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 4: Measuring Money Laundering for Australia and the Netherlands with Melissa Siegel and Joras Ferwerda

Brigitte Unger

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

Extract

4. Measuring Money Laundering for Australia and the Netherlands 1 With Melissa Siegel and Joras Ferwerda 4.1. THE CONTROVERSY ON GLOBAL MONEY LAUNDERING – IS IT BIG OR SMALL? Before measuring money laundering for specific countries, one has to face the principle question of whether it can be measured on a large scale at all. The calculations of international flows of money laundered streaming into a country depend on worldwide money laundering, which again depends on the amount of worldwide crime and the proceeds of crime. So, one must rely on some of the international estimates regarding the global proceeds of crime and money laundering in order to say something about specific countries. The question is, how much can one trust the global estimates? Global money laundering estimates are based on estimates of global crime and its proceeds. There seems to be a controversy going on between those who believe that the proceeds of crime and money laundering are small compared to other sectors of the economy, and those who believe that they are huge. This chapter supports the view that money laundering is sizeable. This view conforms to International Organizations such as the United Nations and the International Monetary Fund (IMF), which see global crime and global money laundering as a huge problem. The UNDP (1996, p. 3) showed that the estimated annual illicit drug turnover in the 1990s was about US$400 billion, 6 times higher than official development aid (US$69 billion in 1995). The drug sector accounts...

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