The Controllability of Money Laundering: A Global Perspective
Table of Contents
3.0 Literature Review
3.1 A study of Country size and the incentive to tolerate money laundering8
3.2 Outsourcing and Insourcing Crime: The Political Economy of Globalized Crime10
3.3 Crackdown on Money Laundering: A Comparative Analysis of the Feasibility and Effectiveness of Domestic and Multilateral Policy Reforms12
3.4 The UN Anti Corruption Convention and Money Laundering14
6.0 Reference List 19
In an every changing global economy, crime is increasing. Money laundering is the tool which criminals use to obtain their proceeds. With increased globalization, the lack of consistent worldwide regulations disallows anti-money laundering to be controlled effectively. In this paper, various research articles will be examined to determine the impact international measures and the UN has on anti-corruption measures, the impact of the political economy on crime, and the findings on correlations between country size and tolerating money laundering. It concludes by addressing the lack of synchronization of regulations and makes recommendations to help control it.
The terrorist attack in the US on Sept 11, 2001 was one of the most horrifying and shocking events in the US. Not only did it bring awareness to a greater need for legislation to combat terrorism, but it also brought the realization that terrorism needs to be stopped at its financial root. The legislation that was brought in is more commonly known as the Patriot Act. The US proclaimed a global war on terrorism. There was no way to punish the terrorists for their actions as they had already died. The focus then shifted to those who funded the crimes and financially supported the terrorists. This led to an increased focus on money laundering. Within 2 weeks of the terrorist attacks, President Bush signed an executive order freezing assets of 27 organizations and individuals that appeared to be in connection with terrorists. Banks were further required to conform to the requirements of the Patriot Act or were suspected of assisting terrorist activities. Thereafter additional assets of those believed to be in connection to Osama Bin Laden including most of the cabinet in Afghanistan were frozen. (Bosworth-Davies, 2007, pg 70). It can be seen here, that the money used and laundered was on an international scale. As the total amount of money laundering globally on a yearly basis ranges from $500 billion to $1 Trillion (Lacey & George, 2009, pg 2) it is apparent now that with the globalization of business and interdependence of economies, the globalization of crime has also grown. Money laundering begins once a crime is committed, so that the individuals who have committed the crime are able to enjoy the proceeds from the crime. There is no incentive to commit crimes if the profits cannot be obtained thus money laundering becomes a key step. Criminal proceeds are laundered for two additional reasons. Firstly, not all individuals responsible for the crime reside within the respective country and therefore do not have access to their respective proceeds and more importantly, many individuals and businesses refuse to deal with criminals and their proceeds. This results in illegal money being valued at less than what legal money is worth which in turn results in the crime being less valuable than it was originally assumed to be. This unintentionally creates a demand for money launderers that are able to maintain the value of the criminal proceeds throughout the three-step process of placement, layering and integration. Through money laundering, crime and its various facets (bribery, sex crimes, gambling, drugs, and terrorism) have been able to multiply.
As will be discussed in greater detail below, various...