Money Laundering in the EU
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Methods and Stages

 

The explosion of money laundering

 

Macroeconomic Consequences

 

The Risks to Financial Institutions

 

The Risk to the Financial System

 

The Euro and Money Laundering

 

Money Laundering as Tax Evasion

 

Social and Political Costs

 

International Conventions

 

EU Directives on Money Laundering

 

The Achilles Heel

 

Bibliography and some useful links





Factors that facilitated and sponsored the explosion of money laundering
  1. The globalisation of markets and financial flows, most evident in the advent of the Internet. The creation of the single market means that money can now travel in nanoseconds, meaning that multiple jurisdiction leaps are made effortlessly on a daily basis.
  2. Deregulation of financial markets has bought with it no consistency or coherence in respect of anti-money laundering regulations; simultaneously today’s global market place has bought with it very few if any restrictions.
  3. Globalisation implies global competition, meaning more competitors and increasing pressure to deliver profits. The proceeds of crime are massive meaning that the people who control them can yield great influence with legitimate businesses, which are hungry, sometimes even desperate for profits.

The funds involved in money laundering are increasing rapidly and the most recent estimate provided by the FATF suggests that the aggregate size of global money laundering is between 2% and 5% of world economic output, or between $590 billion and $1.5 trillion, most of which is gained from illicit drug trafficking, but also from corruption, fraud and organised crime.

The Internet and Money Laundering 

According to some commentators on money laundering the Internet provides a new and undetectable method of money laundering, otherwise known as cyberlaundering. Yet, according to Nigel Morris-Cotterill in his book How Not to Be a Money Launderer, 2nd edition (Brentwood: Silkscreen Publications, 1999), the Internet is nothing more than a messaging system. To move money, banks move information by whatever messaging system available: 
from physically moving lumps of gold from one place to another to processing checks. In this context, the Internet is simply an updated check system or a more efficient, cheaper, and more secure means of moving financial information. The FATF has pointed out that identifying customers is the primary problem arising from Internet usage, and that problem is just the same in any relationship conducted at a distance.

However, some use claims of cyberlaundering as an excuse to move towards more extensive regulation of the Internet. Even if it were possible to create effective regulation of the Internet—a dubious proposition—such an undertaking merely would raise the barriers to entry for poor nations. The Internet can benefit large parts of the world at a low cost by reducing isolation and allowing remote communities the chance to provide services and publish catalogs of locally produced goods. Tighter regulation would only exacerbate the "digital divide" between rich and developing economies.

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