Money Laundering And Its Effect On The Integrity Of Our Financial System

Money laundering in the United States is a serious problem, with criminals (including terrorist organizations) using the accessibility of the financial system and trade-based money laundering to achieve their goals. Between $500 billion and a trillion dollars of laundered money is generated through financial institutions and international banks each year; with half being conducted through United States banks.

With ever-increasing developments in technology, communication, and financial information, money can quickly and easily be moved anywhere in the world. Because of this, combating money laundering has become a matter of urgency. US figures estimate that the amount of money laundered in a 12-month period sits at between 2 and 5 percent of global GDP, or, between $800 billion and $2 trillion in US dollars. And while there’s a big margin between these figures, the lower estimates alone highlight the seriousness of the problem, which governments are now promising to address.

The covert nature of money laundering makes it extremely difficult to determine just how much money is being laundered, and the deeper laundered money makes its way through the international banking system the harder it is to pinpoint where it came from.

In previous decades we have seen a range of developments in the international financial system, all of which have made it more difficult to enforce the three F’s – finding, freezing, forfeiting – of illegally obtained assets and income. These include –

• The continuing growth of  the Euromarket,
• The black market’s use of the US dollar in transactions,
• The current trend towards financial deregulation, and
• The increase in secret financial sanctuaries.

Buoyed by the continued advancement in communication and technology, our financial infrastructure has grown into a continuously-operating worldwide system whereby ‘megabyte money’, meaning money represented by symbols on computer screens, can be moved quickly and easily anywhere in the world.