Corruption and Economic Development

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Questions and Answers

What is the impact of corruption on social trust?

It leads to a more engaged and active public in challenging corruption.
It fosters trust in political systems and institutions.
It undermines trust in political systems, institutions, and leadership. (correct)
It has no impact on social trust.

How does corruption impact the development of fair market structures?

It encourages fair competition.
It discourages investment due to distorted competition. (correct)
It has no impact on the development of fair market structures.
It leads to increased investment in fair market structures.

Why are corrupt officials and individuals motivated to disguise the source of illicit proceeds?

To ensure transparency and accountability.
To avoid detection and confiscation. (correct)
To contribute to public welfare.
To invest in legitimate economic activities freely.

What is the relationship between corruption and environmental degradation?

Lack of enforcement of environmental regulations leads to environmental damage. (D) Signup and view all the answers

What is one way that corruption can impact economic development?

It leads to the depletion of national wealth. (B) Signup and view all the answers

What is the main purpose behind money laundering schemes in corruption cases?

To hide the origin of illicit funds. (A) Signup and view all the answers

How does corruption affect the allocation of public resources?

It leads to the diversion of public funds for personal gain. (D) Signup and view all the answers

In what way do bribe payers often disguise their actions?

By using money laundering schemes. (C) Signup and view all the answers

What is one of the key principles emphasized in combating tax evasion and money laundering?

Promoting cooperation between nations to share information and expertise. (A) Signup and view all the answers

Which of the following initiatives is NOT mentioned in the text as a measure to combat tax evasion?

Establishing a global council for financial transparency. (D) Signup and view all the answers

What is the main objective of "Operation Admiral", as described in the text?

To combat tax evasion and financial fraud within the European Union. (D) Signup and view all the answers

What is the significance of the "Joint Chiefs of Global Tax Enforcement" mentioned in the text?

It acts as a platform for collaboration between tax enforcement agencies. (B) Signup and view all the answers

What is the primary reason for combating money laundering, according to the text?

To protect the integrity of financial markets and institutions. (D) Signup and view all the answers

What does the text suggest as a potential consequence of failing to combat money laundering?

Increased economic instability and weakening of governance. (B) Signup and view all the answers

What is the primary purpose of developing robust controls within financial services, as mentioned in the text?

To prevent tax evasion and financial fraud. (B) Signup and view all the answers

What does the text suggest as the role of international organizations like the IMF in the fight against money laundering?

Raising awareness about the risks and consequences of money laundering. (D) Signup and view all the answers

What is a key objective of the International Monetary Fund (IMF) when it comes to combating money laundering and terrorist financing?

To promote global economic stability by enhancing international monetary cooperation, trade and sustainable growth, recognizing the impact of financial crime on these objectives. (D) Signup and view all the answers

What is one of the key consequences of money laundering that drives international action against it?

The potential for widespread economic destabilization. (C) Signup and view all the answers

How does the IMF provide support to combat money laundering and terrorist financing?

By providing technical assistance and financial resources to countries to strengthen their AML/CFT frameworks. (B) Signup and view all the answers

What is one of the primary goals of criminalizing the handling of criminal proceeds?

To deter criminals from committing illegal activities by reducing their potential profits. (C) Signup and view all the answers

How do economies supported by criminal proceeds pose risks to neighboring countries?

By increasing the potential for cross-border criminal activity and terrorism. (D) Signup and view all the answers

What is one way that the IMF directly supports member countries in their efforts to combat money laundering and terrorist financing?

By providing financial assistance with conditions attached to strengthen AML/CFT measures. (B) Signup and view all the answers

What is one of the key functions of the IMF in its efforts to combat money laundering and terrorist financing?

To provide guidance and technical assistance to countries to strengthen their AML/CFT frameworks. (A) Signup and view all the answers

What does the text suggest is the main driver of international action against money laundering? (Choose the best answer)

The fear of economic destabilization caused by over-exposure to illegally derived funds. (A) Signup and view all the answers

What is the main purpose of money laundering?

To disguise the source and ownership of illegal funds (A) Signup and view all the answers

Which of the following is NOT considered money laundering?

Using a credit card to make small purchases (B) Signup and view all the answers

What is a common misconception about money laundering?

Money launderers are easy to spot (A) Signup and view all the answers

What is a common method used by criminals to launder money?

Investing in real estate (A) Signup and view all the answers

Why is the traditional three-stage model of money laundering not always applicable?

Criminals often skip stages or use alternative methods (C) Signup and view all the answers

How does the text characterize the role of “jobbing” criminals in money laundering?

They are less likely to engage in money laundering because they generate smaller sums. (C) Signup and view all the answers

What is the relationship between self-laundering and depositing proceeds directly into personal accounts?

Self-laundering and direct deposits are both considered money laundering practices. (B) Signup and view all the answers

Which of the following is an example of money laundering, according to the text?

Depositing a large sum of cash into a bank account and claiming it as legitimate income (A) Signup and view all the answers

What is the primary effect of financial structures and tax havens on public services?

Reduced funding for vital public services (B) Signup and view all the answers

What is the definition of tax evasion?

The illegal non-payment or under-payment of taxes (A) Signup and view all the answers

What is the relationship between weak AML frameworks and tax evasion?

Weak AML frameworks promote tax evasion by making it easier to hide illicit financial flows. (A) Signup and view all the answers

How do the OECD's Ten Global Principles aim to combat tax crime?

By encouraging international cooperation to deter, detect, investigate, and prosecute tax crimes. (D) Signup and view all the answers

What is one of the factors that contributes to illicit financial flows involving tax evasion?

Lack of transparency. (B) Signup and view all the answers

What is the primary reason why individuals and businesses utilize financial structures and tax havens?

To avoid paying taxes. (D) Signup and view all the answers

How does the OECD view tax crime?

They believe it is a global issue that requires collaboration. (D) Signup and view all the answers

What is the main objective of combatting tax evasion?

To increase government revenue. (A) Signup and view all the answers

Which of the following is NOT a type of sanction that the UK can impose?

Import tariffs (A) Signup and view all the answers

What is a key requirement for all UN member states under international law regarding sanctions?

To freeze the funds and economic resources of individuals and entities named in UN lists (C) Signup and view all the answers

What is the primary objective of sanctions imposed by regional organizations like the European Union and the Arab League?

To influence the behavior of other states and alter their actions (B) Signup and view all the answers

Which of the following is a characteristic of the Arab League?

It is an intergovernmental organization of Arab states in the Middle East and North Africa (A) Signup and view all the answers

What action did the Arab League take against Syria following government crackdowns on pro-democracy protests?

Suspended Syria from the organization (C) Signup and view all the answers

What is the primary subject discussed in this text?

Sanctions imposed by regional organizations like the EU and the Arab League (A) Signup and view all the answers

Which of the following entities are subject to sanctions imposed by the UK?

UK nationals, including those outside the UK, and bodies incorporated under UK law (C) Signup and view all the answers

What is the specific example discussed in the text to highlight the impact of sanctions?

The reinstatement of sanctions by the Arab League on Syria (D) Signup and view all the answers

Flashcards

Money Laundering

The process of making illegally obtained money appear legitimate.

Proceeds of Crime

Money obtained through illegal activities.