The Scale and Impacts of Money Laundering

The Scale and Impacts of Money Laundering

Brigitte Unger

The book gives an interdisciplinary overview of the state-of-the-art of money laundering as well as describing the legal problems of defining and fighting money laundering. It then goes on to present a number of economic models designed to measure money laundering and applies these to measuring the size of laundering in The Netherlands and Australia. The book also gives an overview of techniques and potential effects of money laundering identified and measured so far in the literature. It adds to this debate by calculating the effects of laundering on crime and economic growth.

Chapter 1: Introduction

Brigitte Unger

Subjects: economics and finance, economic crime and corruption, money and banking, law - academic, corruption and economic crime

Extract

1 1.1. MONEY LAUNDERING, RISK MANAGEMENT AND BANK SECRECY ABN AMRO is one of the world’s largest banks. Incorporated in the Netherlands with its headquarters in Amsterdam, it has some 3000 branches and subsidiaries spread over 60 countries. It is valued at some US$830 billion. In December 2005 the US Federal Reserve Board, the New York Banking Department and the Illinois Department of Financial and Professional Regulation fined ABN AMRO, US$80 million for violating state and federal Anti Money Laundering (AML) rules and regulations (US Federal Reserve et al. 2005). US authorities, in conjunction with the Central Bank of the Netherlands, found that ABN AMRO lacked adequate risk management procedures and legal review methods; lacked effective systems of corporate governance and audit; transferred and cleared funds and issued letters of credit that contravened US laws; failed to adequately report suspicious activities; did not follow-up on negative findings from internal audits; failed to investigate enquiries referred to its New York branch and overstated its due diligence procedures when dealing with ‘high-risk’ correspondent banking customers (De Nederlandsche Bank NV, US Federal Reserve Board, State of Illinois and the New York Banking Department 2005, pp. 2–4). Dutch and US authorities found that ABN AMRO had engaged in ‘unsafe and unsound practices’ contravening the laws of both countries (De Nederlandsche Bank NV, US Federal Reserve Board, State of Illinois and the New York Banking Department 2005, p. 5). In levying its US$80 million fine, US authorities found ABN AMRO to...