Money laundering scale & prevention: facts & myths

Harvey, Jackie (2008) Money laundering scale & prevention: facts & myths. Money Laundering Bulletin, 154. pp. 1-4. ISSN 1462-141X

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Abstract

Regulatory authorities justify their anti-money laundering legislative zeal on the basis that they believe money laundering to be on a scale so vast as to threaten the very foundations of the financial system. Think of the IMF's estimate of 2-5% of global GDP or the UK Government's estimate of UK£25 billion. What is interesting, however, is that as long ago as 1997 and following several years of attempting to measure the volume of laundered funds, the Financial Action Task Force (FATF) simply gave up, noting the "the vast majority of FATF members lack sufficient data to support any credible estimate" (FATF, 1997 p3).

We are faced with the problem that there has been little work to develop an objective academic analysis of the true extent of laundering, which means that we do not have a framework within which the appropriateness of legislative measures can be evaluated. Without this, it is difficult to challenge the 'alarmist' position of the authorities whereby such estimates have been put forward, quoted and repeated, becoming, through such repetition, seemingly established truths. It can be argued, therefore, that global estimates are little more than informed guesses: "...large numbers are frequently thrown around without serious support" (Reuter and Truman, 2005, p56), re-produced to the pont at which they gain, through mere repetition, some form of reliable accuracy (see aso Levi and Reuter, 2006, p.327).

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