## Straight Talk: Cleaning Up

## Source details

**Canonical URL:** [Straight Talk: Cleaning Up](https://www.imf.org/en/publications/fandd/issues/2018/12/imf-anti-money-laundering-and-economic-stability-straight)

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## Bibliographic details
- Authors: Rhoda Weeks-Brown
- Published: December 3, 2018

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### Scope of the problem
- The United Nations recently estimated that the criminal proceeds laundered annually amount to between 2 and 5 percent of global GDP, or $1.6 to $4 trillion a year.
- Money laundering enables corruption, tax evasion, theft, drug trafficking, and migrant smuggling, which can threaten economic stability and undermine the rule of law.
- Money laundering can create asset bubbles in markets like real estate.
- Example case: a Guinean minister accepted $8.5 million in bribes, falsely reported it as income, transferred it to the United States, and bought a luxury estate; the minister was convicted of money laundering.
- A public advisory reported that over 30 percent of high-value, all-cash real estate purchases in New York City and several other major metropolitan areas were conducted by individuals already suspected of involvement in questionable dealings.
- Investigators are probing the possibility that the better part of $233 billion in payments was laundered through the Estonian branch of Danske Bank from 2007 to 2015.
- Terrorism financing and proliferation are additional risks: terrorist groups need substantial funds to pay fighters, buy weapons, food, and fuel, and proliferation (for example, North Korea) has reportedly devoted substantial resources to developing nuclear weapons.

### Threats to financial systems and economies
- Countries with weak anti–money laundering and combating the financing of terrorism (AML/CFT) regimes risk being called out by the Financial Action Task Force (FATF).
- Consequences of perceived vulnerability include:
  - Long-term reputational damage for banks.
  - Costly demands for additional documentation from international business partners.
  - Loss of correspondent banking relationships.
  - Marginalization of fragile economies, threats to remittance channels and foreign direct investment, and displacement of financial flows underground.

### Technology and evolving risks
- Financial technology developments—mobile money transfers, distributed ledgers, and virtual currencies—have legitimate uses but can also facilitate concealment of criminal activity.
- The trade-off: increase transparency about who is behind financial transactions, where, and for what purpose, without unduly increasing transaction costs or driving financial flows underground.

### Policy recommendations and priorities
- Understand and address threats from changing technology while avoiding undue constraints on financial innovation and inclusion.
- Increase transparency to know who is behind financial transactions, their origins, and purposes, without stifling legitimate activity.
- Remove legal and practical barriers to international cooperation to safeguard and share financial intelligence and follow the trail of illicit funds across borders.
- Strengthen the effectiveness of AML/CFT efforts through consistent and persistent implementation beyond laws on the books.

### IMF role and country-level efforts
- The IMF maintains an extensive AML/CFT program to preserve economic stability and financial integrity, including participation in international efforts and provision of advice and know-how to over 100 of its members—and counting.
- Country examples:
  - Ukraine: Working with national authorities to prevent banks from being misused by corrupt officials; regulatory sanctions for AML/CFT violations are increasing and reporting of suspicious transactions is on the rise, yielding a significant number of corruption investigations and prosecutions of high-level public officials.
  - Libya: Helped craft a new AML/CFT law that criminalized terrorism financing and established the legal basis for imposing sanctions against recognized terrorists.
  - Caribbean: Convened international banks and local counterparts to foster bilateral cooperation to address information gaps and meet regulatory expectations; one global bank that had left the region has decided to reestablish ties with some local banks.

### Conclusion
- Almost every country has criminalized money laundering and terrorism financing and established a legal framework to freeze terrorist assets, but significant work remains due to legal and institutional loopholes and criminal innovation.
- The IMF is committed to helping members identify and close modern “dirty money laundromats.” The stakes have never been higher.

*Rhoda Weeks-Brown, Straight Talk: Cleaning Up, F&D Magazine, December 2018.*

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## Content in this bundle

- **كلام صريح**
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  - [كلام صريح (PDF)](/-/media/files/publications/fandd/article/2018/december/ar/straight.pdf){rel="external" type="application/pdf"}
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- **Cleaning Up**
  - [Cleaning Up (Markdown version)](/-/media/files/publications/fandd/article/2018/december/imf-anti-money-laundering-and-economic-stability-straight.pdf.md){rel="alternate" type="text/markdown"}
  - [Cleaning Up (PDF)](/-/media/files/publications/fandd/article/2018/december/imf-anti-money-laundering-and-economic-stability-straight.pdf){rel="external" type="application/pdf"}
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  - [悪弊を一掃する、ローダ・ウィークス・ブラウン著、ファイナンス＆ディベロップメント2018年12月月号 (PDF)](/-/media/files/publications/fandd/article/2018/december/jp/weeks-brown.pdf){rel="external" type="application/pdf"}
- **Удаление грязи**
  - [Удаление грязи (Markdown version)](/-/media/files/publications/fandd/article/2018/december/ru/straight.pdf.md){rel="alternate" type="text/markdown"}
  - [Удаление грязи (PDF)](/-/media/files/publications/fandd/article/2018/december/ru/straight.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/fandd/issues/2018/12/imf-anti-money-laundering-and-economic-stability-straight_