How Does Money Laundering Effect The Government ?
| Money laundering refers to the financial transactions which are products of criminal activity. In most cases, money launder will try conceal the identity, source, and destination. |
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Historically speaking, money laundering was usually related to organized crime. The definition is broader today. Today, money laundering may involve activity from drug trafficking related or white collar crime related such as tax evasion or false accounting.
The process of money laundering usually occurs in 3 stages which are Placement, Layering, and Integration.
Placements: This is the initial stages where funds derived from crime.
Layering: This process refers to the attempt to obscure the source of the fund and destination of money from crime.
Integration: This process refers to the return of funds to legitimate economy for later extraction.
How Much Money Is Launder Per Year?
According to the International Monetary Fund, the total amount of money laundering around the world can be as large as 2 – 5 % of the world’s gross domestic product. However, it is difficult to calculate a reliable estimate of the amount of money laundered.
What Influence Does Money Laundering Have On Society, Economic Development, and Government?
If left unchecked, the consequences of money laundering can be serious. For example, organized crime may infiltrate large sectors of economy and government through bribery. Money laundering can weaken the ethical standards, social fabric, and ultimately the democratic institution of society. In many countries, criminal activity undermines the government. Money laundering allows these criminal activities to continue.
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