The parallel economy and underground banking

• In Event: Parallel Economy

Abstract

Alongside the regulated economy, there exists the so-called 'parallel economy'. The parallel economy exists outside the formal frameworks of our modern society. In the first half of our presentation, we provide examples of parallel economic activities, and the backgrounds and motives involved. This includes an exploration of the different types of government responses, which range from discouraging activities in the parallel economy, incorporation, to active repression. The second half of the presentation focuses on underground banking, a form of the parallel economy which already has led to dozens of prosecutions, especially in connection to transnational drug payments. To better understand the nexus between underground banking and drug dealing, it is important to take a step back and focus on the financial characteristics of large-scale drug transports. It turns out that these are still mainly handled the old-fashioned way, i.e. in cash payments. Such cash payments are no longer facilitated by the legal, highly regulated financial system.

Authors

• Melvin Soudijn, National Police of the Netherlands (KLPD)

• Edwin Kruisbergen, Ministery of Justice and Security