Money Laundering Scam

used — we talk of the battle against terrorism or the war on drugs". 30 The Economist magazine has become increasingly vocal 1 in its criticism of such regulation, particularly with reference to countering terrorist financing, referring to it as a "costly 2 failure", although it concedes that other efforts (like reducing identity and credit card fraud) may still be effective at combating 3 money laundering. 31 4 However, there is no precise measurement of the costs of regulation balanced against the harms associated with money 5 laundering, 32 and given the evaluation problems involved in assessing such an issue, it is unlikely that the effectiveness of 6 terror finance and money laundering laws could be determined with any degree of accuracy. 33 The Economist estimated the 7 annual costs of anti – money laundering efforts in Europe and North America at US$5 billion in 2003, an increase from US$700 8 million in 2000. 34 Government-linked economists have noted the significant negative effects of money laundering on 9 economic development, including undermining domestic capital formation, depressing growth, and diverting capital away 10 from development. 35 Because of the intrinsic uncertainties of the amount of money laundered, changes in the amount of 11 money laundered, and the cost of anti – money laundering systems, it is almost impossible to tell which anti – money laundering 12 systems work and which are more or less cost effective. 13 Data privacy has also been raised as a concern. A European Union (EU) working party, for example, has announced a list of 14 44 recommendations to better harmonize, and if necessary scale down, the money laundering laws of EU member states to 15 comply with fundamental privacy rights. 36 In the United States, groups such as the American Civil Liberties Union have 16 expressed concern that money laundering rules require banks to report on their own customers, essentially conscripting private 17 businesses "into agents of the surveillance state". 37 18 In any event, many countries are obligated by various international instruments and standards, such as the United Nations 19 Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, the Convention against Transnational 20 Organized Crime, the United Nations Convention against Corruption, and the recommendations of the F.A.T.F. to enact and 21 enforce money laundering laws in an effort to stop narcotics trafficking, international organized crime, and corruption. Other 22 countries, such as Mexico, that face significant crime problems believe that anti – money laundering controls could help curb 23 the underlying crime issue. 38 24 Formed in 1989 by the G7 countries, the F.A.T.F. is an intergovernmental body whose purpose is to develop and promote an 26 international response to combat money laundering. The F.A.T.F. Secretariat is housed at the headquarters of the Organization 27 for Economic Cooperation and Development (O.E.C.D.) in Paris. In October 2001, F.A.T.F. expanded its mission to include 28 combating the financing of terrorism. F.A.T.F. is a policy-making body that brings together legal, financial, and law 29 enforcement experts to achieve national legislation and regulatory AML and CFT reforms. Currently its membership consists 30 of 34 countries and territories and two regional organizations. In addition, F.A.T.F. works in collaboration with a number of 31 international bodies and organizations. These entities have observer status with F.A.T.F., which does not entitle them to vote, 32 but permits them full participation in plenary sessions and working groups. 39 33 3.2.4 Organizations working against money laundering 25

30 Money Laundering Bulletin , Issue 154, June 2008, Dr Jackie Harvey (Newcastle Business School

31 The Lost Trail". The Economist . 20 October 2005. Retrieved 19 September 2011.

32 Levi, Michael and William Gilmore (2002). "Terrorist Finance, Money Laundering and the Ris of Mutual Evaluation: A New Paradigm for Crime Control?". European Journal of Law Reform 4 (2): 337 – 364. 33 Levi, Michael (May 2010). "Combating the Financing of Terrorism: A History and Assessment of the Control of 'Threat Finance'". British Journal of Criminology 50 (4): 650 – 669.

34 "Coming clean". The Economist . 14 October 2004.

35 Bartlett, Brent (May 2002). "The Negative Effects of Money Laundering on Economic Development". Asian Development Bank. Retrieved 19 September 2011.

36 The IT Law Community. "Data Protection, Money Laundering and Terrorism". Retrieved 23 October 2011.

37 American Civil Liberties Union. "The Surveillance Industrial Complex". Retrieved 23 October 2011.

38 Booth, William (26 August 2010). "Mexico targets money laundering with plan to limit cash transactions". Washington Post . Retrieved 19 September 2011.

39 Financial Action Task Force. "Member Country and Observers FAQ".

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