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MONEY LAUNDERING – MECHANISMS AND EFFECTS

I. O. Florea

Abstract

Money laundering is the operation by which considerable amounts of illegally achieved money, from different activities such as drug trafficking, drug smuggling, arms dealing, human trafficking, bribery, and corruption or other crimes, are transformed into legal funds earned from legitimate activities. The purpose of this paper is to present the primary forms of money laundering and different mechanisms they set in action and their effects. The methodology used for this paper is made of scholarly articles and articles relevant to the current topic, retrieved from the web as sources of information. When accomplished, money laundering gives its author the possibility to control the funds resulted from illegal activities and gave the impression that they have originated from legal ones. Money laundering plays a crucial role, as it diverts the attention of the authorities from the sudden great amount of money obtained in a short amount of time, by its author. Money laundering has corrosive social, economic and political effects. The involvement of criminal organizations in a state’s institutions can affect the decisions made, and alter the moral status of its members. On the economic level – it averts the funds resulted, to less efficient economic fields, resulting in a limitation of the economic growth. The level of political stability of the nations involved and the entire world can be disturbed by the penetration of significant amounts of dirty money into legitimate fields of action. Understanding the concept of money laundering and its effects on the national and global economy can result in finding more efficient ways of action to be adopted in the fight against this ever-progressing phenomenon.

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DOI resolver: doi.org/10.5593/sgemsocial2018/1.2/S01.017

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