Does money laundering go up when assets get frozen?

World Finance examines what sort of financial conditions increase the prevalence of money laundering

November 18, 2014
Related Videos
  1. What the Digital Operational Resilience Act means for board members and CEOs
  2. What the Digital Operational Resilience Act means for third party ICT providers
Related:
  1. Decoding DORA: Navigating the digital regulatory landscape
  2. Building BRIC by BRIC
  3. The quantum joke
  4. Blue bonds could be the answer to financing sustainable development
  5. Tax challenges at the top
  6. We need to talk about bank supervision
  7. Is it time for a coffee cartel?
  8. The sun is setting on Saudi oil
  9. IMF reckoning on fallout with rogue nations
  10. The looming pensions dilemma
Transcript

Money laundering is a problem worldwide. The International Monetary Fund estimates that two to five percent of global GDP is laundered each year. World Finance talks to Dennis Cox, author of The Handbook of Anti Money Laundering, to ask what kinds of conditions increase money laundering.

World Finance: Dennis, would it be fair to assume that, when assets were frozen of a list of Russian oligarchs and other expats, the amount of money laundered went up?
Dennis Cox: Not necessarily. The money that was, if it was illegal proceeds of crime and that’s what we were to recognise we’re looking at, would have been laundered already.

In the case of most of those Russian oligarchs, one has to assume that actually it is not the proceeds of crime, there’s no evidence that it was so at this stage, so for the financial institution, as long as they’ve checked the source of funds, and they’ve verified the individuals and the source of funds, it doesn’t fall into those kind of categories. So there is no real reason why that should have been the case.

What did happen was, clearly when they had the Cyprus problem, was that money moved around the system, and that was more to do with confidence in the banking sector than really the money laundering rules themselves.