Illicit Economic Practices


During the 21st century, the domination of capitalism has revamped the global economic architecture. Transnational business, multilateral trade trades, Imperatives of technological advancement, and global interconnectedness instigated two folded economic patterns. First is the visible economy that demarcated by international and domestic regulations comprised of tax envisions, legal frameworks, whereas second is the covert/ shadow economy that has gained unprecedented acceptance across the world due to its comparative advantage and its ability to absorb billions of dollars without notice, converting illicit funds into legitimate assets through anonymous agency/actor. This kind of economy has become a fascinating choice. However, there is certain fundamental that paves the path of the shadow economy, amongst all Money laundering (ML) is the most favorable choice and a key determinant for this kind of illicit economic activities. The UN estimates that $800 billion to $2 trillion is laundered through the global financial system every year. With no exception, the developed states are key involved actors in this illegal flow of money due to the better comparative power of the currency. Likewise, the least developing countries are a key exponent of susceptibilities of ML and Terror Financing (TF) rooted in their system. The weak governance structure, menace of corruption, nepotism, and other trends allow illegal activities to percolate the fundamental structure of the country by creating a complex web that remains covert and hidden.

The illegal flow of money has posed another significant challenge to the global security structure through financing proxy warfare. Hiring mercenaries, surreptitiously Terror financing has become the dreadful practice in the contemporary geopolitical realm at the inter- intrastate level. To mitigate those challenges, G-7 states in the year 1989 established an intergovernmental body named -The Financial Action Task Force (FATF), 37-member states hold membership of FATF to date along with eight regional associate members. The FATF operates with two different categories- first non-complying countries to the practices of FATF usually includes the blacklisted entities. Second, the states that make efforts to combat terrorist financing but due to numerous constraints and strategic deficiencies it is placed in the grey list. The enlisted states remain under the constant surveillance of the FATF surveillance policy and it gives recommendations after inclusive appraisal regarding the developments in the context of Money laundering and Terror Financing. Furthermore, FATF also holds the authority to alter the status of any state/entity by using its jurisdiction of power.


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