Going Underground – The Not so New Way to Bank?

Abstract

Some underground banking systems are very long-established traditions in certain jurisdictions and cultures. In some countries they pre-date western banking arrangements by centuries, so they are literally as old as the hills. Nevertheless, in many advanced economies underground banking systems have a low public profile. This low public profile stands in stark contrast to the increasingly high priority that governments, financial regulators and law enforcement agencies are giving to efforts to counter the facilitative role that underground banking can play in the activities of money launderers, organized crime and tax evaders. This paper discusses the traditions of underground banking systems and the contemporary challenges that they pose to law enforcement and other regulatory agencies

Keywords: underground banking systems, law enforcement, organized crime

JEL Classification: G19, K42