Study on the Problem of Money Laundering

Study on the Problem of Money Laundering Chapter 1: 1) Introduction: Money laundering is a global problem. Measuring its impact is tough, as it takes place behind everyones eyes and it apparently is a victimless crime. Yet the damage it does can be devastating to the financial sector and economys real and external sector, especially in case of a developing country. By contrast, effective anti-money-laundering policies can reinforce a range of good-governance policies. This in result helps the country to sustain economical growth particularly by making the financial sector stronger. 1.1) Background Because of the worldwide growing concerns over money laundering, G-7 summit established Financial Action Task Force (FATF) in Paris in1989. Its purpose was to generate an international response to this increasing problem. Since then this organisation has been playing a vital role in tackling money laundering. It works closely with other international bodies that develops and regulates Anti-Money Laundering (AML) policies world wide. FATF members have 29 countries and jurisdiction includes major financial centres in Asia, North and South America, Europe- as well as the European Commission and The Gulf Co-Operation Council. 1.1.1) Problem statement Today a countrys economy largely depends upon the advancement of technology. It made the job a lot easier, but it came with its own challenge. Which concerns the international financial community the most is the bad guys are also using the technology to give their proceeds of crimes a legal look. In short the money made by various criminal activities in various parts of the world is injected into a nations economy to camouflage it or give it a lawful appearance. This system is known as Money Laundering and this problem is growing to a serious proportion over time. IMF estimated that the aggregate size of laundered money worldwide is 2% to 5% of global GDP in 1998. Regardless who or how the dirty money is being used, the operational system or method is always the same. It is a dynamic three stage process. The stages are: Placement- A large volume of cash which was obtained through illegal means is placed in to the financial system, can be used to buy high-price item or may be smuggled out of the country. The point here is to transform the cash into some other kind of asset to avoid detection. Layering- this stage takes place to hide the true origin of the unlawful money. Here in layering stage a complex set of transaction takes place to obscure the trail of that cold hard cash and its real ownership. At this point the advancement of technology helps them. One the methods are Electronic Fund Transfer (EFTs). Others include conversion of monetary instrument, investments in legitimate businesses, purchasing real estates. In most of the EFTs are used frequently. Because of the busy lifestyles and easy access, a lot of EFTs are processed everyday. Among all those when a Phoney EFT takes place between an offshore account and a shell company, It is pretty hard to spot a criminal transaction at first look. Integration- The final step of the process where the illicit money comes back clean to its owner and then integrated to the economy as investment into a legal business. Once integrated, it hides the identity or origin even further. 1.1.2) Research significance There has been little research into the effects of money laundering on the economic growth, particularly in a developing country. Most of the researchers and their works were focused on measuring the amount and usage of money-laundering. Hence the majority of this vast subject has remained unstudied. Therefore the developing countries, which are the prime channels for international money-laundering, are suffering from the need for the guidelines to stop the erosion of the long-term economic growth caused by this problem. 1.1.3) Research question In a developing countrys economy the role of the financial institutes such as- banks, non-bank financial institutes (NBFI), equity market-are critical. They help to sustain the economic growth by concentrating the domestic savings, even the overseas funding. For all these gaining customer trust is vital. Money laundering erodes these institute and affects the customer trust as this is interrelated with other criminal activities that is performed by the workers in financial sector or government. Besides that, money laundering facilitates domestic corruption and crime which results depressed economic growth. It also diverts the resources to less productive activity. In the light of above discussion, proposed work is on following questions: What is money laundering? What are the negative effects of it on economic growth? How does it harm the developing countries? 1.2) Aims and objectives The purpose of this study is to analyse harmful effects of the money laundering on the economic growth of a developing country. Because of the weaker economy, lack of strong policies and comparatively easy regulations the developing countries become an open market for such activities. Therefore those countries have scope to improve their policies, regulations and laws. The objectives of the proposed study are to know: What sectors are mostly being affected? What is the extent of the damage? What can the developed economic community do? What kinds of policies or regulations are being implemented? What kinds of policies or regulations can be improved? As the time advanced, money laundering business has also evolved by keeping pace with the time. Technology has made it more undetectable. The businesses are booming and consequences are visible. But regulatory bodies are also taking necessary steps. They are tightening their borders, educating people, creating awareness. Still these are not enough for the countries affected. Most of the time, they dont have enough resources to divert to that sector. As a result they are bleeding internally. Therefore we can assume the following: Most of the economic damage done by money laundering through its developing country channel is at the expense of the developing economy. The weaker regulations and policies are the more liberty a money launderer gets. Therefore they need to strengthen themselves, with the help of others if necessary. The countries with the developed economy have sufficient resources, therefore options to fight this particular crime. But in case of the developing economies, if not handled in time, it can distort investment, encourage crime and corruption and increase the risk of macro-economic instability. Through this study some solutions may be found, or at least the gravity of the danger ahead. 1.3) Limitations The expansion of money laundering problem is vast. At the same time a greater portion of this crime is goes unreported, hence unnoticed. Authorities all over the world has been struggling to get a proper grasp of the whole problem. The developments that are being made are on the implementations of AML policies and legal sector. But there is a great lack of research on the effects and consequences of money laundering in the developing economies. Therefore there is not enough data available to come to any exact conclusion. Besides, this research is based on the secondary data. So evaluating the existing data was not possible. To be able to do so, a higher level of intervention, e.g. Government, international banking authority etc. is necessary as this research involves the national financial data. 1.4) Overview The first chapter of this research introduces the area or the topic to the audience. What is money laundering, how big or vast the problem is, how did it start and how it is done, what are the authorities doing about it and what are the limitations of this particular research has been described in this section. The second chapter includes an extensive and analytic review of the existing literature that is available to refer to about this subject.(incomplete**) Chapter 2 2) Literature review 2.1) introduction This part of the report contains a thorough and critical study of the books journals, articles and other materials that is available on money laundering. This review gives the audience an idea how much research has been done in this area. It also helps to get an idea of the worlds concept of money laundering. 2.2) Review A channel or medium is required to carry out money laundering activity. The preferred medium that a Money launderer chooses is the financial institution that is efficient and costs less while carrying out the transactions (Masciandaro, 1999).Such activities ruin the integrity of those financial institutions and affects their soundness or stability. As a result of their weak integrity, they loses the investors confidence and eventually direct foreign investments are reduced. This process in turn disturbs the long-term economic growth of the country. Barret (1997),Masciandaro and Portolano (2003), Paradise (1998) and Quirk (1997) argued in their studies that the economic and financial systems of a country are threatened by money laundering. Despite of money laundering being a global problem, there has been a little research in the area of the harmful effects on economy. Some notable exception will include Uche, C U (1999) and Masciandro, D (2000). Most of the works were done on the legal framework or to develop effective AML policies over the years. Therefore quality data on the pervasiveness or any long term pattern of the affected economy is rather limited. The origins of money laundering can be traced as far back as 1930s in organized criminal activities (Bosworth-Davies and Saltmarsh, 1994). So it is clear that the concept is not a new one. Over the years it just grew over its proportion. Financial Action Task Force defined the problem as: . . . the processing of a large number of criminal acts to generate profit for individual or group that carries out the act with the intention to disguise their illegal origin in order to legitimize the ill gotten gains of crime. Any crime that generates significant profit-extortion, drug trafficking, arms smuggling and some kind of white collar crime may create a need for money laundering (FATF 1998). According to Mulig and Smith (2004), the term money laundering was originated by the organised crime families, who used to own legitimate laundry business to disguise or launder very large amount of cash, which was in fact, earned through extortion, prostitution, gambling and drug business. United Nations office on Drugs and Crime (UNODC) explained that there are two reasons why the criminals, May it be the street crime or the corporate white collar embezzlement or maybe a corrupt public official, need to launder the money because, it leaves a paper trail as evidence of their crime. Secondly, the money itself is vulnerable to seizure so it needs to be protected. In other words it is an Unfinished product to the criminal until it is cleaned. A bigger portion of literature on money laundering concentrates on the legal framework. That includes the legislation and regulations that can be traced back to the US war on drugs in 1980s (Gill and Taylor, 2004). Since then it was a concern that was growing over time. In response to that, international agreements were being made to tackle such activities amongst which, the UN was the first international organisation to combat the crime globally. Subsequently, in 1989 G-7 established FATF. In the FATF annual report (FATF, 2006b) it was stated that, most of the illegal activities are linked with corrupt practices and lack of transparency. This subsequently arises to weaker governance which results poor and ineffective use of AML policies. Those are the places that become heaven for money launderers. Their activities erode the financial system from inside while taking advantage of the volatile economy. In large scale money laundering operation, cross-border factor is always included. Therefore an international approach was a crying need to handle this problem effectively. That was also a reason why the UN and the Bank for international Settlement took the initiative to address the problem in 1980. Following the FATF formation, the regional grouping such as- Council of Europe, European Union, Organisation of American States And many others designed AML policies required and effective for their member countries. Asia, Europe, the Caribbean and southern Africa have created regional AML task force-like organizations, and similar groupings for western Africa and Latin America are being planned too. As discussed previously, second stage of money laundering widely uses the technology as one of their means of layering the dirty money, the use of it is becoming rather popular to them. The advances in technology, especially in Information and Communication Technology (ICT) have benefited the whole world. Money launderers are also included in the group of beneficiaries. They take full advantage of these benefits. Modernisation in technology, particularly in ICT has brought various different ideas banks or other NBFIs to offer new products and services through new means of delivery. These new products and services and often contain fast transmission of digitized information, facilitating of fund movement and transcending distance within or across the national boundaries (Bradley and Steward,2002) and anonymity (Philippsohn,2001). According to Mishkin and Strahan (1999) and Berger (20003) speed, distance and anonymity are the key factors that are rapidly changing the financial system. However, Masciandro (1998, 99) and Philippson (2001) implied that those new benefits including e-banking and all sorts of e-money technologies have made money laundering activities even more robust. As a matter of fact, FATF (2001) on their typology report identified the online banking facility and internet as the major money laundering vehicle now days. According to Chief Financial Officer Report (2002) Technolog y changes have influenced the operating strategies of many banks and Non-banks as they seek to compete in the increasingly fast-paced and globally Inter-dependent business environment. Chapter 3 3) Methodology 3.1) introduction: In this chapter all the data that has been collected will be shown. That data will be analyzed and interpreted in to results. As this is not a very comprehensive research, All the data has been collected from secondary sources. 3.2) Data collection

Mannerist Portraits of the 16th Century

The sixteenth century was a period of intense political and military. The 1500s were also a period of religious change. The Italian painter Parmigianino was a pioneer of the mannerist style, which his work shows an essentially decorative emphasis and accomplished smoothness. They had a nickname for Parmigianino which was â€Å"little man from Parma†. At the age of 19 Parmigianino was commission to frescoes for the Parma Cathedral. Now the painting that I’ve chose from the Mannerist portraits of the 16th is Parmigianino’s Madonna and child with Angels, which is also Madonna of the Long Neck.Now the reason they call it Madonna of the long Neck is because how long her neck is in the painting. The Madonna, in particular, has an elongated neck and tilted head. Her movement flows into the spatial twist of the torso and legs, Mary dress, in contrast to the usual blue and red. Parmigianino’s painting exemplifies the elongation that the Mannerists gave their figure s. They made the stretching the human body in some ways the Mannerist artists seemed to be ahead of everyone else. This is one of the most popular subjects in Christian art.It has been painted by hundreds of painters over the centuries to be placed in a church or chapel as an altarpiece. Some of the effects that are in the picture is the faces are more realistic and not idealized. The baby Jesus is less of a small man and more like a child. An attempt at creating depth has been attempted to place two background angels and through the use of linear perspective in the throne. Modeling is clearly visible as the light source is coming from the left of the painting.Madonna drapery has larger and more naturalistic folds that shape her body. The way Madonna look had her head tilted and how her hand was on her chest in the picture was like she was in the royal family or had royal blood, and how the mannerism had a different style of painting the baby was bigger than the normal size baby. In the picture is see five angels looking at Madonna and the baby. They use Oil on panel, and if you pay attention to the floor there is a little man looking away from a scroll.As you can see that the painting is taking place in a room, but in the background you can see a background of outside, and they used like a brownish colors to make it look like the sun is going down or coming up. If you look at Madonna and the angels cheeks, they have all have red blush on their cheeks. If you look close you can see that Madonna’s stomach is sticking out a little because the scene of the painting makes it look like she just had a baby.

Use Of Performance Enhancing Drugs Should Be Banned

The controversial question is whether the use of Performance Enhancing Drugs (PED) in sports should be banned or not. Professional sports are popular in most countries. Major franchises are dealing with the issue of PED being used by the athletes who are paid to perform in the sport on the belief that they are naturally a raw talent. This controversial essay will side with the banning of PED use in any type of sport activity, whether it is at professional or amateur level. Both sides of this issue will be discussed, however the focus will remain towards the banning of these very harmful drugs. PED are both harmful and unfair when it comes to being a professional athlete and based on usage history have a long-term effect on the user. The use of performance enhancing drugs should be banned to keep the sport both safe and clean, to prevent cheating and unnecessary future illness to the athlete in the sport. Many who believe that PED are acceptable in the use of sports will argue that they make the sport more entertaining. These professional athletes are being paid a fortune based on their ability, physical and intelligence of the sport that is incredibly better than your â€Å"average joe†. â€Å"Paradigm cases of PED are steroids and human growth hormones, which dramatically increase athlete’s ability to build muscle mass, increase athlete’s energy and endurance† (Dixon 246). These drugs increase the ability of these athletes; therefore, many argue why not let the athlete use theseShow MoreRelatedAnabolic Steroid Use in Sports Summary1493 Words   |  6 PagesSteroid use in Sports The competitive drive to win at all cost is fierce among athletes. Winning at all cost often includes using one of many performance enhancing drugs such as anabolic steroids. 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Hills Like White Elephants, By Ernest Hemingway - 1673 Words

â€Å"Hills Like White Elephants,† by Ernest Hemingway: The Morality Within the Operation Ernest Hemingway created the iceberg theory, by which he expects the reader to know a great deal of information from the little he expresses in his work. This style is evident in his short story, â€Å"Hills Like White Elephants,† because the information the reader must obtain is hidden underneath the surface. This writing style often confuses the reader, but when the short story is read multiple times, the reader can connect to Hemingway’s unique use of a variety of essential elements. The relationship between the reader and the story is strengthened by the vivid imagery, appealing setting, multilayered characterization, and a deep symbolism expressed†¦show more content†¦However, in this short story critics believe it symbolizes a prayer Rosary because of the mere fact, Hemingway includes the vivid action of Jig taking hold of only two of the strings (Oliver 203). Ironically, the reader can predict Jig practices the Catholic religion, who believe and view ab ortion as a devilish sin. By caressing the bead curtain Jig is praying and seeking guidance to come up with a solution to the critical decision. In his article, Stanley Kozikowski discusses the cool wind that blew the bead curtain, and the effect causes different interpretations of the American and Jig. The American interprets the wind and the abortion procedure as similar to each other, by letting the air in the young couple can get on with their lives. On the other hand, Jig interprets the wind as negativity exiting her life, whether it be the baby, the American man, or both. The setting takes place on a hot day in Spain at a train station that is in the middle of Barcelona and Madrid. The reader is informed of a waiting period of forty minutes until Jig and the American’s train arrive. In the short story, the train station is the stop before the young couple’s actual destination. They can either take a train to continue their life freely and wildly in Barcelona by going through with the abortion procedure, or by going to the Catholic country, Madrid, and live the fantasy of a happily married couple as they raise their child together.Show MoreRelatedHills Like White Elephants by Ernest Hemingway580 Words   |  2 PagesE.B. White once said, â€Å"Theres no limit to how complicated things can get, on account of one thing always leading to another.† This quotation means that nobody ever knows how complicated things are going to get, and on top of that they can get worse. One can agree with this statement because in life you can go thro ugh unexpected situations that really affect your life in a negative way, and in life things might get worse. Both Soldiers home by Ernest Hemingway and Hills like white elephants by ErnestRead More`` Hills Like White Elephants `` By Ernest Hemingway886 Words   |  4 Pagesreader could put themselves into. Whether they choose to partake in a wayward journey full of adventure or the daily life of a human being with morals; a story’s aspect influences those thoughts with a deeper understanding. In Ernest Hemingway’s â€Å"Hills Like White Elephants,† it follows an American man and girl at a resting point during their travels. They arrived by train, stopping between Barcelona and Madrid. While there, they patiently waited for the next train at a bar inside of the station.Read MoreHills Like White Elephants By Ernest Hemingway893 Words   |  4 Pages Ernest Hemingway was a prolific writer. His short story, â€Å"Hills Like White Elephants† shows the te nse situation between a man and a woman on vacation. Hemingway chooses to be vague in many ways. He never gives real names to his characters, nor explicitly states where they are besides hinting that they are in Spain. Additionally, he leaves it entirely to the reader to discover what the couple is discussing. By only providing information to the reader through only the dialogue of the two centralRead More`` Hills Like White Elephants `` By Ernest Hemingway939 Words   |  4 PagesThe short story â€Å"Hills Like White Elephants† written by Ernest Hemingway, is an intriguing literary work that foretells the story of a man and a woman waiting for a train, whilst discussing their feelings and emotions towards the surgical operation that is about to occur on the woman. Although the story was originally written in August 1927, the piece was later published in Hemingway’s short story collection ‘Men Without Women’. The text includes a wide variety of literary terms and has various criticalRead MoreHills Like White Elephants By Ernest Hemingway990 Words   |  4 Pages Another relationship coming to an end†¦ Throughout the story â€Å"Hills Like White Elephants† written in 1927 by Ernest Hemingway, he used the train station setting, the desired operation, and obviously the relationship between the American and the girl to symbolize a crumbling relationship and unwanted gift between them. The American and the girl find themselves wound up in a rough, unplanned situation that they are trying to fix. Many bread crumbs are dropped throughout the story to symbolize a collapsingRead MoreHills Like White Elephants By Ernest Hemingway1446 Words   |  6 PagesErnest Hemingway’s short story â€Å"Hills Like White Elephants† explores the topics of abortion, sex before marriage, and feelings of separation. There are many different points of view one can take on Hemingway’s work. The main literary analysis that will be explained is the significance of the title and how it is layered into the story in various places. In addition to this, the narrator’s point of view will also be discussed since it plays a role in bringing the characters together. Lastly, it willRead More`` Hills Like White Elephants `` By Ernest Hemingway1750 Words   |  7 PagesErnest Hemingway’s stories are known for their ever interpreting meanings behind them, and â€Å"Hills Like White Elephants† does not trail from the rest due to the never mentioned word ‘abortion’. â€Å"Hills Like White Elephants,† written by Ernest Hemingway, takes place around World War 1 in Spain, at a train station (Hills Like White Elephants. 4). An American man and a girl have been discussing the girl’s unspecific operation. It is apparent that the girl is perturbed about this operation, while theRead MoreHills Like White Elephants By Ernest Hemingway1037 Words   |  5 PagesOlivia Sellers English 102 Scheck February 10, 2016 â€Å"Hills Like White Elephants† by Ernest Hemingway Ernest Hemingway’s â€Å"Hills Like White Elephants† can be puzzling and hard to decipher. Due to this, a number of conclusions can be drawn away from the text. The dialog between characters leaves a number of questions unanswered and leaves the reader confused about the conversation as a whole. Many things are left unsaid and not explained in the story, with that being the case, the reader must takeRead More`` Hills Like White Elephant `` By Ernest Hemingway865 Words   |  4 Pagesbefore it begins, or as easily getting rid of problem before it even became one. In the short story â€Å"Hills like White Elephant†, the compensation of abortion can easily be seen between Jig and her American lover’s decision whether to keep the innocent’s life or not. Ernest Hemingway uses the fiction element plot, symbolism, and setting to illustrate the theme of abortion in â€Å"Hills like White Elephants.† Abortion has been viewed as a crucial struggle between couples. Many view this situation as endingRead MoreHills Like White Elephants, by Ernest Hemingway1432 Words   |  6 Pagesunderstood behaviors. Ernest Hemingway weaves both of these stereotypes into his short story â€Å"Hills Like White Elephants.† The story’s plot revolves around a couple arguing about whether or not to have an abortion. In Hemingway’s â€Å"Hills Like White Elephants† a theme of male domination can be found, but by examining the dialogue closely, a theme of females asserting their will and manipulating emerges as well. Male domination is the primary and most obvious theme in â€Å"Hills Like White Elephants.† During the