Money laundering has a corrosive effect on a country's economy, government, and social well-being, two State Department officials say. The officials -- senior policy adviser John McDowell and program analyst Gary Novis of the Bureau of International Narcotics and Law Enforcement Affairs -- say the practice distorts business decisions, increases the risk of bank failures, takes control of economic policy away from the government, harms a country's reputation, and exposes its people to drug trafficking, smuggling, and other criminal activity. Given the technological advantages money launderers now employ, they say, a high level of international cooperation is necessary to keep them in check. Among its other negative socioeconomic effects, money laundering transfers economic power from the market, government, and citizens to criminals. In short, it turns the old adage that crime doesn't pay on its head. Furthermore, the sheer magnitude of the economic power that accrues to criminals from money laundering has a corrupting effect on all elements of society. In extreme cases, it can lead to the virtual take-over of legitimate government. Overall, money laundering presents the world community with a complex and dynamic challenge. Indeed, the global nature of money laundering requires global standards and international cooperation if we are to reduce the ability of criminals to launder their proceeds and carry out their criminal activities.
The Fight against Money Laundering: Economic Perspectives: An Electronic Journal of the U.S. Department of State, v.6, no.2, p. 6-8