Network of Anti-Corruption Specialists

UNODC has just published a research report on illicit financial flows resulting from drug trafficking and other transnational organized crimes. The report attempts to shed light on the total amounts likely to be laundered across the globe, as well as the potential attractiveness of various locations to those who launder money. The report notes that crime has short-term positive effects: laundered money is invested in small businesses, creating jobs, or saved in banks, easing credit flows and liquidity. But the medium and long term effects are destructive. Criminal groups tend to invest cash in businesses where it can be most easily hidden – real estate, restaurants, transport companies – rather than where it will generate the most profit. Criminally-backed enterprises damage competitiveness by driving legitimate firms out of business. ”Local merchants and businesses may find that they cannot compete with front companies organized to launder and conceal illicit funds. Such front companies may offer their goods and services at below-market rates or even at a loss because their primary objective is to launder money. Read the rest of this entry →