Tax evasion and money laundering have always been perceived and widely considered to be the demise of all economies. Tax havens, on the other hand, are seen by many as tax shelters for tax evaders and money launderers. Although money laundering and tax evasion are classified as different crimes, the two are closely related and interrelated. Money launderers aim to turn illegally earned income into legal income while tax evaders seek to hide income, whether earned legally or illegally, to avoid detection or collection by authorities competent tax authorities (Spreutels and Grijseels, 2000). To carry out these activities, launderers and fraudsters tactically depend on offshore financial centers and tax havens because they offer a high level of secrecy and a guarantee of anonymity. There is therefore a significant interconnected relationship between the three. This research explores the relationships between money laundering, tax evasion and tax havens. The document seeks to clearly establish the link between the two offenses and contributions from tax havens. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an Original Essay To assess and understand the connection between money laundering and tax evasion, one needs a basic understanding of the activities involved. Money laundering, as Tavares notes: “…is a criminal offense aimed at presenting as legitimate wealth of illicit origin or that portion of wealth that has been illegally acquired or concealed from the tax and other authorities, using methods that obscure the identity of the ultimate beneficiary and the source of the ill-gotten gains. (Tavares, 2013)Money laundering can occur in many ways and appears to originate from the days when the mafia owned laundromats in the United States of America. According to Ansia Storm (2014), laundromats were originally legitimate business operations used by the mafia to legitimize sums of money from then-illegal activities such as extortion, gambling, drug smuggling. alcohol and prostitution. The process involved the cooperation of illegal gains with cash gains from the laundromat business. This was made possible by the fact that laundromats were a cash deposit business. Al Capone's conviction for tax evasion may have been the spark that ignited the initiation of money laundering activities (Dadoo, 2012; Krishna, 2008; cited by Storm, 2014). This is a possible link between the two. The translation leads to the details of tax evasion. In tracing the details of the Al Capone case, a lot is revealed about it. When the feds found no evidence against Capone and the murders that occurred during his tenure as mob boss, they sought to attack him with a dual plan. The federal government collected evidence of violations of the prohibition law and non-payment of taxes on his income. Later, Capone was convicted of five counts of tax evasion. Meyer Lansky, then a Mafia accountant, feared a similar fate and sought better ways to launder money and evade taxes. “Lansky discovered the advantages of numbered Swiss bank accounts”, tax havens, “triggering the culture of money laundering” (Krishna, 2008; Dadoo, 2012 cited by Storm, 2014). According to the United Nations Office on Drugs and Crime (UNODCestimates that 2 to 5% of global gross domestic product (GDP) is laundered each year (UNODC, “Money-Laundering and Globalization,” 2012). This equates to a minimum loss of around $800 billion. The underlying question raised is: if the illegality of this money is addressed, for the perpetrators to conceal their identity, they should apply a mechanism protecting them from paying taxes. Alternatively, the money is hidden and saved in offshore financial institutions and tax havens like the Swiss bank. This goes to show that for one crime to increase another, you have to lend a hand. These sums are too large to be successfully laundered without detection and this is why tax evasion comes into play. In light of this, it is essential that we establish a common definition of tax evasion for the purposes of our criticism and for scientific discussions. Tax evasion is defined as an illegal practice in which a person engages in intentional tax evasion to submit or pay tax due. Tax evasion sums up and constitutes a crime because it involves violation of the law and causes harm to the public. The harm to the public is significant and occurs when a government is faced with the lack of funds to improve efficiency and facilitate government accountability, the public is harmed (Storm, 2014). The activities surrounding the act of tax evasion range from omitting or rather refusing to file a tax return to lying on one's tax return. The crime of tax declaration, closely associated with the illegality of money laundering and the use of tax havens, is that of non-declaration of all of one's income. This would cover reporting of offshore bank accounts and foreign income. These characteristics can potentially amount to money laundering and conceal the identity of the beneficiary. Storm (2014) idealizes that highlighting core tax evasion activities that are closely linked to money laundering practices strengthens the established evidence that the link between money laundering and taxation exists. Keeping in mind the detailed definitions and explanations of the two crimes, money laundering and tax evasion, one can analyze to identify the common ground between the two acts. Storm's assessment identifies a number of factors that constitute commonalities between the two. To begin with, there is the standard fact of legality that both acts are illegal and both involve the violation of laws. Storm notes that activities are acts of deliberation, meaning that individuals intentionally engage in the activities (2014). Furthermore, these two practices conceal and disguise the money received in each of them (p. 4). In addition to the analytical argument, Storm (2014) emphasizes that “it was necessarily a question of analyzing the definition of tax evasion in terms of crime, because it has often been argued that the products of tax evasion are different proceeds of conservative crime.” "From one perspective, the position is that in a tax avoidance scenario, the income or profits generated were legal and therefore the non-payment of subsequent tax on those profits could not be equated to that of a criminal activity On the other hand, even if the underlying conduct is legal, withholding money that should be paid as taxes constitutes actual criminal conduct (Oliver, 2002, p. 57, cited by Storm. , 2014, p. 20). Furthermore, this argument can be interpreted in the sense that when tax fraud is identified, there is no automatic indication of money laundering. been argued thatwhenever money is laundered, the perception is that the chances of tax evasion are 100%. Critical examination of the existing link leads to the fundamental question of why criminals launder money. Academics and researchers believe that criminals tend to launder money in an attempt to conceal the identity of the beneficiary and hide wealth. By hiding wealth, the aim is to avoid tax liability and increase profits. In the South African Income Tax Act No. 58 of 1962, an individual is required to pay tax on his or her income, regardless of the source of that income. This means that even illegal gains such as those from laundering and drug money must be reported to the South African Revenue Service. The existing connections can be highlighted by highlighting the consequences that exist for both crimes. Storm elaborates and details the consequences as follows: "Money laundering undermines financial systems by expanding the segment of a country's economic activity that is derived from sources...that fall outside the rules and regulations of a country in matter of commerce. Second, it promotes crime because it allows criminals to efficiently use and deploy illegal funds. Finally, the most important consequence is that money laundering reduces revenue and control by decreasing government tax revenues and weakening government control over the economy” (Storm, 2014, p. 21). These consequences reveal the extent of the connection between the two crimes and the similarities in the consequences. The role of illicit financial flows in the existence of money laundering and aiding tax evasion also constitutes a critique of the link between the two. According to Renner (2012), the cross-border exchange of illegally acquired, transferred or used money adds to the flow of illicit funds. Thus, from this analysis, tax evasion and money laundering fall within the criterion of illicit financial flows. The global growth in illicit financial flows reflects an increase in criminal activities, including money laundering and tax evasion. According to the main findings of the Global Financial Integrity report on illicit financial flows (2012), money laundering and tax evasion have been grouped under the heading of illicit financial flows. It is therefore a question of putting the existing relationship into perspective. Money launderers and tax evaders have been found to operate with the help of banking institutions and financial centers that respect banking secrecy. Detective Des Bray, from the Commercial and Electronic Crime Branch, was quoted as saying: “What is increasingly being identified is the infiltration of criminal identities into otherwise legitimate business interests. None of these people could get away with it without the help of lawyers, accountants, financial advisors, etc., who knowingly helped them launder and hide assets. tax evasion, financial centers and tax havens. Strict bank secrecy rules have made it easier for tax evasion and money laundering to succeed. This makes it difficult for tax authorities to track capital income (Storm, 2014). According to research citing He, banking institutions were found to be particularly favored for money laundering and proved to be a popular channel for the convenient transfer of funds in international markets (He, 2010). The secrecy existing in financial centers makes them vulnerable to money laundering and tax evasion. One example examined by (O'Toole, 2012) involved three Zurich bankers who allegedly helped more than 100 clients between 2005 and 2010 to