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Published 1/1/2010 in the Review of Law and Economics: Measuring Global Money Laundering: "The Walker Gravity Model", by John Walker and Brigitte Unger (Utrecht University School of Economics)
Finalist in the ACT Chief Minister's Export Awards, 2008, recognising my work with the Chinese People's Public Security University, the UNODC and the IMF.
Updated estimates of ML in and through Australia
Latest News 2010 in Review 2009 in Review 2008 in Review 2007 in Review
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2007 in Review
The year began with a busy period forecasting trends in crime and criminal justice system workloads, developing various resource allocation formulas for police and legal aid, and researching motor vehicle thefts. I was then invited to the Ministry of Home Affairs, Singapore, to demonstrate my crime trends forecasting techniques, and they have indicated that this could lead to a substantive project in 2008.
In May, Austrade encouraged me to travel with the ACT Chief Minister’s Trade Mission to China, meeting academics and agency staff in Shanghai, Beijing and Shenzhen all in the space of a week. This too paid off, when the Chinese People’s Public Security University (effectively China’s national Police Academy) invited me to teach their post-graduates and lecture to the academic staff through November and December.
Karan and I travelled via a one-day presentation on cybercrime (Singapore), spent a week in Beijing “acclimatising”, before flying to Utrecht (Netherlands) for a conference, organised by Prof. Brigitte Unger (Utrecht University School of Economics) specifically to generate discussion about my global model of transnational crime and moneylaundering, with leading researchers invited from around the world. Eminent speakers, both critics and proponents of my modelling work, agreed that the key deficiency was the poor global data on the proceeds of crime and the degree of moneylaundering engaged in by different criminal groups. Participants from the International Monetary Fund, World Bank and the Brookings Institution all indicated that some funding for research to address these deficiencies may be possible in 2008.
[L-R: Elod Takats (IMF), Raymond Baker (Brookings Institution), Peter Reuter (Rand Corporation), me, and Brigitte Unger (Utrecht Uni School of Economics)]
The year ended with six weeks in Beijing, teaching a class of 15 postgraduate criminologists from all around China, and meeting senior academics. While it was very hard work living night and day in a Chinese-speaking suburban environment, we managed to communicate in Chinese (sometimes!), English (sometimes) and sign-language (frequently), and made a lot of friends there! The local restaurants will certainly miss us, as we caused great excitement and amusement (“la, bu la, ma?” is useful, meaning “is it spicy?”). I even performed (karaoke) in Beijing’s number 1 nightclub, and Karan and I managed an occasional swing dance in unlikely places! There is every indication that I will be invited back to work again in China – for more substantive research projects – two senior and influential academics told me that I had “inspired” them! We were showered with gifts, some of the students were actually in tears when we said our goodbyes, and we have been invited to just about every possible corner of China! A fantastic experience all round!
[Postgraduate Class, Chinese Peoples Public Security University, Beijing]
My work featured several times in both the Queanbeyan Age and the Canberra Times during the year, and finished the year in the Australian.
The year started relatively slowly, focusing on trying to find enough information about bulk cash smuggling around the world to put together a worthwhile report on the issue, for the Australian Institute of Criminology's programme of money laundering research (not an easy job!!), and assisting the Victorian Department of Human Services to construct a demand model for juvenile custody. During March, however, I was invited to travel to Oslo to present my global model of economic crime and money laundering to a conference on Illicit Financial Flows from Developing Countries, organised by the Norwegian Aid Agency, Norad. Raymond Baker's work had concluded that something like US $800 billion flows FROM the poorer countries TO the richer ones, as a result of corruption, trade pricing frauds and the theft of (or underpayment for) natural resources - ten times the funding that the rich countries "generously" give to the poorer in "aid". Although my model is based on completely different data and assumptions, it is capable of producing estimates of the proceeds of crime laundered out of developing countries, and the resulting figure of US$850 billion supports Baker's result.
I then decided to take advantage of the ACT Chief Minister's 2008 Trade Mission, which was to be in May and include a visit to Washington. I figured that, after the success of the Utrecht conference, and the interest shown by Norad, it might be time to try to get a hearing at the IMF, World Bank, and even the US Treasury itself. 1. The Utrecht conference had demonstrated that the model was academically respectable, but lacked good data on the proceeds of crime and on money laundering processes. 2. The Oslo conference demonstrated that the model was a useful contribution to a very important global economic problem. The IMF and World Bank were represented at both of these conferences, and had heard all the arguments. Putting these two together, it seems obvious that these organisations, with responsibilities including developing countries and the health of the global financial systems, should be making efforts to collect the "missing" information on proceeds of crime and money laundering, and I was going to try to persuade them to do so.
I was very surprised at the warm welcome I received in Washington - in complete contrast to the skepticism I would have received a decade or so earlier. The Financial Integrity Group at the IMF immediately asked me to write a discussion paper on measuring a country's attractiveness to money launderers, which gave me the opportunity to think over the concept in more detail than I had done before. Subsequently, I was asked to assist in a series of IMF workshops, in which senior staff of Financial Intelligence Units of the Pacific Island countries (held in Singapore in June) and the western Asia and eastern African region (held in Pune, India, in October) were encouraged to think about the levels of proceeds of crime and the methods of money laundering used in their countries. We are proving that the sort of data required by my model is, in fact, possible to collect. Initially, we are happy for the workshops to generate "ballpark" estimates, with credibility - not accuracy - being important. In the longer term, it will be appropriate to develop more sophisticated methods of estimating the size of the illegal "industries" that generate the proceeds of crime.
Participants in the IMF AML/CTF Workshop on Policy Development in the Pacific Island Countries, Singapore, June 2008.
Participants in the IMF AML/CTF Workshop on Policy Development in South Asian and East African Countries, Pune, October 2008.
After a very exciting early January reunion of the Canberra Bulls Speedway Club, a highlight in an otherwise quiet January, I found myself preparing for some interesting voyages of discovery in March and April. Following the very successful Pacific Islands workshop on the proceeds of crime and moneylaundering (Singapore, June 2008), the IMF had asked me to assist in the preparation of a Report to the Asia Pacific group of Anti-Moneylaundering agencies (APG), identifying and quantifying risks of moneylaundering in the Pacific island countries. Around the same time, the Council for Security Cooperation in the Asia Pacific (CSCAP) asked for my collaboration in a study of "factors contributing to the development of crime hubs in the Asia Pacific". The IMF project commenced with visits to Pacific island coordination agencies in New Zealand and then later to law enforcement and anti-moneylaundering agencies in Fiji, Papua New Guinea and Samoa. Our report was very well received at a full meeting of the APG later in the year.
The timing of the CSCAP meeting (in Bangkok) meant that I actually had to fly into Bangkok direct from Samoa, losing my suitcase on the way. Nevertheless, the survey mechanism I suggested, which would aim to identify the geographic, demographic, economic and governance factors that contribute to the development of crime hubs, was well received, and I was asked to further develop it for a second meeting to be held in Phuket later in the year. It was good to see my friends, Ernesto Savona (head of Transcrime) and Brigitte Unger (University of Utrecht), in Bangkok, where their presentations were very helpful.
Then, as the end of the Australian financial year approached, I was offered two short-term consultancy projects in Australia. The first was to assist the Supreme Court of Victoria in measuring their likely future workloads, while the ACT Department of Justice and Community Services and ACT Policing were hoping to develop a staffing model for ACT Policing, similar to the one I had developed for Victoria Police. As is usual in the justice system, these problems both involved my favourite "art" - blending very dodgy data and fairly heroic assumptions, and turning them into something surprisingly useful. At the end of June, I again assisted the IMF in a successful training workshop in Singapore, this one involving law enforcement and anti-moneylaundering agencies from South East Asian countries.
Old friend Max Kommer, from the Dutch Ministry of Justice, visited in September with his partner Marian, as part of their round Australia safari, but their stay was short as I had to fly to Washington for a Global Financial Integrity conference on Financial Flows from Developing Countries - a follow-up to the Oslo meeting the previous year. In this group, which consists mainly of finance and tax experts, my criminology is a little peripheral to their discussions, largely because the absence of data on the global proceeds of crime gives them virtually no basis for discussion. But there was ready acceptance that the first step in working out how great are the financial costs imposed on developing countries by criminal activities (including corruption) OUGHT to be estimating how much money is made, and smuggled out, by these criminals.
A follow-up meeting of the CSCAP group in Phuket in October gave me a chance to try out some ideas, including the "questionnaire plus expert workshop" methodology that had appeared to work for the IMF. But then the travelling really began! Again, I took advantage of the ACT Chief Minister's Trade Mission, this time to the U.K., where I had a number of very interesting meetings with British Government agencies involved in the fight against organised crime and money laundering. Among other things, I wanted to alert them to the project in which I am assisting Brigitte Unger and the University of Utrecht in a European Union study of the economic and legal effectiveness of anti-moneylaundering strategies. I was then based in Utrecht for the month of October, while we developed the project methodology, and in early December was invited to travel with them to speak at the prestigious Annual Conference of Economists at Tor Vergata University, Rome, where an entire session was organised on "The Past, Present and Possible Future of “the Walker Model” of Transnational Crime and Moneylaundering". An interested observer was Professor Ray Chou from Taiwan, whose encouragement was very rewarding. As an expert in forecasting himself, he was interested also in my criminal justice system projections methodology, and the presentations I was preparing for the next stop on the trip - Beijing.
From Rome, Karan and I travelled back to Australia via Beijing, where I had been invited to speak as a "Distinguished Professor" to the graduates of the Chinese People's Public Security University. I gave my "usual" presentation on estimating the extent of money laundering around the world (the "Walker Model of Transnational Crime and Moneylaundering"), but then - with Ray Chou's perfect translation of Que Sera Sera into Chinese, and with the active encouragement and help of some of the staff and students, I presented my justice forecasting methodology in the form of Karaoke. It is a wonderful way of getting complicated mathematical ideas over to a non-mathematical audience, and it worked very well with the Executive of the Victorian Department of Justice back in 2001 - for example, the relationship between age and offending patterns can be presented using Frank Sinatra's "When I was 17, it was a very good year", and changing the words to reflect offenders' changing offence patterns instead of Frank's changing taste in women as he got older. But would it work in Beijing???? Well, the sight and sound of over 50 senior Chinese police singing away to the words on the screen was worth the effort! It was very well received, and probably a presentation that they would all remember - but that is exactly the point, isn't it?
A section of the audience, and Professor Wang Dawei offers his congratulations after the Musical!
After a typically quiet January, the year's real work began with a February workshop on forecasting crime trends in Singapore. It is very interesting, leading a forecast modeling project when the data are official secrets and the workshop participants are reticent to speak to a foreigner - even one who has security clearance! Anyway, we did our best, and the idea of strategic planning in the criminal justice system, based on analysis of available data and expert workshop, was established in Singapore.
In March, I was again engaged with the ACT Policing Model, which now has a snazzy new name - the ROADMAP - the Resources, Operations And Demand Model for ACT Policing. March also saw another trip to Washington for a Global Financial Integrity conference on Financial Flows from Developing Countries. Again, in this group, which consists mainly of finance and tax experts, my criminology is a little peripheral to their discussions, largely because the absence of data on the global proceeds of crime gives them virtually no basis for discussion. But this time there was serious interest in estimating how much money is made by crime and corruption, and smuggled out of developing countries by these criminals. Following the conference, there were informal discussions on how it might be possible to set up a study to estimate these proceeds of crime figures around the world.
This indeed led to an invitation to speak at the joint UNODC - World Bank sponsored conference in Vienna in April, where I put the proposal that the "It can't be done" brigade must be ignored because "it is too important NOT to be done". My presentation was a plea for the UNODC to put as much effort into data collection and analysis of the other forms of crime as they put into illicit drug research. This proved to be the trigger for one of the most exciting periods of my working career.
The Victorian government's stated intention to increase the size of the Victorian Police operational staff numbers prompted renewed interest in workload projections across the whole of the Victorian Criminal Justice System, and tenders were called for the development of a projections methodology. I teamed up with criminologist Stuart Ross, for whom I have always had great respect, and Neville Norman - a much lauded public sector economist - both from the University of Melbourne, and we won the contract to start in June. We had, of course, a head start on rival contractors because of the modelling work I had done for Victoria's justice system agencies for almost thirty years, but even so to expand my exist model from a relatively simple "police-courts-corrections" to a model capable of projecting workloads for over twenty diverse agencies was extremely "challenging"! But the astonishing level of active participation of those 20+ agencies made it really worthwhile. Some agencies that had never really compiled workload-related data before came to the party, and project managers Jonathan Spear and Ben Mante were magnificent. I think this is one of my best ever models, and - in principle - it is adaptable to other criminal justice systems.
A final meeting of the CSCAP project took place in Phuket in early August, but it was my day at the Nepean Speedway on 5th September that gave me more satisfaction:
I'm no World Champion but at least I had a go!
The year ended with two and a half months overseas, beginning with a two-week follow-up forecasting exercise in Singapore in late October and two months in Vienna working with the UN Office on Drugs and Crime, assisting them in the development of a ground-breaking model of the proceeds of crime and money laundering around the world. The need for this project was identified both in the discussions earlier in the year with the GFIP group and at the joint UNODC - World Bank conference in April, and I was very proud to be the preferred candidate for the consultancy.
A bonus was the opportunity to see out the old year in Vienna, where the project team tested the gluhwein range and demonstrated their fancy footwork in the Graben (Thomas Pietschmann, UNODC)!
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