By Adrian Robert Bazbauers and Anthea McCarthy-Jones

 The spread of illicit activity across the global economy presents significant challenges to international development. Despite the well-recognized global incidence of corruption, fraud, and money laundering in development-focused investment projects, the responses of the multilateral development banks (MDBs) to these threats remain understudied. Our article offers the first comprehensive study into the comparative historical emergence and evolution of MDB responses to illicit activity. By identifying and analyzing critical junctures in this history, we argue that the MDBs have tended to approach illicit activity as prohibited practices rather than criminal acts. We contend that this is an intentional choice made by the MDBs that absolves these organizations from any real responsibility in minimizing illicit activity, finding their concern to be ensuring contractual compliance in their lending operations rather than curtailing criminal behavior and their preference to be resolving contractual deviations in-house as opposed to coordinating with local jurisdictions and law enforcement agencies.

Journal of Illicit Economies and Development, 6(1): pp. 112–128.