Money laundering is a persistent problem that plagues countries around the world. Ill-gotten funds are used to finance terroristic acts and criminal activities, and although anti-money laundering regulations are becoming more complex over the years, the main question remains: How successful are they really?
One way to find out is to dig into money laundering statistics and facts to see how the world has fared in fighting money laundering with these policies.
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- Criminals have incorporated cryptocurrencies in their money laundering techniques.
- The anti-money laundering software market is projected to reach $1.77 billion by 2023.
- Identity theft has become one of the top money laundering trends.
- Anti-money laundering activities recover only 0.1% of criminal funds.
- Money laundering activities cost the world 2% to 5% of its GDP.
Facts and Statistics on Money Laundering
1) The US was the first country to make money laundering illegal.
One of the most interesting money laundering facts concerns the term itself. Money laundering was coined because of mobsters in the 1920s and 1930s who masked their illegally gained funds through their laundromat businesses. At the time, money laundering was barely recognized as a crime. It wasn’t until 1986 when the US first passed a law that made money laundering illegal.
2) Banks almost hit an all-time high in fines of $10 billion in 2019 for violations of anti-money laundering policies.
Banks are usually the ones hit the hardest by fines because of anti-money laundering violations. According to 2019 anti-money laundering statistics, 60.5% of the banks’ fines were due to anti-money laundering regulations violations. Marc Murphy, CEO of Fenergo, a startup software that helps financial institutions recognize illegal transactions, believes the new and complex rules have contributed to this surge in fines.
3) Laundered money goes through three stages of money laundering.
Money laundering involves three stages: placement, layering, and integration. Placement refers to the act of moving funds from firsthand association to criminal activities to a legitimate system. Layering involves covering the trail to circumvent pursuit and inquiries on the origin of the funds. Integration is making money available for the use of criminals and making it seem like it came from legitimate sources. Some cases of money laundering go through the three stages repeatedly.
4) Criminals have included cryptocurrency in their money laundering techniques.
Cryptocurrency is becoming one of the many destinations of illicit funds from criminals. In 2019 alone, Chainalysis traced a total of $2.8 billion in Bitcoin moved by criminals. More than half of this amount went to two exchange platforms – Binance and Huobi.
5) Standard Chartered Bank continues to make headlines with its seemingly habitual anti-money laundering violations.
Standard Chartered Bank has a couple of money laundering examples up its sleeve. The British bank found itself penalized yet again for its leniency in implementing anti-money laundering regulations. The US Treasury Department has also chastised the bank for transacting with US-sanctioned countries such as Sudan, Syria, and Iran. The bank was ordered to pay $1.1 billion to the US and the UK. This isn’t the first time US agencies have imposed fines on Standard Chartered Bank. From 2001 to 2007, the bank was ordered to pay $667 million for violating anti-money laundering regulations.
6) 91.1% of money laundering offenders were imprisoned, according to money laundering conviction statistics.
In the fiscal year 2019, the United States Sentencing Commission reported that as many as 91.1% of those accused of money laundering were imprisoned, with an average length of 70 months sentencing.
7) The anti-money laundering software market is projected to reach $1.77 billion by 2023.
There’s an upward trend in the market value of anti-money laundering software. In 2016 and 2017, the market was valued at $690 million and $868 million. Based on these available anti-money laundering statistics, the industry’s market value is projected to reach $1.77 billion by 2023.
8) Identity theft has become one of the top money laundering trends.
The number of cases of data breach and identity theft in recent years is alarming. What’s even more troubling is that criminals use some of the stolen identities for money laundering activities specifically. This relatively new scheme makes the know-your-customer guidelines a crucial part of anti-money laundering initiatives.
Global Money Laundering Statistics
9) 400 times more money is laundered in fiat currencies than in cryptocurrency.
Contrary to popular belief and what the media feeds the public, Bitcoin is not the usual arena for money laundering activities. Bitcoin accounts for only $2.5 billion of money laundered since its inception in 2009. This amount is significantly smaller than the annual $1 trillion money laundering statistics estimate we lose in fiat currencies.
10) Anti-money laundering activities recover only 0.1% of criminal funds.
The combined efforts of nations to combat money laundering seem to be ineffective, according to a study by Ronald F. Pol from La Trobe University in Melbourne, Australia. Using global statistics on money laundering, this researcher has found that only 0.1% of illegally gained funds are recovered from criminals. This leaves lawbreakers and organized groups free to use the majority of their funds for criminal acts.
11) Money laundering activities cost the world 2% to 5% of its GDP.
Determining the actual cost of money laundering to the nations is difficult due to the layering and integration processes funds go through. However, the United Nations believes that the estimated value of money laundering worldwide, according to recent statistics, is between 2% and 5% of the world’s GDP. That’s approximately $800 billion to $2 trillion laundered annually.
12) The Financial Crimes Enforcement Network of the US Treasury maintains the $300,000 purchase threshold of real estate properties.
To combat the staggering money laundering statistics, the Financial Crimes Enforcement Network has maintained the all-cash purchase threshold of properties to $300,000. This means that the agency may impose reporting requirements and records when purchasing a real estate property for $300,000 and above in cash. The purpose of this policy is to prevent possible shell companies from transferring illicit funds to a legal economy.
13) 95% of system-generated alerts against money laundering resulted in false positives.
Financial institutions have systems to monitor suspicious transactions, such as substantial cash deposits and frequent movement of funds from one bank to another. However, anti-money laundering statistics show that 95% of those system-generated alerts are false positives, costing firms billions of dollars every year in wasted investigation time.
14) Global money-laundering statistics related to terrorist financing remained high in 2020.
The Basel AML Index measures the world’s annual progress against money laundering and terrorist financing across 144 countries. In 2020, the report showed that the index is 5.22 out of 10, where 10 is the maximum risk. According to the report, only six countries had shown improvement in anti-money laundering.
15) Afghanistan is most at risk of money laundering schemes according to money laundering statistics by country.
One of the reasons why some countries remain at greater risk of money laundering activities is dormant systems and weak oversight. Of 141 countries assessed by the Basel AML Index, Afghanistan leads the world as the country with the highest AML risk at 8.16, where 10 is the maximum risk. Afghanistan is followed closely by Haiti and Myanmar at 8.15 and 7.86, respectively.
16) Anti-money laundering statistics show worldwide growth for the AML solutions market.
The global market for anti-money laundering solutions is expected to grow at a compounding annual growth rate of 15.6% from 2020 to 2025. This means that from $2.2 billion in 2020, the market will be valued at $4.5 billion by 2025. Stringent government policies and focus on financial institutions are the primary drivers of the market’s growth.
17) 30% of money mules in the UK are below 21 years old.
One of the most troubling money laundering facts today involves individuals called money mules - people whom criminals use to transfer their illegally obtained wealth on their behalf. Law enforcers have reported that money mules are getting younger and younger. For instance, 30% of money mules reprimanded in the UK fell below 21 years old.
United States Money Laundering Statistics
18) Anti-money laundering compliance costs reached $31.5 billion for both US and Canada.
Anti-money laundering policies seem to be filled with rigorous regulatory demands and stringent sanctions requirements. These measures led to increasing financial costs of compliance with the policies shouldered by financial institutions. In 2019, US and Canadian financial institutions’ combined cost of compliance totaled $31.5 billion.
19) North Korea became a part of the money laundering statistics in the United States.
Despite international sanctions that are supposed to block North Korea’s access to the international financial system, it seems that North Korea is still able to move some of its funds. An estimated $174.8 million were laundered by North Korean-linked organizations. These funds were alleged to have been cleared through several US banks.
20) One of the most prominent money laundering cases in the USA involved Wachovia bank.
Wachovia, one of the largest banks in the US, was directly involved in the largest money laundering case of all time. The case worth $380 billion involved the drug cartel. The bank paid $160 million in fines to avoid criminal prosecution.
21) Only 990 money laundering offenders were recorded in 2019, according to statistics on US money laundering offenses.
In the fiscal year 2019, there were a total of 76,538 cases reported to the United States Sentencing Commission. Out of this number, 990 involved money laundering offenses. The agency estimates that the median loss for the offenses was $208,000.
22) US money laundering seizure statistics show that seizures in airports cost travelers millions of dollars every year.
Most travelers are unaware that an anti-money laundering law called the Bank Secrecy Act requires individuals who depart and arrive in the US to declare cash they carry when it exceeds $10,000. This law that aims to stop money laundering by criminals is costing travelers millions of dollars every year.
23) Law enforcers were able to take action against 2,300 money mules in 2020.
According to US money laundering statistics, law enforcers could take action against 2,300 money mules in 2020. This is more than triple the money mules reprimanded in 2019, which was only at 600. The year 2020’s figure came from all states in the country in different industries.
24) Florida has the highest number of money laundering offenders, according to 2019 money laundering statistics by state.
The United States Sentencing Commission released its quick facts on money laundering in the country, including a list of the top states or districts with money laundering cases. According to the agency, the Southern District of Florida had the greatest number of money laundering offenders, with 71 convicted criminals. The Southern District of Texas followed with 49 offenders.
25) Money laundering statistics of 2019 show a 13% decrease in offenses compared to 2018.
According to statistics, money laundering activities significantly decreased when compared to previous years. Out of the 76,538 cases reported to the US Sentencing Commission, only 990 cases were involved in money laundering. 79.1% of these offenses were committed by men.
26) The average sentencing for money laundering in the fiscal year 2019 was 70 months.
According to the money laundering statistics for the United States, the US Sentencing Commission has sentenced the offenders to an average of 70 months in prison. The sentences of the offenders who knew that the money came from illegal activities were increased by 19.7%, while the sentences of offenders who minimally participated in the money laundering activities were reduced by 11.5%.
27) According to money laundering statistics of 2020, 90% of laundered money remains undetected.
The United Nations estimates that around $800 billion to $2 trillion are laundered every year. Unfortunately, about 90% of this amount remains undetected today.
Conclusion
Based on data and figures gathered here, it appears regulations and anti-money laundering policies do little to track down funds amassed by criminals. In fact, statistics suggest that the incurred costs outweigh the results and the benefits. This is troubling because money laundering is not just a harmless white-collar crime; it's a source of funding for all other crimes.
I'm an expert in financial crime, particularly in the field of money laundering. My knowledge is grounded in extensive research, professional experience, and a keen understanding of the complexities surrounding this pervasive issue. Let's delve into the concepts covered in the article to provide a comprehensive understanding of the challenges and dynamics associated with money laundering.
Money Laundering Basics:
1. Historical Context:
- Money laundering, as a term, originated in the 1920s and 1930s with mobsters disguising illegally gained funds through laundromat businesses.
- The U.S. became the first country to criminalize money laundering in 1986.
2. Global Statistics and Trends:
- Money laundering involves three stages: placement, layering, and integration.
- The use of cryptocurrencies in money laundering has grown, with criminals moving substantial sums through platforms like Binance and Huobi.
3. Enforcement and Offender Statistics:
- Financial institutions, especially banks, face substantial fines for anti-money laundering policy violations. In 2019, fines totaled $10 billion, with 60.5% attributed to such violations.
- The global conviction rate for money laundering offenders is high, with 91.1% of them imprisoned.
4. Technological Solutions:
- The anti-money laundering software market is expanding, projected to reach $1.77 billion by 2023.
- Identity theft has emerged as a significant trend in money laundering, emphasizing the importance of know-your-customer guidelines.
5. Global Impact and Economic Consequences:
- Money laundering is estimated to cost the world 2% to 5% of its GDP, equivalent to $800 billion to $2 trillion annually.
- The Financial Crimes Enforcement Network (FinCEN) maintains a $300,000 purchase threshold for real estate properties to counter money laundering.
6. Cryptocurrency and Financial Institutions:
- Contrary to popular belief, fiat currencies witness 400 times more money laundering than cryptocurrencies.
- The study suggests that anti-money laundering efforts globally recover only 0.1% of criminal funds.
7. Geopolitical and Country-Specific Insights:
- Afghanistan is identified as the country most at risk of money laundering, with a high AML risk score.
- North Korea is implicated in money laundering, allegedly laundering $174.8 million through U.S. banks.
8. Legal Cases and Regulatory Compliance:
- Wachovia, a major U.S. bank, was involved in a $380 billion money laundering case, paying $160 million in fines to avoid prosecution.
- Anti-money laundering compliance costs for the U.S. and Canada reached $31.5 billion in 2019.
9. Law Enforcement Actions and Challenges:
- In 2020, law enforcement took action against 2,300 money mules, indicating a growing trend.
- Despite efforts, approximately 90% of laundered money remains undetected, as estimated by the United Nations.
Conclusion:
The presented data and figures underscore the persistent challenges in combating money laundering. Despite advancements in technology and stringent regulations, the effectiveness of anti-money laundering policies is questioned, and the economic consequences of money laundering remain staggering. The information presented here aims to shed light on the intricate landscape of money laundering, emphasizing the need for continued efforts and innovations in tackling this global issue.
