Money hunt

18:30, 10 September 2016
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It is becoming increasingly difficult and dangerous in the modern world to hide criminal assets and all the money made in a shade. For many years, a hunt has been ongoing for the assets concealed in offshore jurisdictions or that wandering in the form of large bulks of cash. This trend does not seem to subside.

Recently, at a G20 summit in China, the leaders of major economies supported the establishment of the International anti-graft research center of the G20. It will deal with the issues of the search and return from abroad to their home countries of fugitive corrupt officials and recovery of stolen assets. Another newly established international organization aimed to hunt for dirty money will become a  research center on fugitive repatriation and asset recovery.

The establishment of such centers has a noble cause, demonstrating that the fight against corruption is, in fact, an extremely popular global trend. Another thing is that the fight against corruption is only an important addition to the general global trend of strengthening control over the global capital, its handling, allocation, and target use.

It seems that the world leaders decided on a sharp tightening of control over financial resources amid a serious imbalance of global political and economic areas, as well as the international security system.

China’s joining the fight against corruption and shadow capital is very symbolic. Once such a decision was taken in Beijing, it appears that a critical mass for complete blockage of loopholes for uncontrolled financial resources has almost been created.

There are plenty of facts indicating the various government agencies around the world, as well as network communities and other players, have started a real hunt for shady money. For example, the financial crisis in Cyprus in March 2013 is worth noting, when many funds held in this jurisdiction have not been fully or partially returned to foreign investors, instead being allocated to the restoration of the financial stability in Cyprus. At the time, part of Ukraine’s "big businessmen" and corrupt officials has also suffered losses. Many have realized that the end of the offshore era was near.

Later came the multiple data leaks about offshore accounts of various high-profile individuals, who had been using their power trying to get away from paying taxes or simply hid their assets in "safe havens" until better times. Let’s remember the infamous PanamaGate, inflicting a deadly blow on the second most popular offshore jurisdiction. The scandal was so powerful it did not even spare a football world star Lionel Messi. The leak caused quite a stir among many former and current Ukrainian politicians and officials.

It should also be added that after 9/11, began the process of banking secrecy dismantling, which is now almost completed with a variety of methods, including hacker attacks on the database of banks and governments. Even in Switzerland, the last resort of banking secrecy, it is practically impossible for depositors to ensure anonymity.

Naturally, the release of compromising material against more of the world's corrupt officials and tax evaders will continue shortly. Especially since the new financial institutions were created in China on a G20 platform in order to set up a systemic search of shadow assets.  

Another aspect is the latest campaign against cash money. The pressure of "the expert community" and politicians on the issue of withdrawal of banknotes in denominations of $100 and, in particular, EUR 500 has increased significantly. In a parallel line, the developed countries pursue their efforts to improve the infrastructure for the widespread use of banking cards and e-finance. By the way, Ukraine has also been lowering the bar for the use of cash for large purchases lately.

At the same time, many experts believe that, after tackling the offshore havens, the banking, governmental and international organizations will not be able to significantly improve the protection of investments and businesses. This, in turn, will lead to a reduction in economic activity, curtailment of the investment process, and reduction of the overall level of international integration. But the essence of the process is not economic growth but control over financial resources drawn from corruption activities and from the shadow. Therefore, the drop of economic growth will be a side effect of the whole process.

Against this background, the Ukrainian elite should be fully aware that the risks of loss of their capital derived from the not-so-legal activities, which was siphoned from the country, have now increased significantly. The situation will get even worse. Therefore, maybe it’s high time for them to invest in their own country, raising the price of their assets and developing the resource base?

Moreover, the current situation favors innovation and non-trivial projects.

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