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Money laundering in the financial community: one of the dark sides of globalization

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  1. Introduction
  2. The perverse effects of financial globalization
    1. Tax havens and offshore centers: new spaces of lawlessness
    2. The issue of terrorist financing and its difference with the money
  3. The fight against money laundering faces a degree of impunity
    1. A stronger fight
    2. Limited effects
  4. Conclusion

Economically, globalization may appear beneficial in that it enhances trade between men and generates growth. Many of its adverse effects are, however, the game of criminal organizations. Indeed, with the rise of movements of people, goods and capital, globalization tends to increase the capacity of individuals and businesses to overcome the state borders. Therefore, the process of globalization now relies on global financial integration and creates a single market of capital operating on a global scale and suitable for a mixture of financial flows from criminal activities (drug trafficking, weapons, corruption, etc) with the legal economy.

Financial globalization has been greatly enhanced by several factors. Firstly, the liberalization of capital movements, since the late 1980s, out of national or international control and also the dematerialization of financial transactions, accelerated by technological communications revolution, and the reliability increased by a global archipelago of places specialized in the management tolerated financial crime havens. Given the liberalization of capital movements, the fight against money laundering faces several challenges such as banking secrecy and the transfer of funds from one country to another.

These factors affect the freedom of movement of capital. These foundations of economic liberalism thus become formidable obstacles to tracking down financial criminals. How does organized crime use this financial system to launder the profits generated by their various illegal activities? What are the mechanisms put in place to fight against the laundering of money, which can also be a source of terrorist financing? What are the consequences on the economies and their people?

This paper will therefore analyze how financial globalization has given rise to many tax havens, as well as terrorist groups who take advantage of this unregulated market to finance their activities. Then, it will highlight a fight against money beset by many difficulties.

The globalization of economic and financial activities has made the world a homogeneous space, where money flows freely to circulate. However, this internationalized financial system and open plan offered greater prosperity for money laundering. To conceal the criminal origin of funds exchanged, money launderers are, in fact, using a set of techniques and processes including legal and fiscal investments in tax havens.

Tax havens that proliferate especially in the 1990s are indeed jurisdictions that offer financial services that are out of control. Globalization has facilitated access to "paradise" protectors of capital and people. Indeed, international criminal organizations take advantage of the gaps and contradictions of judicial standards between the countries of the world.

Tags: Money laundering; financial havens; consequences on the economy; financial havens used by organized crime and terrorist groups

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