Money Laundering in the EU

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

Social and Political Costs

There are also social and political costs of money laundering, which have the capacity to be serious if left unchecked or dealt with ineffectively. Laundering is a natural by-product of financial fraud; but simultaneously fraud is also a continuance, in some cases, of laundering where the fraud itself is financed by the proceeds of an earlier crime. Organised crime syndicates can infiltrate financial institutions and acquire control of large sectors of the economy through investment. Organised crime syndicates are in an opportune position to offer bribes to public officials and indeed governments. This implies corruption and laundering go hand in hand. The influence of organised crime syndicates in the economic and political sphere can weaken the social fabric, collective ethical standards and ultimately the democratic institutions of society.

However, what is probably of most importance is the fact that money laundering is inextricably linked to the underlying criminal activity that generated it. Laundering enables criminal activity to continue. It is the dynamic that allows criminal activity of all descriptions to grow and expand. This process –the delivery channel of clean funds –is now so embedded in the ‘normal’ business environment that chances of controlling it are small and therefore chances of eradicating it are slim to nothing.