Organised crime and money laundering trends and countermeasures: a comparison between western and eastern Europe

The scope of this contribution is to provide an overview of recent trends in organised crime and money laundering activities in the countries of central and eastern Europe, and to underline the contrast policies devised to prevent the infiltration of financial systems in these countries by organised criminal groups. However, in order to achieve a better understanding of these phenomena and to make an evaluation of existing contrast and prevention policies, it is necessary to adopt a wider perspective, which also comprises western Europe. Some of the factors, in fact, which affect the development of transnational crime and the countermeasures taken at the national and international levels, are particularly relevant in the European continent (Adamoli 1998). The first is the globalisation of the economy, which at the European level means the establishment of a single market, which brings citizens and corporations from foreign countries increasingly in contact. Related to this are the abolition of border controls between Schengen states and the integration between western and eastern Europe through the transition of these countries towards a market-controlled economy, which have increased the opportunities for illicit transactions across borders (Winer 1997). Moreover, particularly relevant when tackling the issue of money laundering are improved communication technology (including telephone, fax and computer networks), the explosive increase in the use of computers in business, the development of electronic systems in the banking and other parts of the financial sector which use wire transfers to shift enormous amounts of cash around the world very rapidly. All these factors combine to make borders more and more permeable, favouring interdependence among businesses and their globalisation. Combined with the persisting difference and segmentation of anti-money laundering legislation at the regional level, they contributed to a rapid increase in transnational criminal activities, making it of increasing concern. In fact, just as legal businesses are expanding internationally in response to the globalisation of markets, so are the criminal enterprises seeking to develop both their structures and illicit activities at the international level in order to gain access to new markets, taking advantage of the discrepancies between the legal systems of countries in different parts of the world. These “environmental” changes, the changes in organised criminal structures and activities and the tightening of legislation and contrast policies in general, also had an impact on the changes in money laundering operations. In fact criminals, in their effort to maximise opportunities for earning profit while minimising, at the same time, the risk of being arrested and convicted, have been very quick to shift from one activity to the other and to enter new markets. In particular, the persisting discrepancies existing between anti-money laundering legislation in eastern uropean countries coupled with, in some of them, its scarce and ineffective mplementation, have to a certain extent created a “displacement effect” which has ead criminal groups to find there more “friendly” environments where to conduct heir illicit activities. With a view to describing organised criminal activities, trends in money aundering operations and contrast policies in central and eastern Europe, the analysis has been divided into three main parts. In the first part, a brief outline will be delineated of the most recent developments in the structure and activities conducted at the European level by organised crime groups. The second part of the paper is devoted to the analysis of some money laundering trends in eastern Europe. The third and final part compares anti-money laundering legislation enacted by the countries of eastern Europe with European Union standards, highlighting at the same time the provisions existing in countries which have recently enacted domestic legislation (e.g Bulgaria, Estonia, Latvia and Romania).