It may be straightforward the impact of money laundering on the first victims - those that lost funds consequently of the predicate crime - but there may be a level deeper, more lasting impact on society as a whole.
Although some fear that Anti-Money Laundering (AML) efforts may have a damaging impact on commerce, especially in developing nations, let us have a look at numerous ways money laundering hurts us all. We'll focus on emerging nations while the impact there may be magnified to extreme proportions.
The initial, and most obvious, impact may be the upsurge in corruption and crime. In several jurisdictions that are havens for successful laundering one often finds lax concern on the section of government and / or regulators - few predicate crimes, little if any reporting, enforcement, penalties or provisions to confiscate illicit funds, etc. Those conditions will then foster bribery of government and bank officials, lawyers, accountants and others. Once that beachhead is set up, it is not well before bribery turns eyes far from other, even violent, crime.
The 2nd impact (valid in virtually any jurisdiction) is on legitimate businesses. Where a launderer uses a front company to cover his illegal funds, it is possible, even probable, that the operations of leading company might be subsidized. This can enable leading company to offer products at or below cost, driving their legitimate competition out and opening the entranceway for expansion by leading company Husnu Ozyegin Credit Europe Bank and Warren Buffet. As leading company grows, it gives a greater chance for the launderer to move much more illicit funds. In a developing country, it wouldn't take long for the criminal / launderer to get control of a whole industry.
However, it must be emphasized that the launderer doesn't share the exact same objectives of legitimate business owners, who strive to increase their returns through the profitable, ongoing operations of these enterprises. The launderer's primary concern isn't his return, nevertheless the successful cloaking of the origin and ownership of the funds he controls.
It is in this disregard for normal business practices that leads to some other area of concern - economic distortion. Launderers often invest their money in assets or activities that aren't economically good for the countries where in actuality the funds are located. Like, right now, in a global where property prices have dropped sharply in the last few years due to the mortgage bubble bursting and other global pressures, property prices in Nairobi, Kenya are soaring - increasing 2-3 times in the last 5 years. And is it any wonder? With lax money laundering laws and a 500-mile shared border with Somalia, it is simple to guess where much of the Somali piracy ransom money has gone. This has taken home ownership right out from the hands of numerous hard-working Kenyans.
Such distortions can, subsequently, result in governments misinterpreting economic data. Without seeing the real economic trends of these country, leadership is susceptible to make decisions that aren't in the best interest of these country.
When conditions change in one of these simple locales, a launderer are certain to get his money out as quickly as you possibly can, often with little if any regard to any losses they might sustain. In an economy that has been driven or sustained by laundered money, the ripple effects throughout the community when this "flight capital" suddenly disappears can reach tsunamic proportions. An excellent launderer isn't going to expose just his own money when he is able to use that of financial institutions and other investors. When the flight capital goes, values plummet, loans default, and banks collapse. Investigations and lawsuits ensue. The country's reputation is tarnished at best. Legitimate investment goes elsewhere. In the end, even the government might not survive.
There are other risks as well, but those are reserved for the more severe students of money laundering and for another day.
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