port and import licenses, and tax exemptions. But once market prices and market leverage prevail in distribution and competition strengthens, rent-seeking opportunities will decrease significantly. Transparency in decisionmaking and clarification of property rights will also help to drive crime out of business. The fight against fraud—especially pyramid schemes, which affect a large part of the population through lost savings—can be waged effectively by improving civil and commercial codes, inserting specific articles in the criminal code, and publicizing hearings and convictions of pyramid builders.The rapid growth of financial fraud (box 2) parallels the speedy development of the banking and insurance sectors and lack of control over financial flows. (Moscow, Russia's financial capital, records an annual 13.3 crimes committed in the financial sector per 100,000 Muscovites, almost twice the country's average of 7.6 per 100,000 people.) One can assume that with the further refinement of banking institutions and strengthening of financial regulations, the number of crimes (though not necessarily the overall extent of losses) will go down. Growth of financial crimes in the banking sector is already slowing: these types of crimes jumped fourfold between 1992 and 1993 but only doubled between 1993 and 1994. The consolidation of the banking sector, which started in 1995, together with the tightening of central bank requirements and oversight of financial activities, are other encouraging trends. And what are the prospects of the Russian economy if economic crime could not be checked? In a worst case scenario Russia could become a country run by "keiretsu"—powerful groups formed as symbiosis of criminal and official organizations with stakes in extracting and mining, manufacturing, international trade, with Moscow as their financial center.Finance Is the Largest Crime-Income GeneratorIn 1994 total revenue from economic crime...
