Money laundering: Over $1 trillion enters global financial market

RemittancesAn official at the United Nations Office on Drugs and Crime (UNODC) says more than $1 trillion is the amount of money laundered yearly in recent times into the global financial market.

The official says once criminal money has entered the global and financial markets, it becomes much harder to trace its origins.

“More than one trillion dollars: this is the staggering amount of money probably laundered annually in recent years,” said Pierre Lapaque, Head of organized crime and money-laundering unit at UNODC in an interview with the UN radio August 11, 2011.

In 1998, the International Monetary Fund estimated that the amount of money laundered is the equivalent of between 2% and 5% of global gross domestic product (GDP).

These monies laundered, described as “dirty money”, are acquired through illegal acts such as crimes and drugs and Mr. Lapague says one cannot separate the two.

“We cannot separate drug money from crime money – it’s all dirty money…It’s a huge flow but we cannot make precise estimates,” he explains adding “You have to identify the stream of illicit money before it joins the rivers of global financial flows – That’s the crux of the problem in making estimates.”

Despite measures put in place to combat financial crimes such as the training of both police and custom officials on client identification and development of a detection system, Mr Lapaque notes that there will always be money-laundering. “The most we can do is to restrict the flow and staunch it as early as possible.”

According to him, the menace will be curbed if the criminal markets are tackled to make it unattractive since crime is lucrative and money-launderers  are using state-of the-art technology, making the fight more difficult, and requiring governments to conduct ongoing risk assessments.

“In the long term, criminal groups are not important, what really matters is to tackle the criminal markets to make them less attractive. Focusing solely on law enforcement is short-sighted. Imprisoned criminals will be immediately replaced by others, and their activities will continue as long as crime is lucrative.”

We need prevention and control strategies to tackle drug markets, human trafficking, mafia activities and corruption of which the UNODC is implementing in partnership with the international community, said Mr. Lapaque.

Early last week, the Danquah Institute (DI) alerted the Ghana government on illegal international money transfers after it conducted a research in three European countries indicating that more than 60% of total remittances sent to Ghana in 2010 were through illegal money transfer routes.

The study stated that these remittances from illegal channels could be between $1.2 billion and $2.12 billion, including laundered money from crime proceeds.

Nana Attobrah, Head of Research at the Danquah Institute said the research was conducted in Germany, United Kingdom (UK) and the Netherlands, Ghana’s three largest European remittance corridors.

Countries offering offshore banking are perceived to be used as a hub for money laundering.

This perception at one time forced the Bank of Ghana (BoG) to convert Barclays Bank’s license to operate offshore banking into a regular one.

“At a time that Ghana was gaining a reputation for laundry, we did not want to confirm this misperception”, Mr Kwesi Amissah-Arthur, governor of BoG said during a Monetary Policy Committee meeting on February 18, 2011.

Mr Amissah-Arthur also cited lack of regulations to guide the offshore operation even though the Act for offshore banking has been passed.

But Parliament on Thursday March 24, 2011 adopted a Legislative Instrument (LI) to regulate the Anti-Money Laundering Act 2008 (Act 749) enacted to track criminals and financiers of terrorist activities.

The Ghana News Agency says a report presented by Mr Kwame Osei-Prempeh, Chairman of the Committee on Subsidiary Legislation, stated that appropriate provisions were made in the instrument to augment the efforts of the security agencies in combating crime and corruption.

He said the application of the legal framework would help to prevent criminals and terrorists from operating in the country.

By Ekow Quandzie

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