In the 21st century the global economy has suffered a major economic crisis greatly affected by the misuse of offshore banks. How does offshore accounts and all of its components work? Offshore accounts many times bring subjects such as tax haven, laundering of money and off record assets. Individuals that have offshore accounts control accounts through a credit card that has a unique and individual number and secret code. This system helps all of these banks provide financial secrecy which is that only you and your banker would legally be allowed to know the financial activity within your account. The financial secrecy, completely different from financial privacy, includes many regulations to maintain this asset of secrecy for example many banks use codes that are implemented during communication that in absence of this code it means that a governmental agency is in an investigation process of this account.
Why all this secrecy? Well, the shocking amount of hidden money in in type of accounts is thought to be no less than $21 trillion. Much of this money is acquire through assets that raise their value and to even farther benefit avoid taxes in what is called tax havens. According to Leona Helmsley, a female that ran a chain of luxurious hotels and famous for once saying and quote “only the little people pay tax”. What do the predominantly wealthy people do to avoid taxes? Owners of offshore accounts found a different path that allowed them to keep their money, the idea of tax havens which is known to be promoted by those experts whose expertise are off the charts but nonetheless are still experts at using the flexibility of the system to their advantages. Offshore banking is a two-sided game in which white collar criminal camou...
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...those wealthy people that have offshore accounts with the sole purpose of avoiding taxes, laundering money or keeping money offshore are also responsible and also breaking the law. Nigeria is one of the principal suppliers of oil to the United States, the most populous country in Africa is yet homed the biggest single thief in the world in the 1990s who was almost certainly the late military dictator Sani Abacha, with $12 to $16 billion passing out of Nigeria in corrupt and tax-evading money during his murderous five year regime, most of this to the personal accounts of Abacha and his immediate family members. Offshore banking attracts criminals and opportunist but that does not mean that it is bad in nature, the purpose of offshore banking could be very valuable for the common men but sadly white collar criminals are the ones that are use and misuse this privilege.
Two individual employees wanted to complete their assignment for their company. But, did their strategy go about accuracy? Karel Svoboda works for Rogue Bank. Svoboda is a credit officer who needed Alena Robles, independent accountant, assists to evaluate and approved his employer’s extensions of credit to clients. In order to complete the task, Svoboda needed to access the nonpublic information about the clients’ personal information related to the company such as their profits and performances. Instead of appropriately following the company policy, Svoboda and Robles created a plan to utilize this data to exchange securities. According to their plan, Robles exchanged the securities of more than twenty unique organizations and benefitted by
The WikiLeaks target a private Swiss bank, Julius Baer whose branch in Cayman Islands engage in illegal activities and transactions.
...laws, these nations permit unnamed managing an account. They may have several bank exchanges to and from overseas accounts. Some of these countries include the Bahamas, Bahrain, the Cayman Islands, Hong Kong, Antilles, Panam. Underground/alternative banking is another form where some nations in Asia have legitimate accounts that have undocumented stores, withdrawals and exchanges. These are trust-based organizations with antiquated roots, that leave no paper trail and work outside of government control. This incorporates the hawala framework in Pakistan and India and the fie chen organization in China.
In this report I will go on to discuss the topic of money laundering in the following order; firstly, I will begin by explaining what is money laundering?, why it is done?, and how it is done? I will then go on to explain the effects of money laundering and the institutions/organisations that are at risk from these activities. I will also be discussing the current situation in the UK regarding money laundering and whether anything can be done to prevent or restrict laundering activities, and will then go on to conclude my findings.
As globalization continues to flourish and evolve, this creates further opportunities in which individuals are able to launder money with greater ease, efficiency in profit and sophistication. Through the forms of economic globalization, people may use new forms of travel to their advantage and personal gain. It is widely recognized (Pfaller, A & Lerch, M 2005, Auernheimer, L 2003) that this is becoming a significant challenge in the international sphere. Through globalization, criminals are able to create new means to commit crime for an economic benefit and avoid prosecution through new forms of travel. This allows them to spread transactions across multiple nations around the globe, thus increasing the number of obstacles that need to be overcome for an investigation to be completed (Karofi, U, Mwanza, J). For example, this can be explained through the new forms of money laundering. Money laundering is ‘the process by which one conceals the existence, illegal source, or illegal application of income, and disguises that income to make it appear legitimate’ (President’s Commission on Organised Crime 1984, p. 7). This can be achieved through the process of transporting diamonds or gold or even through wire transfers (Morris-Cotterill, N). The lack of risk that is involved in these contemporary crimes is increasing the appeal for crimes such money laundering to occur. This is due to the fact that criminals know that it will prove to be difficult to investigate and prosecute their activities when it occurs on a transnational basis. This, in turn, gives more individuals the opportunity to commit these crimes with little risk that they will be caught. Furthermore, this targets potential naïve victims into partaking in these forms of c...
A tax haven is a country that offers foreign corporations and individuals relatively low corporate and income tax rates, with a politically and economically stable environment. Some tax havens are Switzerland, Hong Kong, Bermuda, Ireland, and the Cayman Islands. The United States government has been fighting against the movement of corporations because it is not collecting taxes from these corporations that it could have used to reduce government debt. However, corporations have found loopholes that exempt them from United States tax laws. Companies are moving their headquarters across seas for tax benefits to keep their shareholders content. The United States government needs to reduce its corporate tax system so the country does not lose more companies, jobs, and money to foreign entities.
...benefit economically from their activities on these markets. Countries with offshore centers that specialize in money-laundering reap significant benefits. Unlike the negative effects of the Mafia and organized crime, the positive effects are direct and quickly noticeable (Van Dijk 56). Even though it may seem like the revenue from all of the illegal activities helps the economy, it actually does not. There are profits but it does all lead back to negativity: corruption, lesser rule of law, risk of business, etc. The economy is actually slowed down and weakened rather than strengthened (Van Dijk 52).
...ld help improve the economy of the nation. The pocketing of profits by corrupt government officials shows characteristics of patrimonialism, which not only hinders the economy because these profits are the sole source of revenue for the nation, but also harms the democratic stability of the nation and can to some extent cause the regime changes of the nation. The civic conflicts of the nation are not handled by the government and not only do these conflicts drain revenue from the government, but shows the lack of mobilization in the government, possibly due to a lack of taxation, due to the resource curse. These claims show that the resource curse has affected the government and economy of Nigeria greatly as it leads to ineffective and corrupt government with a hindered chance of democratization, with civic conflict that cannot be controlled by the civic government.
The money launderer, who is holding the money produced from unlawful activities, introduces the illegal funds into the financial systems. This can be done by dividing up large amount of cash into smaller sums which are deposited directly into a Bank Account or by purchasing a series of instruments such as Cheques, Bank Drafts etc., which are then collected and deposited into ...
Offshore banking is the action of having a bank account outside of the country of residence. Since its start, offshore banking has become a considerably lucrative business. Many of those who take part in offshore banking are looking for a secure location to place their income or seize the opportunity of having lower taxes. However, there are those who misuse the privilege of a foreign bank and use the business ventures for illegal actions rather than the original purpose of the dealings. Offshore banks seem to have an impartial acceptance of quite a few clients within the bank that create a lower standard of ethics in contrast to the ethics meant to be held—this includes those of a political position. Furthermore, this has the potential to be detrimental to the economy.
Many groups of people use money laundering today, and many ways exist to launder money. Money laundering has become more sophisticated over the years. It is much different then when Al Capone laundered his bootleg profits. The United States is doing what they can to combat this illegal activity but without the help of others it is an impossible task. Many countries have teamed up with the Unites States to help. The only way to truly combat it is to persuade the other countries to develop anti-laundering standards. Along with developing these standards, banks need to train their staff on how to catch different transactions and policies to catch money laundering. Because laundering is so easy in these less developed countries laundering will continue, and while this illegal activity continues the activity itself will continue to destroy the economy in which it exists.
Nigeria, with its prodigous oil and natural gas reserves, has the potential to be one of the most affluent places on the planet, were it not for the rampant corruption that defines it. Instead, it is the 20th poorest country in the world1. Much like the guanxi of China, Nigeria practices prebendalism—the use of high-level positions to gain personal wealth. In other words, people exchange money for political favors, which of course creates a greedy and corrupt society. The extent of this fraudulency is such that most of Nigeria's oil wealth is sucked up by one per cent of the population, while more than 60% falls below the poverty line. In fact, the United Nations Educational, Scientific, and Cultural Organization (UNESCO) has determined that 92% of Nigeria lives on less than one dollar a day2. Meanwhile, it is estimated that in the past 50 years, three to four hundred billion dollars have been stolen by government officials.
Nigeria’s 144 ranking out of 177 countries by Transparency International is just one benchmark of the endemic corruption issue in Nigeria, which ranges from politicians who funnel embezzled government revenue to foreign bank accounts; to police departments requiring bribes before conducting investigations or granting bail; and universities where school officials charge bribes for admissions and students pay teachers for improved grades.1,2 These types of political and economic corruption exacerbate the security challenges Nigeria faces as officials would rather expend government funds to augment personal fortunes than utilize them to counter militaristic threats against the nation, such as Jama’atu Ahlis Sunna Lida’awati wal Jihad (Boko Haram). At the local level, police officers who take bribes to allow anyone to pass through a checkpoint unchallenged further expose the nation’s populace to potential security hazards through the freedom of movement gained by insurgent/terrorist elements. Additionally, discriminate and unequal applications of civil justice and legal rights against various socio-economic classes continue to engender state-sponsored violence and human rights abuses.3,5
Many unsolved problems in many African countries, but the issue of the rise of corruption are disturbing, and the amends it has done to the polity are vast. The fear of fraud leads to restrict movement of documents in offices, slow traffic on the highways, port congestion, ghost workers syndrome, queues at passport offices, police extortion tollgates and gas stations, vote irregularities among others. Even the nutty people on the road remember the devastation caused by bribery - the funds allocated for their success disappear into some people pockets. Thus, some people believe corruption is the bane of many African countries. Corruption is the main obstacle to slow down, and knock African economy growing. The problem keeps happening in Africa, and the issue will hardly be solved.
Corruption can be defined as the use of entrusted power to accumulate public wealthy for personal benefit. Corruption is not peculiar to any country, continent or state; it is sure a global issue which is an endemic to all government all over the world. However, corruption is prevalent in the Niger delta region of Nigeria; public officers in this oil producing state of Nigeria are corrupt. Consequently, it has defied the Niger delta from developing politically and economically which has left the states reputation in a mess. Radicalization of youths, abject poverty and -political instability are the three leading effects of corruption in the Niger delta region of Nigeria.