about financial crime

4. Why does money laundering matter?

According to some estimates, some 80% of property crime, for example, theft, is committed to fund drugs habits. If there were no people willing to buy the stolen goods, then there would be no point in criminals committing theft because there would be no money raised.

Published 1996

In most countries, the person who handles stolen goods (this generally means the person who buys them from the thief and then sells at a profit) is liable to a more severe sentence than the person committing the original offence. So there is a widely held belief that even simple theft can be reduced by making it unprofitable for the criminal.

But in financial crime, increasingly, there is no physical representation of the crime. The money is no more than information on a computer screen, or to be more precise it is bits and bytes stored in a computer’s memory. So, no one “handles” stolen goods because there is nothing to touch.

The result of this is that criminal laws that were framed to address the physical holding of something that had been stolen did not apply (or Courts decided it did not apply) to non-physical money or other “dematerialised” assets.

There is a phrase often used by those who draw up laws or have to enforce them – they say that one way of reducing crime is to “take the profit out of crime.” This means to identify assets that represent proceeds of crime and to seize them under a Court Order or administrative power.

All this means that if money laundering could be made an unrewarding or as risky as handling stolen goods, then there would be an impact upon financial crime.

Financial crime affects everyone. Some people claim it is a victimless crime. It is not.

It results in increased taxes for those that do not evade tax, it results in increased insurance policy premiums for those that do not make fraudulent claims, it results in higher taxes for those that do not make fraudulent claims for benefits, it results in higher costs to businesses, which means a combination of less profits and higher prices to consumers and it means the vulnerable such as the elderly are at risk from offences such as doorstep frauds. It means shopping on the internet or even at your local supermarket is more risky because the trader may be a fraudster and it means that money flows into the hands of corrupt politicians and businessmen, including those engaged in trafficking in drugs, arms and people.

It means your cost of living is higher, and you have less to spend on the things you want to spend your money on.

Money laundering is not a victimless crime.

You are the victim.