Research: Publications

Dirty Money and Its Global Effects

January 6, 2003 | Report

By , Brionne Dawson, Ilya Shulman, Clint Brewer

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The globalizing era has produced an explosion in the volume of illegitimate commercial and financial transactions. North American and European banking and investment institutions have been flooded with laundered and ill-gotten gains. Amounting to trillions

of dollars, most of these sums are generated through secretive ar- rangements between co- operating but distant private-sector entities. Lagging legal codes have proven inadequate to deal with the situation. Much of this subject is taboo in business and government circles, yet this torrent of stolen, disguised and hidden re- sources poses a major risk to state security, corporate stability, democracy, free enterprise, the effectiveness of international aid programs and the lives and well-being of billions across the world.

International financial statistics can neither clearly trace the flow of illegal money nor firmly establish its total magnitude. However, we do know its effects. We know, for example, that it drives the drug trade, has moved hundreds of billions of dol- lars out of Russia in recent years, has shifted vast sums from the southern hemisphere into the north- ern hemisphere, finances current wars and con- flicts in Latin America, Africa and Asia, and played an enabling role in the events of September 11, 2001. That tragedy led to the greatest assault ever on a network that generates and utilizes money for illegal purposes. And yet in the midst of the post-Sep- tember 11th pursuit of ter- rorist funds, Osama bin Laden said that attempts to find and freeze such as- sets “. . . will not make any difference to Al Qaeda or other jihad groups. Al Qaeda is comprised of modern, educated young people who are as aware of the cracks in the western financial system as they are of the lines in their own hands. These are the very flaws in the western finan- cial system which are becoming a noose for it.”

Given political will, these “flaws” can be largely corrected.

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