Political factors affecting AML/CFT efforts in post‐communist Eurasia. The case of Georgia

Pages59-73
Date02 January 2009
Published date02 January 2009
DOIhttps://doi.org/10.1108/13685200910922651
AuthorElias Götz,Michael Jonsson
Subject MatterAccounting & finance
Political factors affecting
AML/CFT efforts in
post-communist Eurasia
The case of Georgia
Elias Go
¨tz
Institute for Security and Development Policy, Hamburg, Germany, and
Michael Jonsson
Institute for Security and Development Policy, Nacka, Sweden
Abstract
Purpose – The purpose of this paper is to provide an overview of anti-money laundering (AML)
efforts and high-risk sectors in Georgia, and explain changes in this field over time.
Design/methodology/approach – This case-study draws on a political economy-approach, based
on the argument that “political will” provides the best explanation for the quality of AML efforts in
transitional economies, as opposed to “technical assistance” or the sophistication of the domestic
financial system.
Findings – The study finds that AML efforts have drastically improved in Georgia following the
Rose Revolution, even though significant high-risk sectors remain and a certain tendency towards
“selective implementation” of AML regulations can be detected.
Research limitations/implications – Implies that the “political will” of the ruling elite and the
promotion thereof should be increasingly incorporated into research on AML, especially as regards
explaining the quality of implementation and enforcement of existing laws.
Practical implications Implies that technical peer evaluations resulting in “naming and
shaming” of jurisdictions that do not live up to international AML standards may not in and by
themselves be enough to further efficient implementation, but need to be complemented by policies
creating incentives for the domestic political elite to encourage de facto implementation of de jure
regulations.
Originality/value – Provides the first comprehensive overview of AML efforts in Georgia and
points to important explanatory factors underlying changes in this field.
Keywords Georgia, Moneylaundering, Law enforcement, Government policy
Paper type Case study
Introduction
During the past ten years, efforts to counter money laundering and terrorist financing
have grown exponentially, driven largely by the US “War on Drugs” and later the
so-called “War on Terror” (Biersteker et al., 2008; Clunan, 2006). But, it is only during
the past three or four years that such efforts have begun to yield any palpable results in
terms of criminal investigations and convictions in post-communist Eurasia[1].
In this region, the process of designing new political and economic systems while
simultaneously grappling with issues of national identity “triple transition” has
provided fertile ground for corruption, profiteering, and money laundering (Karklins,
2005; World Bank, 2000). In this paper, the center of attention is not so much on money
laundering per se, but rather on how the state is responding to it. As most countries in
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
AML/CFT
efforts
59
Journal of Money Laundering Control
Vol. 12 No. 1, 2009
pp. 59-73
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200910922651

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