The account owners are promised huge financial rewards if they
collaborate and if they bear some minor-by-comparison upfront costs.
The con-men pocket these "expenses" and vanish. Sometimes, they even
empty the accounts of their entire balance as they evaporate.
The Launderers
A lot of cash goes undeclared to tax authorities in countries in
transition. The informal economy (the daughter of both criminal and
legitimate parents) comprises between 15% (Slovenia) and 50%
(Russia, Macedonia) of the official one. Some say these figures are
a deliberate and ferocious understatement. These are mind boggling
amounts, which circulate between financial centres and off shore
havens in the world: Cyprus, the Cayman Islands, Liechtenstein
(Vaduz), Panama and dozens of aspiring laundrettes.
The money thus smuggled is kept in low-yielding cash deposits. To
escape the cruel fate of inflationary corrosion, it has to be
reinvested. It is stealthily re-introduced to the very economy that
it so sought to evade, in the form of investment capital or other
financial assets (loans and credits). Its anxious owners are
preoccupied with legitimising their stillborn cash through the
conduit of tax-fearing enterprises, or with lending it to same. The
emphasis is on the word: "legitimate". The money surges in through
mysterious and anonymous foreign corporations, via off-shore banking
centres, even through respectable financial institutions (the Bank
of New York we mentioned?).
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