Financial Crime Soars in Bosnia and Herzegovina: New Report Reveals Alarming Trends
VIENNA, AUSTRIA - JANUARY 19, 2022
Millions of euros are being siphoned out of Bosnia and Herzegovina every year through illicit financial flows (IFFs), according to a new report by The Global Initiative Against Transnational Organized Crime. This article sheds light on the ways in which money earned illegally is transferred into and out of the country, highlighting the alarming trends and drivers behind these crimes.
Illicit Financial Flows: A Major Problem in Bosnia and Herzegovina
The report reveals that a significant portion of IFFs are laundered through the financial system, with dirty money being moved from within the region and offshore. The lack of available data on all components and channels of IFFs makes it difficult to uncover the full scope of the problem.
Drivers Behind Illicit Financial Flows
According to the report, corruption, organized crime, and tax evasion are the three key drivers behind these illicit financial flows.
- Corruption: In Bosnia and Herzegovina alone, almost 30% of the workforce is informally employed, allowing workers to evade income tax by being paid in cash.
- Organized Crime: The report reveals that drug trafficking, trade in counterfeit goods, and migrant smuggling generate significant IFFs. The market for human smuggling in Bosnia and Herzegovina was estimated to be worth between €8.5 million and €10.5 million in 2020 alone.
The Cost of Illicit Financial Flows
The proceeds from these illicit activities are then laundered into the local economy, with an estimated 2-5% of each country’s annual GDP being lost to IFFs. In total, this translates to a staggering €1.5 billion to €3.75 billion.
Consequences and Recommendations
Despite government efforts to prevent such crimes, implementation of new laws and regulations is limited, discouraging investment in essential infrastructure and depriving the licit economy of resources needed for sustainable development.
The report concludes that more research is needed on how cryptocurrencies are being used to launder money, and that greater awareness and understanding of IFFs are necessary to stimulate effective prevention and responses.
“We hope that our focus on this topic can increase awareness and stimulate more effective prevention and responses,” said Kristina Amerhauser, one of the report’s authors.
About The Global Initiative Against Transnational Organized Crime
The Global Initiative Against Transnational Organized Crime is a network of professionals working to combat transnational organized crime and its impact on communities worldwide.