What is there universal about money laundering?
Money laundering is a common problem for international community of the world, therefore numerous governments and jurisdictions commit themselves to taking action regarding anti-money laundering.
Since money laundering is so wide-spread across the world, it is much easier to talk about its regularities that about its irregularities and individual peculiarities in particular countries. The general framework of regular money laundering features is very important to understand this universal phenomenon.
The United Nations Office on Drugs and Crime has worked out the Ten Fundamental Laws of Money Laundering that reveal the way money laundering works. These are as follows:
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The more successful a money laundering apparatus is in imitating the patterns and behaviour of legitimate transactions, the less the likelihood of it being exposed.
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The more deeply embedded illegal activities are within the legal economy and the less their institutional and functional separation, the more difficult it is to detect money laundering.
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The lower the ratio of illegal to legal financial flows through any given business institution, the more difficult it is to detect money laundering.
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The higher the ratio of illegal “services” to physical goods production in any economy, the more easily money laundering can be conducted in that economy.
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The more the business structure of production and distribution of non-financial goods and services is dominated by small and independent firms or self-employed individuals, the more difficult the job of separating legal from illegal transactions.
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The greater the facility of using cheques, credit cards and other non-cash instruments for effecting illegal financial transactions, the more difficult it is to detect money laundering.
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The greater the degree of financial deregulation for legitimate transactions, the more difficult it is to trace and neutralize criminal money.
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The lower the ratio of illegally to legally earned income entering any given economy from outside, the harder the job of separating criminal from legal money.
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The greater the progress towards the financial services supermarket and the greater the degree to which all manner of financial services can be met within one integrated multi-divisional institution, the more difficult it is to detect money laundering.
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The greater the contradiction between global operation and national regulation of financial markets, the more difficult the detection of money laundering.
Also, 26 countries and territories – members of Financial Action Task Force (discussed in the previous blog) established 40 recommendations setting a universal standard for combating money laundering.
Universal problems call for universal solutions. But it goes without saying that the universality of this particular problem by no means signifies simple solutions. Still, what the UN and the FATF have done helps much.