Ronojit Banerjee

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



The EU Member States


This website deals with the main issues of money laundering in the EU. Commencing with a definition of money laundering and the processes on to examining the risks it poses to the financial system and institutions of the EU, macroeconomic consequences of money laundering, tax evasion and the effects of the Schengen agreement on money laundering.


What is money laundering?

According to one political commentator it is all about deception, its aim is to convince relative authorities of the legal origin, existence and/or application of illegal sources of income and the subsequent possession of that income. Money laundering plays a fundamental role in facilitating the ambitions of drug traffickers, terrorists, organised crime syndicates, inside dealers, tax evaders as well as many others who need to avoid the kind of attention from authorities that sudden wealth brings from illegal activities. This facility is the placing of such proceeds beyond the reach of asset forfeiture laws. Hence, money laundering is an essential task carried out by all organised crime groups, and therefore if treated and analysed properly could be the tool with which authorities could prosecute organised crime syndicates. This is a definition given with by one political commentator on the matter; the concept is still a subject of controversy in criminological parlance. Many of the definitions given by the individual FIUs in various countries are related to money laundering in the context of drug trafficking, but as has been mentioned previously it is not just drug traffickers that must launder money but all organised crime syndicates.

Another definition is "The conversion or transfer of property, knowing that such property is derived from serious crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in committing such an offence or offences to evade the legal consequences of his action, and the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from serious crime". (Article 1 of the 1990 European Communities (EC) Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime).

The UN defines it as  "Money laundering is a process which disguises illegal profits without compromising the criminals who wish to benefit from the proceeds. It is a dynamic three-stage process that requires: first, moving the funds from direct association with the crime; second, disguising the trail to foil pursuit; and third, making the money available to the criminal once again with the occupational and geographic origins hidden from view". United Nations Global Programme Against Money Laundering.

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