Detecting red flags of illegal cash-out schemes in accounting records systems
DOI:
https://doi.org/10.17308/econ.2025.2/13064Keywords:
illicit transactions, shell companies, forensic traces, control mechanisms, unlawful activitiesAbstract
Subject. The primary goal and end result of unlawful economic activities is the generation of illicit income, with cash being the preferred form. This preference among perpetrators of economic offenses and crimes stems from the inherent difficulties faced by regulatory and supervisory authorities in tracing the movement and transformation pathways of physical currency. Non-cash and digital funds leave significant forensic traces within interconnected economic information systems, recorded on both physical and digital media. Cash evades taxation, facilitates "double-entry" bookkeeping fraud, and is frequently employed in dubious or illicit transactions.
Purposes. To determine the specifics of detecting forensic traces of illicit cash-out schemes within accounting systems and the methodological approaches to documenting such evidence. That is essential to conducting a detailed examination of existing practical methods of these unlawful activities and developing a comprehensive methodology for their detection and evidentiary documentation.
Methodology. To achieve the stated goals, we used such established methods of scientific inquiry as the dialectical method of cognition, analysis and synthesis. The research is based on the studying of current scientific literature, instructional-methodological materials, peer-reviewed economic periodicals and empirical case data.
Results. Based on the analysis of law enforcement practices, statistical data, and scholarly publications we systematized the primary methods of illicit cash-out operations. This includes substantiation of the characteristic documentary forensic traces within accounting systems indicative of each method. Furthermore, we identified specific categories of economic crimes serving as grounds for initiating criminal proceedings related to illicit cash-outs.
Conclusions. The control mechanisms proposed in this study can be effectively utilized to detect, investigate, substantiate, and document illicit cash-out schemes during documentary audits, external and internal audits, tax inspections and forensic accounting examinations.
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