Purpose
– The purpose of this paper is to provide an overview of and comment on various aspects of reverse money laundering, whereby, instead of “washing” criminal proceeds to make them legal, legitimate funds are withdrawn from formal circulation and pumped into the informal sector to evade taxes, hand in bribes, pay “under-the-table” salaries and sidestep paperwork.
Design/methodology/approach
– The paper is divided into two parts. The theoretical part reviews the relevant academic literature and discusses the role of cash as a dominant medium of exchange in the underground economy. The empirical part is grounded on a qualitative analysis of several case studies of fraudulent encashment schemes all of which illustrate how reverse money laundering works.
Findings
– The findings suggest that fraudulent encashment, a type of reverse money laundering, is performed via bank and non-bank institutions. Importantly, methods and techniques used in conventional forms of money laundering are also used in reverse money laundering schemes.
Originality/value
– Despite a large volume of literature on money laundering, reverse money laundering remains an understudied area. This paper discusses the peculiarities of illegal transfers of non-cash assets into cash, which have been the pronounced problem in Russia and other post-Soviet countries since the 1990s.
Whereas there seems to be a consensus on the importance of social services for the success of peacebuilding efforts, the role of corruption in the public sector remains ambiguous. On the one hand, conventional interpretations of the role of corruption in the aftermath of conflict suggest that corruption impedes a successful war-to-peace transition. On the other hand, corruption may be necessary to the survival of ordinary citizens by reinforcing economic efficiency and helping them to gain access to basic social services. This article studies various aspects of post-conflict reconstruction in Chechnya with a particular focus on corruption in in the public sector. It argues that Moscow's strategy of soothing the insurgency in the North Caucasus with generous financial injections has brought some stability at least in the sense of absence of large-scale violence. Despite these seemingly positive results, sweeping corruption in the public sector is likely to undermine the effectiveness of post-conflict reconstruction and development projects in Chechnya in the long run, in this way increasing the likelihood of post-conflict Chechen society sliding back into public discontent and violence.
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