Financial Crime and its Prevention

Running Head: FINANCIAL CRIME
FINANCIAL CRIME
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Author Note

1FINANCIAL CRIME
Answer 1
Even in case where all the funds which are under the control of the international terrorist
organizations are very large. Only small amount of funding is required for the purpose of
financing an act of terrorism. The identification of the relatively small sum which has been
transferred within the system can be very challenging for the forces. However it is of
significant importance to prevent the transfer or flow of money to such terrorists both
internationally and domestically for the counter terrorism forces. Through keeping a track in
relation to the flow of funds the counter terrorism forces get access to information regarding
profiles, movements and links which aids towards the construction of picture of how the
terrorist organizations operate (Masciandaro, 2017).
There has been a decline in the ‘state-sponsored terrorism’ there have been a look out by the
terrorist organization for new sources of financing. They use both legal and illegal activities
for the purpose of collecting the revenue. A constant revenue stream is provided through
criminal activities. There few typical financial activities are as follows:
 Kidnapping and extortion which is generally related to protection rackets
 Goods being smuggled cross border which are sold for profit
 Imposition of levies on the dealers suppliers of drugs and drug trafficking
 Certain kind of fraudulent activities such as counterfeiting and identity fraud
 Activities like theft and robbery
 Fundraising and charities
 Wealthy donors and ethnic communities providing legitimate donations
Financing is also given through legal forms if businesses which have been created via the use
of funds which have been obtained as the proceeds of crime. It has been alleged that Al-

2FINANCIAL CRIME
Qaeda has been made investment of the forestry of turkey as well as Tajikistan holding,
African diamond trading and farming of ostrich in Kenya.
The two primary among these are that off Kidnapping and legitimate business transaction
In case of legitimate business funding funds are transferred cross borders through legal
channels so it is difficult to track for the forces. The money which is gained through activities
like kidnapping are generally smuggles across the borders by smugglers (Pratt and Peters
2017)
Answer 2
Corporate governance is regarded as one of the primary element of enhancing economic
growth and efficiency along with the growth in the confidence of the investors. Where an
effective corporate governance system is present in relation to a sole organization or as a
whole across the economy it provides an extent of confidence to the market which is a
necessary component for the building of a proper economy. This leads to a lower cost of
capital which makes the firm to effectively use their funds in order to trigger proper growth.
The primary focus of corporate governance is on the governance problems which results out
of division between control and ownership. In certain jurisdictions powers of certain
shareholders over the minority give rise to governance issues. There are important legal risks
which employees have in the other countries irrespective of having ownership rights
individually. These principles are therefore complementary in relation to the wider approach
to functions of balances and checks. A few other issues in relation to the decision making
process of the company like ethical concerns and environmental anti-corruption are also
considered. No single mode of corporate governance is present. The principles rely upon a

3FINANCIAL CRIME
few common elements which embrace different existing models. The implementation of good
corporate governance principles also help to address prevention of financial crimes. The
principles ensure effective and efficient governance which include identification of any risk
relation to financial crimes such as frauds and money laundering. It also incorporates within
the business structure various ethical principles which make the employees and the managers
to operate in an honest and ethical manner upholding the principles of integrity. Through the
application of good corporate governance principles within the organizations financial risks
can be managed well. In addition as the principles focus of employee needs and
developments as well thus the implementation makes the employees loyal to the organization
and restraining form any kind of financial crimes. Structuring the board as per the principles
of corporate governance by having a mix of independent and non independent directors will
also ensure that there is no fraud and financial crime committed by those in charge (Tillman,
Pontell and Black 2018).
Answer 3
There are various aspects which the regulators are willing to see within a regulated
organization which would operate towards assisting them to establish an proper fraud
identification and prevention framework as a wing of the total framework of financial crime
prevention. There are two aspects which have been identified and discussed for the purpose
of this segment of the paper.
Nowadays the IT companies and firms have become very smart in dealing with fraud
and therefore they have devised various methods to reduce and minimize crime and fraud.