Tax Policy Challenges in the 21st Century

S. 251I. Introduction

Corruption and money laundering are a growing worldwide problem. The World Bank estimates USD 1 trillion are paid in bribes each year. The United Nation estimates that in 2009, USD 2.1 trillion of proceeds with illegal origin were laundered through the financial systems, which equals about 3.6 percent of global GDP.

Money laundering is not the goal but is the life blood of criminal enterprises. Creating measures in national legislation that promote transparency can help in the fight against transnational crime.

In the first section of this paper, the author is gives an overview of the two most prevalent financial crimes: corruption and money laundering. After an introduction on bribery and a description of its different forms, the reader will learn about the indicators by which a tax auditor or intelligence officer can identify corruption in an organization. The third part of section one describes money laundering, its antecedent nature to other criminal activities, and the process of laundering money of its illegal origin. A little detour shows how the beneficial owner concept fits in the fight against financial crimes.

The third section provides two examples of agency...