The Laundromat: Inside the World of Money Laundering
Byline Times launches a new series on how organised crime is destabilising entire economies by rinsing its dirty cash through the legitimate finance system.
People work hard in Canada.
The country has an “American” approach to employment – long working hours, short holidays and a commitment to productivity which has seen the state’s economy grow steadily even during global austerity. Its economy is now worth an estimated $1.9 trillion annually: almost the same size as Brazil’s stalled South American powerhouse, but with one-sixth of the population.
Consequently, average wages in Canada are higher than across most nations, at just under $50,000 a year, and families enjoy high living standards despite equally high tax rates which pay for the services that keep the country moving during those severe winters and scorching summers.
The estimated global value of money laundering activity annually equates to more than the value of Canada’s entire gross domestic product.
Canada isn’t paradise by any means. It faces all the challenges of its 21st Century peers such as urban crime rates, drugs, pockets of deep poverty and climate problems. But, in these days of populist global politics, and the turmoil that it has brought with it, Canada remains a relatively serene, diverse and happy country. Cities such as Vancouver, Montreal and Toronto regularly top the list of most desirable places in the world to live.
Property in Vancouver, British Columbia (B.C.), is particularly expensive – driven by soaring demand from international “investors”. Yet, most Canadians do not know that one of the key drivers of rising property prices has been the level of dark money pouring into B.C.’s housing market. One recent estimate put the figure at $2.5 billion of illegal cash invested in local property in 2018 alone.
In 2018, the United Nations Office on Drugs and Crime estimated that the value of money laundering annually was between 2% and 5% of global GDP.
Which is why, on a recent trip to visit my brother-in-law in Toronto – a senior figure in the country’s finance sector – Canadians were furious to learn that the estimated global value of money laundering activity annually equates to more than the value of Canada’s entire gross domestic product.
All that hard work, all those hours of honest sweat and toil, all those large tax bills, which make up the total value of Canada’s economic activity – and it equates to less than the value of a single criminal activity which is fast becoming one of the world’s biggest problems.
They say that crime doesn’t pay. But, you’d be hard pushed to convince overworked, upstanding and generally law-abiding Canadians.
Put simply, money laundering is the process of concealing the origins of illegally earned monies by passing it through the legitimate economy – thereby “cleaning” or “laundering” the cash in the process. It is a major crime and, in this increasingly fractious and hard-to-regulate modern world, it is on the rise.
In 2018, the United Nations Office on Drugs and Crime (UNODC) estimated that the value of money laundering annually was between 2% and 5% of global GDP. That’s an upper limit of $2.08 trillion, or an economy the size of Italy’s G8 member. According to my Europol policing sources, it was a purposefully conservative estimate made by the UN. Privately, some experts believe the annual figure could be 40% higher than the UN’s estimate – which would make it the size of the UK’s economy.
I have spoken with senior police officers, bankers, consultants, victims, politicians, tax authorities and even alleged money launderers to try to make sense of exactly what it is.
As the leak of sensitive information through the ‘Panama Papers’ shows, money laundering is now a serious “business” and an activity which is threatening to destabilise economies and societies the world over. There is not a major state which remains unaffected by attempts to hijack legitimate economic activity in order to “clean” vast sums of cash gleaned from illicit trade such as drug trafficking, prostitution and sex trafficking, fraud, arms dealing, robbery, dodgy land/property deals and terrorism.
Money laundering is a fascinating subject, although it can be complicated and often technical. But, at its heart, money laundering is a simple process made to look complicated by those who are expert at it.
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In the course of researching a forthcoming book on the subject, I have spoken with senior police officers, bankers, consultants, victims, politicians, tax authorities and even alleged money launderers to try to make sense of exactly what it is, how it works, and how organisations can do more to identify and tackle it.
In this new series for Byline Times, we’ll walk you through the basics of money laundering, using some noteworthy examples, and explain just how a perfect storm of economic and political globalisation, legislative incompetence or complacency and outright state corruption have created increasing opportunities for organised crime to turn money laundering – and the activities which fuel it – into one of the biggest threats facing the globe today.
The idea, by the way, is not to allow you to go off and join the dark network of money laundering practitioners or beneficiaries. Please don’t do that – you will and should get caught.
The reason Byline Times works to expose and explain money laundering is so that law enforcement organisations, governments, politicians, regulators, businesses and the general public know money laundering when they see it. Because it can often hide in plain sight.
So, if we truly wish to tackle dark money, we need first to understand the activity. And, in order to do that, we’re going to need to show you how some of it works.
Welcome to The Laundromat. All money is welcome – cash is king.
Please contact firstname.lastname@example.org in confidence with any tip-offs, information or feedback relating to money laundering and associated activity.