ILLEGAL INTERNATIONAL CAPITAL FLOWS AND OFFSHORE FINANCIAL INSTITUTIONS

In this article, I want to give answer to questions such as how and where capital is earned, invested and moved in politically unstable countries with a propensity to frequent crises. Criminal activities such as organizing pyramidal savings, smuggling and sale of tobacco, cigarettes, drugs, arms and oil in the near past brought huge earnings to individuals and politically powerful figures, in the Balcan area. Where and how did these huge amounts of capital from poor Serbia and other countries from this area end? The article has exampled from the world practice and it basically consists of two parts. The first part gives description of the offshore financial centres,while the second part is concretely directed towards the analysis of operations of illegal money transfer and its injections into legal international flows. There are also attempts of international regulations to stop illegal capital transfer.

Key words: criminal activities, capital, offshore financial center, money laundering, capital flight.