Illicit Financial Flows: Conceptual and Operational Issues

Who Are Our Owners? Exploring the Ownership Links of Businesses to Identify Illicit Financial Flows

“…In almost all specifications, financial secrecy is strongly correlated with our indicators of anomalous ownership links -that is, the levels of residuals and their outliers. This result confirms a large amount of literature pointing to the opacity of the financial, banking and corporate sectors as a key vulnerability for IFFs (Aziani, 2018;Janský and Kokeš, 2016;Van der Does de Willebois et al, 2011). This empirical result argues in favour of the fact that 'rational choice' is a strong theoretical perspective for understanding the mechanism behind IFFs, as it is for money laundering and tax fraud (Cornish and Clarke, 2002;Gilmour, 2016;Mehlkop and Graeff, 2010).…”

“…The focus of this article is on legal persons only and the unit of analysis is the country, that is, the aggregate volume of ownership links between legal persons located in i and j. In accordance with most of the literature (for example, Aziani, 2018;UNODC, 2017), we use the expression 'illicit financial flows' to refer to the transnational movements of assets related to illicit activities such as money laundering, corruption (especially grand corruption) and tax evasion schemes -eventually including some forms of tax avoidance. 1 Using an exploratory multivariate analysis of data on the nationality of shareholders of companies registered in 41 European countries, the article analyses whether crossborder business ownership links are exclusively driven by legitimate determinants -for example, economic size, cultural proximity, trade or other social and macroeconomic drivers -or whether they are explained also by illicit determinants, related to countries' financial secrecy and level of corruption.…”

Violent disequilibrium: the influence of instability in the economic value of cocaine markets on homicides

“…Our estimation of the fluctuation of the value of cocaine markets relies on an approach developed in the field of macro-level network studies (Berlusconi et al 2017;Boivin 2011Boivin , 2013Boivin , 2014UNODC 2015) and fully detailed in all its calculi, assumptions, limits, and data sources by Aziani (2018). This method yields a longitudinal and cross-sectional estimate of the gross value added generated by drug trafficking and dealing at national and international level in each country considered.…”

“…All cocaine flows can be bilateral, so that exports from a given country may be mirrored by imports from all other countries, and vice versa. Wellestablished methodologies to estimate consumption and seizures are available (Everingham and Rydell 1994;Kilmer et al 2014;Prinzleve et al 2004;Pudney et al 2006), and necessary data are available in open-access repositories (EMCDDA 2015; UNODC 2019b) and in institutional reports and academic publications (Aziani 2018;EMCDDA 2016;Everingham and Rydell 1994;Kilmer et al 2014;Kilmer and Pacula 2009;Trautmann et al 2013). The relative magnitudes of different flows entering the same country are known (𝛾)-we can calculate them according to the amount of cocaine seized along each dyad.…”

“…UNODC's online databases (2019b) provide six levels of prices per country (i.e. minimum, typical, and maximum price at both street and wholesale levels) for most of the countries in the world; the opportune combination-and interpolation-of these data allows a final estimate to be made of the fluctuation of gross value added per year and per country (Aziani 2018). By exploiting the estimate of the imported quantities of cocaine and the data on seizures, it is possible to estimate the amount of cocaine which is intercepted by law enforcement authorities as a proportion of the total imported quantity-i.e.…”