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Topic: Anti-Money Laundering

Background on Anti-Money Laundering

In recent years, and especially since the events of September 11, 2001, worldwide efforts to combat money laundering and the financing of terrorism have assumed heightened importance. Money laundering and the financing of terrorism are global problems that not only threaten security, but also compromise the stability, transparency, and efficiency of financial systems, thus undermining economic prosperity.

The success of a criminal enterprise is based on its ability to sanitize its ill-gotten gains by moving them through lax or corrupt national financial systems. The laundering allows criminals and terrorists to operate freely, using their financial gains to expand their criminal pursuits and fostering illegal activities such as corruption, drug trafficking, arms trafficking, smuggling, and financing of terrorism.

Money laundering and the financing of terrorism can have devastating economic and social consequences for countries, especially those in the process of development and those with fragile financial systems. The economy, society, and ultimately the security of countries used as money-laundering platforms are all imperiled. Here are just a few examples of how illicit financial flows can affect the economy and institutions of the host country:

  • Financial institutions that accept illegal funds cannot rely on those funds as a stable deposit base. Large amounts of laundered funds are likely to be suddenly wired out to other financial markets as part of the laundering process, threatening the institution’s liquidity and solvency. A financial institution’s reputation and integrity can be irrevocably harmed if involved in money laundering or financing terrorism.
  • Local merchants and businesses may find that they cannot compete with front companies organized to launder and conceal illicit funds. Many such front companies offer their services and goods at below-market rates and even at a loss. Because their primary objective is the laundering of money, they do not need to compete in the marketplace and make a profit for their owners.
  • Money laundering may also distort some economic sectors and create instability in their markets. Money launderers may channel funds to sectors or areas where funds are unlikely to be discovered whether or not investment is needed or real returns are offered. The often sudden departure of investments from those sectors may impair the industries involved.
  • Currencies and interest rates can be distorted by money launderers’ investment practices, based as they are upon factors other than market returns.
  • Money laundering and terrorist financing do nothing for the reputation of the host country. The loss of investor confidence that follow revelations of large-scale involvement in such activities can sharply diminish opportunities for growth. Once a country’s reputation is tarnished, it  takes years to repair.

Comprehensive information and resources are available at the World Bank's Anti-Money Laundering and Combating the Financing of Terrorism website.

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Partially Annotated Bibliography on Anti-Money Laundering

The literature on money laundering has expanded rapidly over the past decade, as the issue and related concerns about corruption, organized crime and terrorism have moved to the top of the agenda among policy-makers, academics and civil society. The AML contributions cited below cover a wide range of topics, including best practice, the impact of technology, and the relationship between money laundering and the ability of criminals to benefit from and engage in illegal activities.

The AML bibliography can be downloaded in searchable PDF format, and is sorted into the following categories:

  • General (115 kb PDF)
    The references in this file are broad in scope and cover a plethora of AML issues.
  • Control & Investigation (38 kb PDF)
    The entries in this category elaborate on evolving investigative methods, with examples of what works and what does not in efforts to control money laundering.
  • Case Studies (13 kb PDF)
    The references in this file draw on a rapidly expanding body of cases that have been investigated in greater detail, highlighting the actual steps taken by money launderers in their efforts to obscure the sources of ill gotten gains.
  • Economics (27 kb PDF)
    The studies listed here analyze the broader economic effects of money laundering and investigate the incentives surrounding the illegal practice.
  • Financial/Banking Sector (183 kb PDF)
    The entries in this category address growing concerns about the impact of money laundering on financial systems, and research aspects of the financial sector, like bank secrecy laws, that either facilitate or hinder money laundering.
  • Law (17 kb PDF)
    The references in this file elaborate on financial sector regulation and legislative initiatives to curb money laundering.
  • Corruption (142 kb PDF)
    Corruption and money laundering are intimately linked, and the entries in this category contribute to a better understanding of this relationship.
  • Organized Crime (36 kb PDF)
    Organzied crime, including drugs, prostitution and gambling, generates much of the funds that propel money laundering around the world. The referendces in this category focus mainly on this connection.
  • Technology (11 kb PDF)
    The entries in this file focus on the significant impact of technological change on money laundering activities, both in curbing and facilitating the illegal practice.

The AML bibliography was prepared by Christian Eigen-Zucchi with the assistance of Erin Farnand under the direction of Daniel Kaufmann. It draws from a number of sources, including 
bibliographical information from the International Money Laundering Information Network (IMOLIN), the  Financial Crimes Enforcement Network (FINCEN), the  Organization for Economic Cooperation and Development (OECD), and the World Bank's Financial Sector Thematic Group. The bibliography is not intended to be exhaustive. Rather, it has been developed as an evolving resource for those interested in AML issues, and it will be updated and expanded. We are grateful for suggestions and contributions in this effort, which may be sent directly to  Christian Eigen-Zucchi.

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Previous Learning Events

Global Dialogue Series 
Latin America and the Caribbean Region
April 3, 2002
Download information booklet (1.1 mb PDF)

Global Dialogue Series 
Eeurope and Central Asia Region
January 24, 2002
Download information booklet (978 kb PDF)
Archived event website

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