Inclusion of tax crimes in the FATF list? FATF (headquarter in Paris) is funneling legitimate entrepreneurs to grey and black financial channels.
Black financial channels
AML controls over tax evasion and the difficulties to open and to maintain a bank account are generating fear amongst entrepreneurs and the rise of hawala transactions.
The alternative remittance channel, outside of traditional banking, is backed by trust only. Money transfer without money movement is uncontrollable so the use of such system is overrun by criminals.
To a counterproductive situation?
Tightened regulations and laws initiated to stop the use of financial institutions by criminals are somewhere starting to generate a counterproductive situation.
Being tracked and monitored numbers of entrepreneurs are decreasing or stopping their tax evasion activities, but instead of becoming tax compliant, they are turning themselves to dangerous alternatives.
Hawala system being trust based is undetectable, also one of the multiples reasons why the governments are trying with limited success to reduce the circulation of cash.
Cash is king : by participating to hawala legitimates clients are onboarding with criminals and terrorists this only to not be victims of confiscatory taxes.
Not only the governments sweat off potential income but the rise of such alternative systems is directly generating profits for the same people whom where initially targeted.