Establishing the Ratio of Concepts of Counteraction to Legalization (Laundering) of Illegally-Obtained Income and Counteraction to the Shadow Economy: The Importance for Determining Performance Indicators of the European Integration Processes

Abstract

The vast majority of reports from governments of the European Union member states and applicants for such membership contain a separate provision on ensuring their effectiveness in the system of combating money laundering and terrorist financing, adherence to the requirements of leading international groups and organizations for such measures. In particular, the assessment of compliance with the 40 Recommendations of the Financial Action Task Force (FATF) on combating money laundering and counteraction to terrorist financing, conducted in Ukraine in 2017 and ended with the relevant report of the Committee of Experts of the Council of Europe MONEYVAL (Report, 2018), is systematically evaluated. The mentioned monitoring body of the Council of Europe assesses, in particular, compliance with the main international standards of organizational, technical, and legal provision of counteraction actors in the respective country, making emphasis on the fact that corruption and illegal (shadow) economic activity (and, according to a well-founded author’s approach – “shadowing of the economy” – Tylchyk, 2017) are the main threats (risks) of money laundering (Report, 2018). Today it is possible to state the awareness of the need to introduce generally accepted standards into the practice of special subjects of providing economic security, although in the absence of a single vision of their place in the overall system of subjects of national security. At the same time, there is a significant complication regarding the gradual, system, and systematic nature of this activity, which is determined by the aggravation of social tension in society, external aggression, features of the formation of domestic doctrine and legislation traditionally oriented towards the application of the maximally defined concepts, at the same time, to date contain ambiguous provisions as to the content, in particular, the concept of illegally-obtained income, which does not coincide with that specified in the mentioned Standards and other international documents. The above stipulates the urgency to search for optimal ways to eliminate these inconsistencies, which lead to real hampering activities related to providing a counteraction to the legalization (laundering) of illegally-obtained income, in order to secure not only the national interests of Ukraine but also of the entire world. Methodology. The solution of the set purpose is realized using the cognitive potential of the system of philosophical, general scientific, and special methods. Analysis and synthesis allowed identifying the signs of illegally-obtained income, shadow economy, fight against the shadowing of the economy, and forming the latter concept. Methods of grammatical review and interpretation of legal rules helped to identify gaps and other shortcomings of legislation on problems of providing counteraction to the legalization (laundering) of illegally-obtained income, to develop proposals for its improvement, in particular regarding the features of defining the meaning of the concept of “illegally-obtained income” in domestic law field, the correlation of this concept and other economic and legal concepts. The comparative legal method allowed determining the development directions for domestic statutory acts in order to bring them in line with the generally accepted European standards. Practical implications. The level of shadowing of the Ukrainian economy, as well as many other countries of the world, requires the introduction of effective, timely, and consistent measures, in particular, to ensure control over the mentioned processes and create conditions for minimizing the possibilities of legalization (laundering) of illegally-obtained income by the efforts of the system of subjects of providing national (including economic) security to counteract the shadowing of the economy, for which it is necessary to formulate uniform unambiguous basic concepts that are “legalization (laundering) of illegally-obtained income”, “counteraction to the economic shadowing”, which determine the actual direction of the activities of these subjects and correlate the use of appropriate complex measures and facilities.

Economic security through criminal policies

“…They include the imperfection of legislation, which is subject, among others, to tax pressure, confusion in the tax administration, the lack of assistance in obtaining tax breaks, lobbying the interests of business groups, and the closeness to power. Tylchyk et al (2018) add that another socially dangerous phenomenon negatively affecting the state of economic security is the legalization of the proceeds of crime as an aspect or component of the shadow economy itself. By analyzing the laws defining measures to counteract the legalization (laundering) of proceeds from crime we can conclude that they actually emphasize that the negative phenomenon and the shadow economy are not identical.…”