Reverse money laundering in Russia: clean cash for dirty ends

Abstract

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of reverse money laundering, whereby, instead of “washing” criminal proceeds to make them legal, legitimate funds are withdrawn from formal circulation and pumped into the informal sector to evade taxes, hand in bribes, pay “under-the-table” salaries and sidestep paperwork.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.

Role of perceived countries’ advantages of cashless economy in behavioral intentions of using cashless transactions: an empirical analysis

“…, Zandi et al (2013); Krolikowski (2014); Goel, and Mehrotra (2012); Essame ( 2006 Warwick (1993), Zabyelina (2015); Immordino and Russo (2018), Matonis (2013); Goel (2018) vii . .…”

“…Globally, the underground economy operates mainly through cash transactions. Reducing the quantum of cash transactions would help curb the functionality of such an economy, which would result in the reduction of robberies, crime, money laundering, counterfeit currency, tax evasion and bribes (Warwick, 1993;Alba, 2003;Felson and Boba, 2010;Mehta, 2009;Zabyelina, 2015). Based on this proposition, many countries, including few developing countries, have implemented their strategies to replace cash transactions with cashless transactions in the formal financial system.…”

“…Increased transparency will reduce the quantum of hawala transactions, tax evasions, money laundering, corruption and bribery (Figure 1). Consequently, the creation and existence of black money in the economy would come down and help increase revenues to the government (Warwick, 1993;Levin and Satarov, 2000;Schramm and Taube, 2003;Goel and Mehrotra, 2012;Zabyelina, 2015;Goel, 2018).…”

Organising the Monies of Corporate Financial Crimes via Organisational Structures: Ostensible Legitimacy, Effective Anonymity, and Third-Party Facilitation

“…For instance, it has been evidenced that organised crime groups may use corporate vehicles to launder illegal profits (e.g., from the drugs trade), to generate income (e.g., boiler room frauds), to avoid personal liability (e.g., as in bankruptcy frauds), or to legitimise other activities (e.g., using a business as a 'front' for illicit market trade) (see Van de Bunt et al 2007). Additionally, cases of 'blackwashing' or 'reverse money laundering', where legally acquired assets are used to fund criminal activities, have also been analysed (see for example Zabyelina 2015). Money laundering, tax evasion, and bribery in which we see the misuse of 'corporate vehicles' are typically phenomena that transcend the categorical distinctions between corporate and organised crime (see also Ruggiero 2017b).…”

FIFA – highlighting the links between global banking and international money laundering

“…The OECD and other agencies have often advocated in the past for the removal of cash-based economies to be able to detect criminal activity and to make financial systems more accountable (Zabyelina, 2015). It could be argued that without the bank statements the evidence being suggested against individuals within FIFA would not be possible; however, it is also an indication that major criminal activity still occurs, even when the formal banking structures and electronic payment systems are used.…”