Transcript ILLEGAL ACTIVITIES IN THE 1993 SNA Joint UNECE/OECD/ EUROSTAT Meeting UNECE, Geneva 25-28 April 2006 U N S T A T I.

ILLEGAL ACTIVITIES IN THE 1993 SNA
Joint UNECE/OECD/ EUROSTAT Meeting
UNECE, Geneva
25-28 April 2006
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Point of departure
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Handbook, Measuring the Non-Observed
Economy has provided guidance to countries
for recording illegal activities
Handbook was a joint publication in 2002 by
Organisation for Economic Co-operation and
Development , International Monetary Fund,
International Labour Organisation, Interstate
Statistical Committee of the Commonwealth
of Independent States
Illegal activities in the 1993 SNA
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illegal activities that have the characteristic of
transaction – notably that there is mutual
agreement between parties – are treated in
the same way as legal actions
Accounts could be significantly distorted if
significant redistribution of assets through
actions without mutual agreement is not
recorded as other flows on other changes in
volume accounts
Examples of illegal activities
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Production and distribution of illegal goods
Production of illegal services
Production of legal goods and services
undertaken by unauthorized producers
Production of counterfeit products
Smuggling
Resale (fencing) of stolen goods
.. And the like
Theft
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“If thefts, or acts of violence (including
war), involve significant redistributions, or
destructions, of assets, it is necessary to
take them into account. …… they are
treated as other flows, not as
transactions. Less significant
redistributions, such as shoplifting, may be
included in change of inventories and
therefore need not be recorded separately”
(SNA para 3.56).
Theft
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SNA treatment: unclear about theft of exceptional
value which occurs either on a regular or irregular
basis
NOE Handbook: recommends that widespread
practices of illegal appropriation of the output is
treated as production and additional compensation of
employees
AEG recommendations:
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Regular theft (of whatever size) of value of finished goods
and services is excluded from output
Regular theft (of whatever size) of materials and supplies is
included in both output and intermediate consumption
Irregular theft of exceptional value of finished goods and
services is production and materials and supplies is NOT
considered in intermediate consumption. Both are adjusted
in OCVA
Re-sale of stolen goods (fencing)
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SNA: involves transactions by mutual
consent
AEG recommendation: Fencing should
be recorded as sales of second-hand
goods – as trade margins
Bribery
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SNA: does not provide guidance
NOE Handbook:
 In the provision of market goods and services, increase in
value of output by the bribe matched by increase in
compensation of employees
 In provision of non-market goods and services as accepted
practice, the bribe is recorded as additional compensation of
employees
 In provision of non-market goods and services as
unaccepted practice, the bribe is recorded as current
transfer
AEG recommendation:
 Disagreed with NOE Handbook. Bribery is considered
inconsistent with the SNA production boundary. No explicit
references to treatment of bribery in 1993 SNA Rev.1 will be
made.
Extortion
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SNA: no explicit reference
NOE Handbook: No mutual consent
thus recorded under other volume of
assets account
AEG recommendation: agreed with NOE
Handbook.
Money laundering
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1993 SNA: no explicit reference
NOE Handbook: difference between the
value of the illegal cash and the value
of the laundered cash should be
considered a provision of services
AEG recommendation: agreed with NOE
Handbook.