Dr Jelena Slovic

This paper considers the key system measures which can prevent financial frauds. Financial frauds prevention is crucial part of organized economical system and it materializes through the structures of controls. System of the structures of controls is called “three lines of business security” and its establishing and functioning has significant benefit for the economic system as a whole. All the elements of the structure need to function on their own and mutually in order to achieve business security. Functioning of modern states and economies relate to the gathering of reliable information in respect to the principal of cost efficiency and the functional “three lines of business security” system can contribute to that aim. What is the benefit of the “three lines of business security” model? The most important contribution of the model is that it can provide business security to all the participants in the economy. What is more, it can contribute in drawing of foreign investments, s...

Informal economy is one of the side effects of modern business activities which has not been resolved in the right way even in developed countries and represents a serious problem to numerous economies in spite of a large number of regulatory attempts. Studies indicate that informal economy is reversely proportional the economic development of a country, that is to say that a large part of business activity is conducted in that zone. Anyhow a part of assets acquired in informal economy is returned to the zone of formal economy in a certain way and continues to be circulated there. When the assets acquired in informal economy enter into regular cash flow they ostensibly get the status of regularly acquired assets, they also seemingly appear to have been taxed in some previous business cycle which makes them amnestied in a certain way. Still assets from informal economy are introduced into the regular cash flow through certain business transactions which make it possible. However, what seems to be symptomatic is the fact that when assets gained in informal economy are put into regular cash flow, this activity is manifested as money laundering. The aim of this paper is to throw light on the similarity and relation between money laundering transactions and those which enable introducing money from informal economy and to explore a possible way to potential reduction of the volume of this phenomenon. In order to achieve that we explore and point out the fact that the potential solution to both problems lies in the correlation between informal economy and money laundering which appears in formal business activities. That very aspect offers certain potential for countries to establish some control mechanisms and indicators which will enable these phenomena to be identified and regulated afterwards. Keywords: informal economy, money laundering, pre-phase of identifying, two-phase tax collection

Corporate crime is a phenomenon that marked the XX century. The first half was marked with two major world economic crises (The Great Depression) and the second with an increasing number of massive corporate scandals.Corporate crime stems from business activities and although there were financial scandals in previous centuries, corporate crime was in full swing in the last two decades. Modern business has significantly dematerialized and transformed into virtual reality, which on one hand represents a significant breakthrough, but on the other hand it opens a wide space and offers modalities for perpetrating crimes in the field of finance. Nevertheless, regardless of the conditions of modern business, the basic reason for corporate crime derives from human greed, namely, the wish to acquire resources which are limited by nature. What is significant is the fact that this type of fraud is spreading, and as a consequence there has emerged a need to study this concept from the scientifi...

The development of economic relations has prompted the development of the idea of integrating more countries into one big country. Countries have formed, in the process of integration, different economic associations based on economic interests, also encouraged by the political, cultural and other reasons for unification. The European Union was created as the highest point of integration in Europe by the Maastricht Treaty in 1992 with the aim of creating a single market, supported by a single system of legal obligations that apply equally to all members of the Union. Globalization and trade liberalization significantly affect the increase of gross domestic product of the Union, but on the other hand localization opens a huge space in the Member States for abuses and tax evasion. The advantage of the integrated economy represents a liberalized business that includes free cash flows. These circumstances create space for circulation of goods, services and money, but also allow the circ...

Corporate crime is a phenomenon that marked the XX century. The first half was marked with two major world economic crises (The Great Depression) and the second with an increasing number of massive corporate scandals.Corporate crime stems from business activities and although there were financial scandals in previous centuries, corporate crime was in full swing in the last two decades. Modern business has significantly dematerialized and transformed into virtual reality, which on one hand represents a significant breakthrough, but on the other hand it opens a wide space and offers modalities for perpetrating crimes in the field of finance. Nevertheless, regardless of the conditions of modern business, the basic reason for corporate crime derives from human greed, namely, the wish to acquire resources which are limited by nature. What is significant is the fact that this type of fraud is spreading, and as a consequence there has emerged a need to study this concept from the scientifi...

This paper considers the key system measures which can prevent financial frauds. Financial frauds prevention is crucial part of organized economical system and it materializes through the structures of controls. System of the structures of controls is called "three lines of business security" and its establishing and functioning has significant beneet for the economic system as a whole. All the elements of the structure need to function on their own and mutually in order to achieve business security. Functioning of modern states and economies relate to the gathering of reliable information in respect to the principal of cost efeciency and the functional "three lines of business security" system can contribute to that aim. What is the benefit of the "three lines of business security" model? The most important contribution of the model is that it can provide business security to all the participants in the economy. What is more, it can contribute in drawi...

Money laundering and terrorist financing can be performed in many ways, regular business operations being among them. Business activities go through a large number of business changes, which offers numerous options for money or assets to enter the company via seemingly legal business transactions, enabling money or assets to remain in regular business flows once money laundering is completed. On the other hand, the opposite scenario, in which there is interest in money to be transferred from regular flows to alternative flows, including terrorism financing, is also common. This paper will discuss legal business operations as a framework for money laundering and terrorist financing. Cash flow cycles are presented in form of an algorithm as connections between irregularly and regularly acquired assets in the process of money laundering through business operations, as well as re-entry from regular flows into alternative cash flows. The "Butterfly Diagram", presenting groups o...

Money laundering and terrorist financing can be performed in many ways, regular business operations being among them. Business activities go through a large number of business changes, which offers numerous options for money or assets to enter the company via seemingly legal business transactions, enabling money or assets to remain in regular business flows once money laundering is completed. On the other hand, the opposite scenario, in which there is interest in money to be transferred from regular flows to alternative flows, including terrorism financing, is also common. This paper will discuss legal business operations as a framework for money laundering and terrorist financing. Cash flow cycles are presented in form of an algorithm as connections between irregularly and regularly acquired assets in the process of money laundering through business operations, as well as re-entry from regular flows into alternative cash flows. The “Butterfly Diagram”, presenting groups of business...

Informal economy is one of the side effects of modern business activities which has not been resolved in the right way even in developed countries and represents a serious problem to numerous economies in spite of a large number of regulatory attempts. Studies indicate that informal economy is reversely proportional the economic development of a country, that is to say that a large part of business activity is conducted in that zone. Anyhow a part of assets acquired in informal economy is returned to the zone of formal economy in a certain way and continues to be circulated there. When the assets acquired in informal economy enter into regular cash flow they ostensibly get the status of regularly acquired assets, they also seemingly appear to have been taxed in some previous business cycle which makes them amnestied in a certain way. Still assets from informal economy are introduced into the regular cash flow through certain business transactions which make it possible. However, what seems to be symptomatic is the fact that when assets gained in informal economy are put into regular cash flow, this activity is manifested as money laundering. The aim of this paper is to throw light on the similarity and relation between money laundering transactions and those which enable introducing money from informal economy and to explore a possible way to potential reduction of the volume of this phenomenon. In order to achieve that we explore and point out the fact that the potential solution to both problems lies in the correlation between informal economy and money laundering which appears in formal business activities. That very aspect offers certain potential for countries to establish some control mechanisms and indicators which will enable these phenomena to be identified and regulated afterwards.
Keywords: informal economy, money laundering, pre-phase of identifying, two-phase tax collection

This paper considers the key system measures which can prevent financial frauds. Financial frauds prevention is crucial part of organized economical system and it materializes through the structures of controls. System of the structures of controls is called "three lines of business security" and its establishing and functioning has significant beneet for the economic system as a whole. All the elements of the structure need to function on their own and mutually in order to achieve business security. Functioning of modern states and economies relate to the gathering of reliable information in respect to the principal of cost efeciency and the functional "three lines of business security" system can contribute to that aim. What is the benefit of the "three lines of business security" model? The most important contribution of the model is that it can provide business security to all the participants in the economy. What is more, it can contribute in drawing of foreign investments, since business security is fundamental principle of attracting investors into the state's economy. Therefore, efecient system where the "three lines of business security" function properly can contribute to the national economics in total and at the same time to be part of the efecient system of financial fraud prevention.
Key words: “three lines of business security”, economic system, legal system, internal controls, external controls, investigation, coordinating, functioning