Impact of Money Laundering on Development
Economieswith growing or developing Financial Centers but inadequate controls areparticularly vulnerable ( exposed ) to money laundering.
Establishedfinancial center countries which have implemented comprehensive anti moneylaundering laws - are in a better position - to prevent money laundering.
The gaps in anational anti money laundering system are exploited by launderers - who have atendency to move their networks to those countries and financial systems withweak or ineffective laws.
When theintegrity of a financial system is damaged - there is an adverse effect onforeign direct investments ( since such countries are assumed to be under thecontrol and influence of organized crime gangs ).
In times ofnegative growth - introduction of hard currency can boost Country’s foreignreserves and promote Infrastructure and Industrial development.
‘Inflow’ ofcriminal money in to the economy - may result in short-term benefits but thelong-term effects are mostly negative.
Onedifference between - Official Borrowings and Laundered Funds - is that Officialfunds can be controlled by the Govt. whereas Laundered Funds escape theGovernment’s ability to control and regulate the economy.
The possible social, economic and politicaleffects of money laundering - if left unscheduled - are serious.