1	Who Am I? I earn millions of dollars every year through selling drugs and illegal arms? I run a major international transfer pricing racket? I bribe police and customs officials to overlook my illegal imports? I employ teams of accountants to confuse the auditors and hide fraudulent deals. I have a legitimate business but understate my income to evade taxation? I move large amounts of money through a tax haven? I organise major fund raising schemes for terrorists? I move money that was earned through crime in such a way as to hide its criminal origins?
2	How Big is Money Laundering? “The biggest industry on the planet”? “Bigger than arms”? “Bigger than oil”? “3-5% 0f Global GDP”? “Potential to destabilise governments”? “Undermine financial markets”? “Links to corruption and destruction of tax base”?
3	What do we know about the Extent of Money Laundering? How much money is laundered? Where does it come from? Where does it go to? Does it really affect the economy?
4	4-Step Logical Analysis
5	A Starting Point:
6	Focussing in on the “real” figure for Australia
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9	Can we extend this approach to over 200 Countries?
10	Some Very Big Questions
11	Logic of Generating Laundered Money
12	There’s Plenty of Information about Crime….
13	…but how accurate is it?
14	We can also measure crime profits...
15	We can measure Corruption too....
16	….and Bribery
17	…Putting all this information together...
18	What determines the destination?
19	Model Index: Most Attractive to Launderers
20	Model Index: Least Attractive to Launderers
21	Service Exports and Estimated Incoming Money Laundering
22	What is an “attractive” banking regime Courtesy TRANSCRIME “Euroshore” project
23	Criminology and Law analyses agree!
24	Model’s Top 10 Flows of Laundered Money
25	Model’s Top 10 ML Destinations
26	Model’s Estimates of the Generation of Laundered Money by Crime Type and Region ($US bill/yr)
27	Where does it Go?
28	Model results compared to Press reports
29	Consequences of Money Laundering
30	Money Laundering v Society Criminals become wealthy enough to bribe officials and ensure their continuing profitability Bribed officials become captive to the objectives of the criminal groups Professional groups (lawyers, accountants, bankers) are corrupted, kick-backs become the only way to do business Police fail to investigate major crimes, removing the threat of arrest - crime statistics provide inaccurate picture of risks Parliaments and politicians are controlled, removing the threat of effective business and finance legislation Key media are controlled, removing the threat of publicity
31	Money Laundering v the Economy Crooks don’t pay tax, so impose higher taxes on everyone else Crooks don’t mind paying a premium on legitimate property, so compete unfairly in the property markets Honest businessmen marginalised or eliminated - cycle of corruption of business principles Your country seen as a risky place to do business - spiral of decline in international trade Increasing poverty, decreasing social order, rise of extremism - cycle of deterioration.
32	Money Laundering v Terrorist Financing Not the same thing Both try to disguise source and end point No predicate offence Funds may be legitimate ‘Intended’ use may never occur What is the offence? Mirror image Reverses the ML scenario - the crime follows the laundering Requires different focus in financial institution Investigators need to reverse thinking Similar techniques – different purpose Crime and terrorism - 2 good reasons to make money laundering harder
33	A brief history of money laundering “Money Laundering” has been around for close to a century (Joseph Kennedy, Al Capone were money launderers). Fueled by high profitability due to US prohibitionist policies (first alcohol, later imported drugs including heroin, cocaine). The 1980s war on ML via FATF was driven by US political interests: (“If we can follow the money trail we can catch the drug crooks”) In the 1990s FATF became interested in evidence-based research into global ML (but US interests rejected it in favour of a narrow drug-focussed study) In September 2001, the World Changed . . . Because the US changed. Its changed domestic politics redirected its international response. Fear and vengeance were key political drivers. Immediate response - find the culprits and make them pay Enormous effort – no expense spared 50,000 personnel to find the terrorists Who were they; How did they get here; How were they paid Financial transactions the key to investigations Realisation that drugs were not the sole source . . .
34	So, in conclusion……………. While there is extensive global activity to counter ML, it doesn’t appear to be based on any rational analysis of the evidence. While, in the pursuit of more efficient trade, governments around the world have chosen to deregulate business and finance to the point where there have been massive auditing failures, and have chosen to create massive illicit markets by criminalising various forms of trade (particularly drugs), Banks are now expected to: do the work of police (identifying the proceeds of past or likely future crimes); do the work of intelligence agencies (anticipating future terrorist acts); do the work of passports and issuers of official identity papers (looking for false identity papers) In addition, police in many countries are now expected to: act as business auditors, for which they are rarely trained, qualified, or indeed appropriate. Banks’ responsibility should be limited to keeping good records and being good corporate citizens, by: reporting suspicious transactions of any sort, and reporting crimes to police (even where they themselves are the victims of the crime). Banking reputation must be based on full disclosure of risks, not on the suppression of inconvenient facts. Other responsibilities should be returned to the government agencies whose proper business it is – eg the police, intelligence agencies and those agencies that issue basic ID documentation.
35	Who am I? I conduct investigations into major crimes I collect information on terrorist groups I check and issue official identity papers I act as a business auditor Am I a Banker?