Banks and the Global Laundromat by



By Geoffrey Smith – Banks and regulators lose fight against money laundering.

Data leaked by the US Treasury’s Financial Crimes Enforcement Network painted a picture of banks overwhelmed by the sheer volume of potentially suspicious transfers, without the resources or willingness to tackle the problem in depth.

According to figures from the United Nations Office on Drugs and Crime, the amount of money laundered each year in the world is estimated at 2% to 5% of global GDP, or up to $ 2 trillion in absolute value. American Banker magazine noted that the system catches only 1%.

While much of the information released was largely historical, it once again drove the names of a handful of major banks into the mud.

US and EU lawmakers are considering ways to improve their respective regimes: Congress is reviewing the Illicit Cash Act, which would give banks more power to know the identities of the people behind the myriad of shell companies through which l the money is laundered. The EU, meanwhile, is considering transferring anti-money laundering oversight to a new EU regulator who would hopefully be better able to catch criminals than overworked surveillance staff and sometimes compromises of small EU states.

Whether either will ever provide an effective defense against global organized crime is another question, however.

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