The following is a guest post. Enjoy!
Money laundering is the process of disguising the source of money that has been obtained unlawfully and it has significant negative effects on people and the economy. Research has shown that several hundred billion pounds of illegal money is laundered every year and the impact this has on countries across the world can be very serious.
The current success of people who engage in money laundering gives the impression that crime can actually pay, which only serves to encourage more criminal activity such as fraud, selling drugs and corporate embezzlement. Embezzlement can lead to the loss of jobs and pensions when a company collapses, which in turn impacts on people’s health and the welfare system.
As drug-related crime increases, the police force and other emergency services find their resources being stretched to breaking point, which puts pressure on the tax system and the burden all too often falls on the shoulders of everyday working people.
There can also be a loss of morale and desire to engage in competitive trading amongst legitimate business owners who are unable to make the same amount of money that criminals can.
Additionally, further tension around the subject exists in the business community as a result of legitimate and law-abiding business owners finding themselves the subject of anti-money-laundering investigations. Those concerned about any current or potential investigation should speak with money laundering criminal lawyer.
Developing countries are often cited as victims of money laundering organisations based in the developed world. This is due to the fact that many of these countries have governments that are in the early stages of establishing practices and regulations for newly privatized financial sectors. This leaves them vulnerable and at risk of unknowingly attracting and assisting criminals who deposit money into national financial institutions.
When rumors start to make local customers question the integrity of their bank and the safety of their savings, they often withdraw their money and this can cause banks to collapse and create instability in the market.
Influxes of laundered money into sections of the economy that are specifically targeted by criminals can create a false demand. This leads to an adjustment in economic policy, which can have devastating effects on the economy of a county when the laundered money is withdrawn from the market due to police pressure and criminal investigations deterring the practice.
Laundering money can also remove competition from the market as this money is usually untaxed, so businesses that act as a legitimate front for those who are laundering money can afford to sell their goods much more cheaply than their law-abiding competitors. Primarily, their concern is moving large amounts of illicit money through a business such as a laundry-mat or car wash, so they are not usually concerned with making the business successful.
Research has shown clear links between money laundering, drug-trafficking and terrorism, so tackling this problem may have a beneficial impact in terms of reducing levels of crime and violence.