Money Laundering

Money laundering is a process by which money earned from illegitimate sources is circulated in the economy and hence it is made to appear as if it is gained from proper sources. The origin of money laundering can be dated back to be as old as the origin of crime itself but it has become common in recent years. The global effect of laundering is staggering in social, economic and security terms.

In terms of the effects on socio-culture, if one has successfully laundered money that means the crime has paid off. This success eventually encourages criminals to do more laundering because they can attain attractive profits without bearing the fear of any repercussions at all. This freedom and relaxation of laundering means an increase in fraud and corporate cheating i.e. more workers losing their pensions when the corporation collapses. Along with these the adverse effects include more drugs available on the streets and hence more drug related crimes which will cause law enforcement agencies to be on their toes to monitor these crimes and take corrective action. Those businessmen who choose to stay loyal to their country’s economy and don’t break the law hence make lesser profits then the criminals which might urge them to leave their loyalty and indulge into such activities to make profits.

Next in line come the effects on economy. There are drastic damaging effects on the economy. The greatest threat of laundering is faced by the developing countries because they are still trying to reconcile and develop themselves and have not established any financial regulations for their newly established private financial sectors. Because of these reasons developing countries become a prime target for launderers. Other major issues affecting the world’s economies include the error of economic policy due to artificially inflated financial sectors. The great influx of money into the market creates false demand due to which officials adjust their economic policy. When this whole laundering processes reaches its peak or when the law enforcement agencies become active in eliminating this crime, the launderers act and they withdraw all the dirty money without any proper economic cause hence causing those particular financial sectors to fall apart.

Problems on small scale would relate to taxation and small business competition. Money generated through laundering is generally untaxed which means that the loss in tax revenue is to be made by the people. And also the primary motive of launderers is to clean their money and so they might go to great lengths such as providing products and services for lower cost causing a decline in the sales of small businesses.

Over-all money laundering is a heinous crime and it should be stopped at any cost. It leads to a serious economic recession and causes major fluctuations in the value of a country’s currency.