Edited by Brigitte Unger and Daan van der Linde
Chapter 5: Money laundering, drugs and prostitution as victimless crimes
The market for laundered money can be analyzed just as any ordinary good for which there is demand and supply. The supply of money to be laundered ultimately originates from legal money put to use in illegal activities or transactions. This can roughly be subdivided into two categories, the first being tax evasion, in which legal money or legal transactions are hidden to avoid paying taxes. Most of the money involved in tax evasion finds its way back to the official economy easily. Money, for instance earned in the black economy, is simply spent on consumer goods and channeled back in the legal sector. The second stems from the proceeds in the trade of illegal goods and services (drugs, prostitution, weapons) and other illegal activities (such as bank robberies, blackmailing, gambling, counterfeit and fraud). For instance, a citizen who spends part of his legal salary to smoke marijuana in the evening turns legal money into money that will be hidden from the official economy by dealers and drug lords, with them, in turn, transferring part of the revenues back into the official economy through consumption.
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