In the early days, when economists
advocated for the benefits of globalization, especially for the maximization of
returns and the benefits of the common good, they did not consider the adverse
effects of the free flow of capital, assets, labor, and investments across
borders, as these transactions had helped to create transnational
crime.
These adverse effects are the features of a deviant globalization.
اضافة اعلان
To explain this phenomenon, we need first to
understand the meaning of globalization in terms of economic activity.
I am
going to use here the International Monetary Fund (IMF) definition for
globalization — the process through which an increasingly
free flow of ideas, people, goods, services, and capital leads to the
integration of economies and societies.
The term globalization was first created in
the 1980s and has remained as a term to this present day.
Cross-border economic activity and
integration have been happening throughout history.
However, in the last
decades, it has become more evident, as people, goods, and services have been subjected
to an increased rate of mobility, due to the cheap means of shipment, mostly for
goods, carried by sea, rail, and highway freight, and the relatively cheap
modes for individuals’ travel.
Moreover, advancements and innovation in
information technology have removed the barriers of time and space that
separated markets in the past.
Additionally, political alignment, initially in
the post-World War II era, the new liberal global hegemony, assisted countries
to adopt Western style free markets and liberal democracies, which removed
political barriers, promoted competition, reduced costs, and provided regions
and countries with comparative advantages that helped them to specialize in
their area products and services.
Therefore, globalization has raised interdependence
between countries as cross-border trade of commodities and services increased,
the free flow of international capital between countries became easier, and the
new rapid spread of technologies became more accessible.
Deviant globalization operates without
clear boundaries. The infrastructure of the global economy sometimes has cracks
that facilitate criminal activities, especially, if legal frameworks and
procedures in countries don’t match the advancements and the new innovations of
globalization.
The following are examples of transnational organized crime: Trafficking
of persons, trade of human body parts, sex tourism, drugs and narcotics trafficking,
endangered species trade, counterfeiting of goods, money laundering, terrorist
activities, theft of rare antiquities, which includes grave robbing and
artifact plundering, theft of arts and cultural objects, intellectual property
theft, illicit arms trafficking, aircraft hijacking, sea piracy, land hijacking,
insurance fraud, cybercrime, environmental crimes, fraudulent bankruptcy, infiltration
of legal business, customs fraud and tax evasion, corruption, and bribery of
public officials and elected representatives.
Financial deregulation had assisted
criminal actors to launder money.
Prior to the 1990s, most of the world’s
countries either banned or tightly limited foreign currency transaction.
These
countries also tightly screened and regulated foreign investments and considered
the export of capital a crime.
However, after the Washington
Consensus,
the 1990s witnessed a major shift away from foreign exchange controls.
Consequently, when governments allowed foreign exchange transactions, electronic
global banking networks emerged, which made banking transactions easy and at
the speed of light.
Accordingly, the relaxation of foreign currency exchange
regulations and the computerized banking experience had allowed money
launderers to use banking systems to cover up their criminal activities.
Competing
banks vying for wealthy individuals to deposit assets at their establishments gave
rise to the “no question asked” financial dominions, in which they offered an offshore heaven.
Thus, banks had
a historical culture of secrecy and privacy in dealings with customers, which assisted
transnational criminal organizations to deposit criminal activity money at an
offshore bank branch, then wire the money to the criminal organizations’ “home country,” where the money could
be accessed.
As for the non-banking
financial hawala system, it is an ancient system for transferring money, money
remitters (such as money transmitters, issuers of traveler's checks or money
orders, sellers or redeemers of traveler's checks or money orders, check
cashers and currency dealers, or exchangers).
Terrorist organizations use hawalas
to move money across borders, i.e., to generate funds and transfer funds to
plan and carry out their attacks.
Hawala money transfers are very similar to the Western Union money transfers. Hence,
to control and to have oversight mechanism over these financial activities,
states need to require nonbank financial institutions to legally register under
their formal financial systems.
Moreover, the
removal of barriers on international trade and the free flow of capital had assisted
the facilitation of cross-border illicit trade.
Thus, illegal activities
flourish like legal international businesses prosper with globalization,
because of advancements in the technology of transportation and
telecommunication.
There are direct links between technological development, economic
liberalization, and cross-border illicit trade.
Transnational criminal networks
gained so much power in recent years that they now have access to high-tech
technologies, such as airplanes, submarines, drones, etc. to transport their illegal
goods.
They use complex cyber operations for money laundering and financial
transactions.
For example, drug cartels, a form of oligopoly, have grown into
global organizations because they share similarities with legal multinational
companies, as dealers agree to create explicit agreements to fix prices and
production quantities.
These cartels take advantage of globalization,
especially in international technological, commercial, and financial structures
to expand regionally or even continently.
This new criminal empowerment, due to
deviant globalization, has encouraged countries to collaborate in joint effort
to combat unlawful transnational criminal activities.
However, some believe
that such an effort will not be enough to prevent the growing threat of crimes,
as many countries depend on their traditional policing activities, in addition
to bilateral cooperation and local law enforcement, which are rigid to the fast
global change.
Therefore, countries need to continuously reform their
institutions, and update their bilateral effort to be ready for any transnational
criminal activity challenge, as these transnational organizations always try to
stay ahead of governments.
Moreover, governments and central banks need to put
stricter binding policies on banks and non-bank financial institutions to
prevent unlawful activities from happening in their dealings, especially for money
laundering and fraud transactions.
