Table of Contents

Research Handbook on Money Laundering

Research Handbook on Money Laundering

Elgar original reference

Edited by Brigitte Unger and Daan van der Linde

Although the practice of disguising the illicit origins of money dates back thousands of years, the concept of money laundering as a multidisciplinary topic with social, economic, political and regulatory implications has only gained prominence since the 1980s. This groundbreaking volume offers original, state-of-the-art research on the current money laundering debate and provides insightful predictions and recommendations for future developments in the field.

Chapter 6: The costs of fraud

Michael Levi

Subjects: economics and finance, economic crime and corruption, law - academic, corruption and economic crime, politics and public policy, terrorism and security

Extract

Fraud is a deceptively simple word covering a very broad territory. It is a way of making money illegally via deception, whether that deception is directly person-to-person in real space or in virtual space; operates by false stories alone or via the use of deceptive real or e-documents or via Personal Identification Numbers; or uses genuine or phoney businesses as tools of fraud. Thus there is a huge range of contexts in which frauds, large and small, lasting milliseconds (like unauthorised electronic funds transfers) or many years (like the Madoff ‘Ponzi’ scheme), are perpetrated. Some are planned as scams from the start, sometimes as part of an ‘organised crime group’ activity; others – with or without the involvement of outsiders – are the result of insiders spotting system weaknesses which, if undetected, may spread from there into much larger schemes. After the event, it can be a matter of interpretation into which planning category any given fraud falls. But the level of harm may be independent of that level of planning, and many losses may have been generated by inefficient business activities and poor judgement rather than pure criminal profit: hence, in addition to clever laundering, the fact that such modest amounts are sometimes recovered from corporate losses.

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