and uses the relationship matrix obtained from the meta-path learned in the transformer network as the input of the convolution network, and finally uses the node embedding for classification tasks. The classification results show that this model performs better than the traditional model and the standard deviation is small, which proves the effectiveness and stability of the model.

Запрет на незаконное финансирование политической деятельности как антикоррупционный стандарт поведения в бизнесе

The problem of political corruption is of particular relevance for criminological science. The processes of formation and functioning of power, due to their high social significance, have long been subject to negative corruption influences, and therefore they need a special protection mechanism. The subject of the research is the legal regulation of the ban on illegal financing of political activity, as well as its reflection in local regulations of commercial organizations. The article examines one of the forms of political corruption as illegal financing of political activity by officials of commercial organizations. The author used the dialectical method of cognition, as well as the system-structural, formal-logical and other methods of scientific cognition. To study the practice of regulating the ban on illegal financing of political activity at the level of local regulations of commercial organizations, the author monitored the official websites of 250 largest Russian companies. The monitoring of the content of local regulations showed that commercial organizations have not yet developed a unified approach to regulating the ban on illegal financing of political activity. In addition, in more than 50% of the surveyed commercial organizations, this prohibition is absent in local regulations. One of the reasons for the low level of anti-corruption activity of organizations is the lack of motivation of companies to conduct business with integrity. The results of the study allow us to conclude that it is necessary to take a set of measures aimed at stimulating commercial organizations to consolidate in their local regulations a ban on the financing of political activities, as well as measures aimed at limiting the possibility of committing corresponding corruption offenses. Keywords: corruption, political system, elections, electoral process, campaign finance, electoral fund, anti-corruption standard, commercial organization, business, prevention of corruption. Научная специальность: 12.00.08 – Уголовное право и криминология; уголовно-исполнительное право Исследование выполнено при финансовой поддержке РФФИ в рамках научного проекта № 20-311-90028 The reported study was funded by RFBR according to the research project № 20-311-90028

Unveiling the power behind cryptocurrency mining in Venezuela: A fragile energy infrastructure and precarious labor

In the aftermath of the global financial crisis (2008–2010), peer-to-peer online payment mechanisms emerged as a way to avoid financial intermediaries and untrusted centralized state authorities. Cryptocurrencies proliferated among like-minded individuals, generally depicted by scholars as anarcho-capitalists. Much social science literature has focused on governance and technical puzzles that these new market tools bring about as well as on the risks associated with the problems of trust, security, money laundering and illegal financing. In this article, I shift gaze to center on the material underpinnings of cryptocurrencies, such as energy systems and infrastructure, as well as how cryptocurrencies can expand in contexts of crisis in peripheral societies. I focus on the case of Venezuela to explain some of these processes in the rise and expansion of cryptocurrency markets that have remained at the margins of energy and political economy discussions. A deep dive into Venezuela allows us to de-virtualize our understandings of cryptocurrencies. It redirects our attention to infrastructure, energy, rent, and precarious conditions of living in a crumbling rentier society, shedding light on the use and expansion of cryptocurrencies in a nominally socialist country.

Anti-Corruption Potential of Prohibiting the Financing of Election Campaigns by Commercial Organizations

The problem of political corruption is particularly relevant for modern criminological science. The processes of formation and functioning of power, due to their high social significance, have long been subject to negative corruption, and therefore they need a special protection mechanism. The subject of the study is the legal regulation of banning the financing of political activities (election campaigns), as well as its reflection in the local regulations of commercial organizations. The article presents a general description of the illegal financing of election campaigns as a form of political corruption, describes the problems of applying measures of retrospective responsibility in relation to its subjects, and also evaluates the effectiveness of banning the financing of political activities (election campaigns) in the system of preventing this form of corruption. To study the practice of regulating the prohibition in question at the level of local regulations of commercial organizations, the authors conducted monitoring of the official websites of 250 major Russian companies based on the methods of statistical analysis of socio-legal phenomena and processes. The results of the study allow us to conclude that it is necessary to take a set of measures aimed at encouraging commercial organizations to adopt anti-corruption compliance programs which will include a ban on financing political activities (election campaigns), as well as aimed at limiting the possibility of committing relevant corruption offenses

Electoral corruption unfolded by Operation Car Wash and political rights in Brazil

PurposeThis article aims to advance the literature on the effects of corruption and its relationship to human rights violations. The article also presents an overview of existing legislative measures as well as those expected to be implemented at the national level to tackle corruption and its impacts on fundamental rights.Design/methodology/ approachThe study draws on the literature that addresses the relation between corruption and human rights, and analyses a single well-known case in Brazil (Operation Car Wash) in order to discuss both the violation of citizens’ political rights and of those being investigated.FindingsThe article suggests that the Brazilian State has failed to guarantee fundamental rights as well as to effectively control electoral corruption. By exploring the complex structure of illegal campaign financing in Brazil, the article exposes how Operation Car Wash evidenced the violation of both of the right to participate public affairs and to vote in authentic elections in Brazil.Originality/valueConsidering that the literature shows it is difficult to link the breaches of human rights with incidences of corruption, this article debates the macro context in which the Car Wash case is inserted and demonstrates the evidence that link the corrupt acts involved in this operation to the violation of specific fundamental human rights: the political rights.

Regulation of digital financial assets in Hong Kong, Macau and Mainland China

This article analyzes the acts of the People's Bank of China and the Monetary Authority of Macau, which showed that the recognition of ICO as illegal financing, as well as the prohibition to financial organizations to perform exchange operations with tokens and cryptocurrency are measures aimed at preventing corruption and money laundering. Hong Kong unlike mainland China and Macau partially regulates digital financial assets. If tokens and cryptocurrencies have the characteristics of securities or futures, then their turnover falls within the scope of the legislation on the securities market. Otherwise, transactions with them are unregulated, and protection is not provided to investors.

Introducing the missing 11th principle of the United Nations Global Compact to reach sustainability – follow the money…

PurposeRecent research has emphasized the need for engaging non-financial companies in combating money laundering for the efforts to be efficient and effective. To incentivize engagement, several options are available, such as regulation, voluntary disclosure or commitment to international principles such as the United Nations (UN) Global Compact. The purpose of this paper is to analyze how anti-money laundering fits the aim of the UN Global compact and how anti-money laundering can support the other principles of the UN Global Compact. Furthermore, this paper addresses the necessity to include anti-money laundering in the core principles to reach the overall goal of sustainability by the UN Global Compact. Such an inclusion will incentivize the signatories of the UN Global Compact to include anti-money laundering as a part of their social responsibilities, helping the financial sector in combating money laundering.Design/methodology/approachThe methodology of this paper is a functional approach to law and economics. It seeks to enhance the efficiency of the regulatory framework combating money laundering by including economic incentive theory and addressing new areas of law.FindingsThe paper finds a strong relationship between the UN Global Compact and anti-money laundering. Furthermore, it is concluded that it is necessary to include anti-money laundering as a core principle in the UN Global Compact if the Global Compact is to be efficient and effective in terms of its sustainability goals. The reason being that money laundering to a great extent supplies operational finances to the illegitimate sector related to core issues of the UN Global Compact such as human trafficking, child labor and corruption.Originality/valueThe paper identifies a significant missing element with regard to the core principles of the UN Global Compact. Although most research within anti-money laundering concerns the financial sector and thereby does not address the UN Global Compact, the focus of this paper is the link between anti-money laundering and the UN Global Compact. Furthermore, most research related to the UN global compact does not connect the core principles to the illegal financing of the businesses contradicting the principles. This paper addresses both of the neglected areas and combines them to improve the overall combating of money laundering while supporting the UN Global Compact sustainability goal.

Electoral Campaign Financing and Criminal Policy

In a democratic state, power is exercised by elected bodies through free and fair elections. The choice of the political class that will exercise political, economic, etc. power by the sovereign (the people) is one of the most important moments in the way how a state works.The sovereign and the expression of his will by voting for those to be elected to the governing or governing bodies. The first part will address and analyze the election campaign, the day of voting until the moment of the results, is the period when the sovereign exercises his power directly by voting which political class will lead the state.Political classes seeking to govern and govern governing bodies disclose their programs, their policies during the election campaign.Election campaigns in modern and capitalist society require funding as they are associated with costs, expenses. Election campaigns cannot be done without capital, without money. The second part will analyze the power of money in election campaigns is related to the expenses political parties or candidates make to their program, to disseminate their political and governing ideas, so money power is used to influence the sovereign to be informed on election day. who to vote for and who to choose in the governing bodies. The use of money in election campaigns forces a democratic state to set rules on how to finance, spend, etc., so setting rules such as how the power of money will affect election campaigns and their control by the responsible bodies.In a country with a fragile and transitional democracy such as the Albanian state, the control of money power during election campaigns is extremely difficult, however the manner of controlling election campaign financing is clearly defined in legislation. In this paper I will contribute by analyzing the impact of money on the Albanian state policy, first in terms of electoral financing, financing of political parties and individuals in electoral campaigns In this paper I will address and analyze how money affects constitutional principles during election campaigns, how it affects the principles of free and fair elections. The third part will address and analyze how entities participating in electoral campaigns are financed.The use of illegal money during campaigns affects the violation of constitutional principles for free and fair elections.I will address and analyze the criminal policies in the field of illegal financing of electoral campaigns. The Criminal Code of the Republic of Albania in relation to free and fair elections. llegal financing of election campaigns is a current phenomenon of the Albanian society, bringing about the incrimination of Albanian politics.Illegal financing of entities participating in electoral campaigns comes from organized crime or suspects in criminal activities, and this brings about the establishment of those persons who protect the latter's interests and not the interests of the constituents or democratic interests of a state .Intensify the fight against illicit financing of electoral campaigns by creating not only a complete legal framework for preventing illicit financing but also creating practical mechanisms for not only law enforcement but also the practical prevention of uncontrolled funding of electoral subjects.Setting criminal penalties for illegal financing of electoral campaigns and revising the Criminal Code in incriminating all illegal financing actions that violate free and fair elections may be the most important step in the fight against illegal financing of electoral campaigns. Illegal financing of electoral campaigns in Albania calls for free and fair elections and questions the basic principles of the representation of political entities in governing institutions and therefore the interference in law and penal policy is current and immediate.

Sources of political parties’ campaign expenditure in Nigeria’s Fourth Republic: Examining the 2015 General Election

A periodic election is a fundamental pillar and backbone of any democratic regime, and for a proper election to take place there must be some activities, most especially by parties and contestants to vote for them most especially competing to secure the electorates. These activities require huge expenditure from the parties and their financiers through campaigns, media advertisements and other related activities. The problem is that parties and their candidates are allowed, in Nigeria constitutionally and by the Electoral Act 2010, to source their campaign finance privately, which has led to illegal financing. The objective of this paper is to examine the sources of parties’ campaign expenditure in the Fourth Republic, taking the 2015 General Election as the case study. The research used a qualitative method of data collection and analysis where both primary and secondary sources were used. The primary source was an in-depth personal interview with some selected informants/participants from the categories of stakeholders in the electoral process, parties, and agencies responsible for regulating their activities. The secondary source was the use of available documents such as books, journals and Internet sources on the subject matter of the study. The data obtained were analysed and interpreted using thematic analytical interpretations from the informants’ views and the existing data in the field. The research discovered that there are basically six major sources of campaign expenditure for parties and that some of the sources are illegal and the spending has violated the regulations. The research recommends thorough supervision and monitoring of the sources of parties’ campaign expenditure and the spending process.

COMPARATIVE REVIEW OF REGULATORY FRAMEWORK OF VIRTUAL CURRENCY (CRYPTOCURRENCY) IN SELECTED COUNTRIES

In the era of rapid technological progress, the legislators of individual countries face the challenge of submitting new technological phenomena to the legal framework. The business operation in the field of virtual currencies (cryptocurrencies),widely, in the financial technology sector (hereinafter referred to in as “fintech”), create a chance to attract investors and develop the economy. On the other hand, the same might be misused for illegal purposes, such as, in particular,money laundering or financing of terrorism. This study provides for an overview of the legal regulations of selected states in the field of virtual currencies (cryptocurrencies). Although, presented laws and regulations herein are in favour of thecryptocurrencies, the scope of implemented acts varies significantly.

Venezuela’s Toxic Relations with Iran and Hezbollah: an avenue of violence, crime, corruption and terrorism .

Venezuela’s relations with Iran date back into the sixties when both were founding members of the OPEC. Iran’s influence in Latin America has become quite large since the Iranian revolution. Iran sees Latin America as a strategic priority for its global positioning. The Lebanese immigration towards South America has begun a while ago. But there’s a period, during the Lebanese civil war (1975-1990) when a large number of Lebanese immigrants came to the continent. Back then, according to some experts, Hezbollah and Iran took advantage of this mass migration and infiltrated their agents and recruiters among the Muslim migrants. Hezbollah is probably the most organized terrorist organization in the World in respect to its illegal financing activities. The group funds its regular operations through all sorts of crimes. Hezbollah has a tight relationship with Iran. Ever since Iran has established its covert operations in Venezuela, Hezbollah has come along, as its proxy. Venezuela is submerged in crime and corruption. The Venezuelan government has been infiltrated by transnational organized crime for more than a decade. The convergence of corruption, crime, violence and terrorism in Venezuela was enabled by a set of conditions and circumstances that basically surfaced after Chávez was elected president in 1998. From that time onwards, Venezuela became a crucial source of political, financial and logistical support for Hezbollah. Their relationship impacts the neighboring countries, particularly Brazil.

The Rousseff impeachment and the crisis of democracy in Brazil

ABSTRACTThis is an article about the impeachment in Brazil. I argue that it was the result of the political crisis that takes place in the country since 2013. T his political crisis has at least two major components: (1) the first one is the collapse of the coalition presidential system associated with the ascension of a conservative group within the National Congress led by Eduardo Cunha ; (2) the second is a crisis of representation expressed by the increase of illegal campaign financing and the influence of money in Congress. Together, the opposition and the conservative block of the PMDB blocked every move of Dilma Rousseff’s administration and proposed moral and economic conservative legislations. After impeaching the president, this group is proposing legislations that pose under threat the democratic system built in the country after 1988.

DATA MINING IN BANKING AND ITS APPLICATIONS-A REVIEW

Banking systems collect huge amounts of data on day to day basis, be it customer information, transaction details, risk profiles, credit card details, limit and collateral details, compliance and Anti Money Laundering (AML) related information, trade finance data, SWIFT and telex messages. Thousands of decisions are taken in a bank daily. These decisions include credit decisions, default decisions, relationship start up, investment decisions, AML and Illegal financing related. One needs to depend on various reports and drill down tools provided by the banking systems to arrive at these critical decisions. But this is a manual process and is error prone and time consuming due to large volume of transactional and historical data. Interesting patterns and knowledge can be mined from this huge volume of data that in turn can be used for this decision making process. This article explores and reviews various data mining techniques that can be applied in banking areas. It provides an overview of data mining techniques and procedures. It also provides an insight into how these techniques can be used in banking areas to make the decision making process easier and productive.

The multiplexity of political conspiracy: illegal networks and the collapse of Watergate

Using historical data from the United State's Watergate criminal conspiracy case, we construct five sociomatrices representing the multiplex social relations of political conspiracy. Sociomatrices representing (1) the social relations of the illegal relations among the conspirators, (2) fractious relations between the conspirators during the working period of the conspiracy, (3) fractious relations between the conspirators during the crisis stage of the conspiracy, (4) the flow of money among the conspirators and (5) the relations of which specific conspirators testified against specific other co-conspirators. The quadratic assignment procedure (QAP analysis) is used to determine the extent to which these five sociomatrices are inter-related. QAP analysis shows that the structure of the five sociomatrices are related to each other, implying that political conspiracies are composed of multiplex relations of working acts of deviance, relations of dyadic fractiousness, conduits of illegal financing and the betrayal of co-conspirators through finger pointing at trial.

Illegal finance and usurers behaviour

This paper deals with a stochastic dynamic optimization problem in the context of illegal company financing. Our analysis of the usury phenomenon is conducted by searching for the best interest rate which an illegal financier should apply to a company in order to bring about the firm’s bankruptcy whilst still securing the maximum wealth for the firm’s guarantee. In this case, the company itself can be taken over and used by the financier for illegal activities. Because of the highly complex nature of the problem, the analysis will be performed via simulation studies.

Terrorism and financial supervision

This article presents an analysis of how legislators on international, European and national level combat the financing of terrorism. The central question in this article is whether European regulations concerning the prevention of money laundering and the financing of terrorism, are effective, proportional and mutually harmonious. Now that many regulations in this field have been established by intra-national bodies, it is important to examine how these regulations are further elaborated in the respective national systems. This article gives a broad overview of legislative initiatives of the UN, USA, FATF, EU and Council of Europe. The Netherlands for numerous reasons serves as a legal example. It is concluded that measures taken or proposed to avoid or at least reduce the financing of terrorism are quite effective to prevent abuse of the financial system. On the other hand, these measures increase the risk of underground or illegal financing, which is even more difficult to control.