**Abstract**

The purpose of this chapter is to study the detailed dynamics of economic and financial crimes within the European Union member states, namely corruption, shadow economy, tax evasion, money laundering, cybercrime and financial frauds. Our econometric modelling focuses on the impact of the vector of financial and economic crime proxies upon economic prosperity and human development. In accordance to the reviewed literature, for our sample of European Union countries, corruption and shadow economy have a negative effect upon the vector of development proxies while money laundering and cybercrimes belonging to "white collars" are positively correlated with the vector of development proxies that we analyze. All the data are interpreted and discussed, and then conclusions are drawn. Governmental policies on economic prosperity and societal wellbeing should focus on reducing corruption and shadow economy, in order to favour benefits in the field of economic and human development.

**Keywords:** corruption, cybercrime, gross domestic product, human development index, money laundering, shadow economy

### **1. Introduction**

At the international level, there is not any common definition valid for all the states regarding the economic and financial crime phenomena but in practice, this concept is associated with various deeds such as corruption, tax evasion, money laundering, theft cheating, embezzlement, data distortion, counterfeiting, data and document cover up and destruction, tax evasion, crimes regarding the accounting books and many others.

The growing digital economy together with the period of crisis create challenges for the criminals to find new channels to engage in crimes. For instance, the current crisis determined by the COVID-19 pandemic led to the deterioration of working conditions, disruptions of financial markets, accentuating the need for liquidity in companies. Cyber scams, fraud, disinformation and other cyber-enabled crimes will become a growth industry, as people under lockdown kill time online [1]. On March 2020 the number of cybercrime events increased about 1.5 times compared to the similar month of 2018 [2]. Under these conditions, the theft of banking data, followed by the compromise of savings accounts, frauds on some institutions and

companies or blocking access to information systems, increased the pressure on society. Cybercrime represent an important channel for money laundering [3]. Thus the development of new financial technologies (virtual currency, e-commerce activities, mobile payments, prepaid cards) facilitates the high movements of money, it sometimes facilitates anonymity and secrecy and these are the best channels for cyber to be explored in order to get higher benefits under the form of fraud, also including money laundering. An important role in the fight against money laundering is played by international money laundering regulations which have known important adjustments year by year especially starting with the fifth EU Directive (EU) 2018/843 [4] which brings many important adjustments including addressing the risks associated with prepaid cards and virtual currencies.

All these crimes bring along many negative effects upon people on many channels: the decrease of the revenues collected by the national budgets [5, 6]; the diminishing of the level of economic and sustainable development [7–11]; the reduction of the level of investments ([12], p. 438; [13]); or the increase of social inequalities and poverty [14, 15].

The remainder of this chapter is structured as follows: section 2 presents various statistics of crime deeds (frauds, corruption, shadow economy, tax evasion, money laundering, and cybercrime) within the European Union member states with reference to Romania; section 3 is dedicated to the analysis of the relationship between economic and financial crimes and economic development. The paper ends with the formulation of the final conclusions, limits and future studies.
