Financial crimes form a multitrillion-dollar industry which affects every business sector and geographical area. The term ‘financial crime’ covers all areas of criminal conduct involving money, including fraud, terrorist financing and money laundering.
Financial crimes are sometimes referred to as a victimless crime – but this is not the case. Individuals, businesses, nongovernmental organisations and public sector organisations can all be targets in financial crime. Furthermore, financial crimes are often related to hugely harmful practices, which include modern-day slavery, drug trafficking, human trafficking and unsafe labour practices.
Fraud costs added up to £3.89 trillion globally in 2019, which equates to 6.05% of global GDP (Crowe). Over the last two years, 47% of companies have experienced and reported fraud (PwC). By 2017, 40 million people were victims of modern slavery (International Labour Office and Walk Free Foundation).
1. Fraud Fraud involves deliberately misleading or deceiving another party in order to make some form of gain, often financial. Fraud can take on many forms, from using someone else’s identity to tricking someone into sending money to a (seemingly) genuine cause.
2. Bribery and corruption Bribery is the attempt to influence judgment or behaviour by offering or receiving money or another reward. For example, paying officials a fee to ensure a business deal is completed quickly. Corruption is the misuse of power for personal or organisational gain, which may or may not include bribery.
3. Money laundering Money laundering involves transactions that attempt to conceal the origin or destination of money and often involves money being transferred through multiple accounts or jurisdictions. The goal of money laundering is to deliver the money to the recipient while concealing any links to illicit activity.
4. Terrorist financing Terrorist financing involves financially supporting terrorist organisations or individuals. The financer may directly provide money or indirectly channel funds through an intermediary. 5. Modern slavery Modern slavery involves people being forced to work against their will. Victims may have been trafficked or lured to a country under false pretences, then had their passport taken away. People in modern slavery may be paid, but it will not be enough to survive on or to escape the situation in which they find themselves.
6. Sanctions Financial sanctions are the prohibition of carrying out transactions with an individual, organisation or an entire country. Sanctions are a key part of the global fight against financial crime. They may involve a targeted asset freeze on an individual or a comprehensive ban on transferring funds to a specific country. Some financial sanctions are imposed by the United Nations or other international organisations such as the European Union, while others are imposed at the national level. Organisations must comply with financial sanctions – non-compliance is a criminal offence.
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