Money Finds a Way: Increasing AML Regulation Garners Diminishing Returns and Increases Demand for Dark Financing
The cost of anti-money laundering regulations has grown to many billions of dollars, and countries worldwide are increasingly complying with international standards for financial regulation. Yet, the interception rate for criminal proceeds remains under 1 percent. Banks in the United States, United Kingdom, and France continue to engage in unsafe practices, undeterred by legal penalties. Recent US legislation will narrow, but not eliminate, regulatory gaps. The cost of regulation has become so great that banks accept litigation as a cost of doing business or reduce legal exposure by ending relationships in areas of perceived high risk for money laundering; this excludes developing economies from the global financial system, reducing stability. Anti-money laundering should focus on transparency instead of punishment- particularly for clients that need more, not less, access to the financial system-and redirect funds to investment to stop predicate crimes rather than focus inefficiently on laundering.
Jacquelyn B. Lewis,
Money Finds a Way: Increasing AML Regulation Garners Diminishing Returns and Increases Demand for Dark Financing,
55 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vjtl/vol55/iss2/7