COMPLIANCE one dishonest individual who creates the domino effect by adding others to his / her web of perpetrators . This can happen through onlookers ’ lack of ethical and moral values and , eventually , the lack of punishment for perpetrators . The level of corruption can be direct through straightforward personal gain or through indirect , unintentional acts , such as a publicly elected official accepting a cash gift just merely by reason of his / her office . This means that the one trusted and elected to hold office does not necessarily perform a favor to the third party in consideration of the cash gift . Because of the position the public official holds , however , acceptance of the gift presents the appearance of conflict — a key factor that can be challenged later . Eventually , corruption schemes can spiral into an entire organization , linked through other organizations and then an entire country , and can even cross international borders .
Corruption manipulates incentives and general economic and market forces , eventually leading to the misallocation of resources . Most importantly , corruption reduces tax revenue for the government . These factors will ultimately artificially create some inefficiencies , such as raising production costs and causing decreases in human capital , thereby making some investments inaccurately calculate lesser profits . When an organization or country has a high rate of corruption , it creates an imbalance of economic activities . A country ’ s enforcement of laws on corruption , intercession and buying influence has a negative perception by national and foreign companies who seek investment in the respective countries . Thus , there would be a slowdown in the country ’ s economic growth . 10 Average citizens or perpetrators may not see the seriousness of corruption from its face value . However , the aggregate theft of public funds through bribes , fraud , embezzlement and extortion is much more serious to a nation ’ s economic growth and development . This is why corruption is higher in nations that lack effective money laundering laws and enforcement strategies for perpetrators of this type of white-collar crime . Some empirical research states that a one-unit increase in corruption reduces GDP per capita by 0.15 % to 1.5 %. 11
Challenges enforcing the law on perpetrators
Enforcing the law on corrupt individuals , organizations and nations is challenging for a couple of reasons . One of the hardest issues is tracking down ill-gotten gains . This is the case with laundered money . Individuals who commit corrupt acts usually hide them to avoid detection . Many times , these are people with power , authority and political connections . Thus , they have avenues to hide corrupt proceeds , whether in the form of physical or liquid assets outside of their home country . This is where international cooperation comes into play in terms of tracking the corrupted proceeds of the money trail . Law enforcement ( LE ) in developed nations such as the U . S . can run into issues in enforcing the law and may be unable to recover the corrupted assets based on the international nation ’ s unwillingness to assist in investigations . This could be due to both countries ’ lack of mutual agreements in sharing and transparency about records .
One of the major challenges occurs when certain nations do not consider corruption as a crime that is considered “ criminal ” and rather “ civil .” 12 As such , there could be lesser penalties for perpetrators who funnel corrupted money to nations that are a haven for corruption . Another challenge applies when LE hands are tied due to sovereign immunity offered to public officials that do not apply to common citizens . Sovereign immunity is a hurdle when dealing with international publicly elected officials such as heads of state and high-ranking members of governments . 13 However , in March 2022 , the U . S . case against former Sri Lankan Ambassador Jaliya Wickramasuriya for corruption was prosecuted successfully by bypassing diplomatic immunity . 14 Even though this was a smaller case , the results prove that effective enforcement strategies
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