Mapping the trails of financial crime
| Date | 01 April 2005 |
| Published date | 01 April 2005 |
| DOI | https://doi.org/10.1108/13590790510624918 |
| Pages | 139-143 |
| Author | Massimo Nardo |
| Subject Matter | Accounting & finance |
Mapping the Trails of Financial Crime
Massimo Nardo
INTRODUCTION
Recent economic and geo-political events have alar-
mingly highlighted the risks to peace and economic
prosperity that could occur if phenomena such as ter-
rorism, organised crime and political subversion were
to join forces for mutual support.
The ®nancial crimes that could result from such
collaborations are particularly worrying and include
fraud, money laundering and operations of a direct
criminal nature, or the more insidious one of occult
®nancing of organised crime, political subversion, ter-
rorism and other such serious criminal activity.
Besides the direct threat there is an indirect one,
namely, the damage to the ®nancial system that the
use of credit and ®nancial channels for criminal ends
can cause, since integrity and transparency are a sine
qua non for a sound and ecient market economy.
The risks produced by ®nancial crime have grown
in step with the number and sophistication of the
instruments available, with low-cost and user-friendly
technology that spreads exponentially and with con-
stant innovation, and is capable of speeding-up and
swelling the size of illicit operations. A corresponding
increase in damage is being in¯icted on the integrity
and soundness of the system.
Extremely topical, therefore, has become the need
to identify and combat such forms of crime through
a method that is cohesive and eective, based on
timely and preventive measures. No stone can be left
unturned; every road and every source of help must
be explored and tested to discover an eective strategy
of response. This could be the essential formula for
®nding the best solutions.
Up to now, most legal systems have focused their
attention primarily on instruments created for track-
ing and investigating illicit operations after the fact.
But these instruments have too often proved a bit
too slow. The authorities ®nd themselves in the posi-
tion of running after the problems and their perpetra-
tors Ð the robbers always keeping the advantage over
the cops. With this advantage and with the ever-
increasing innovations in technology that can be
used for illicit ends, the risk grows that the criminal
act cannot be intercepted by the supervisory, investi-
gative or law-enforcement institutions before the
action has been completed and the strategies for
concealing proceeds and perpetrators for the most
part realised.
In this state of things, even the uncovering and
reconstruction of the speci®c techniques used in ®nan-
cial crime are of use only over the short term since
behaviours tend to move away from revealed
schemes.
To meet the challenge from ®nancial crime in its
many and most innovative forms, there must be a
broader prospective. It is essential to look at more
predictive and preventive instruments. It is neces-
sary to know more about the movements that go
through the markets: the causes, options, instru-
ments available, opportunities that arise from all
these, choices that this mix can oer the perpetra-
tors, and the eects these choices produce at
system level. It is essential to be able to foresee,
anticipate and in¯uence changes in behaviour Ð
not only those of lawful operators, but if possible
those of the same illegal players.
In a word, it is needful to know more to be able to
intervene better and more rapidly. Illegal players must
be beaten at their own game of ®nding out the best
strategies, to block them through timely intervention
or wait for them as they come out the other end. That
only will advantage the goal of con®scating the pro®ts
and arresting the perpetrators.
FINANCIAL CRIME AND ECONOMIC
ACTIVITY
To identify how all this can be possible, a return must
be made to more general principles. Finance, like the
economy in general, is essentially a process of
making choices among the alternatives available, for
the aim of achieving a pro®t. The conditioning ele-
ments of such choices are related to the structure of
the environment where they take place. Speci®cally,
they refer to:
Constraints that characterise the environment
(whether objective or induced as the eect of a
mix of individual actions, or by the actions of
someone who has the power to structure the
environment itself);
Page 139
Journal of Financial Crime Ð Vol. 12 No. 2
Journalof FinancialCrime
Vol.12,No. 2,2004,pp.139±143
#HenryStewart Publications
ISSN1359-0790
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