By Michele Riccardi & Peter Reuter

Two images dominate the discussion of money laundering. Investigative journalists and politicians stress the variety and sophistication of methods that have been used to launder the money of corrupt officials and white-collar offenders. The research literature, largely dependent on criminal cases, emphasizes how unsophisticated and routine are the laundering methods used by drug dealers and other illegal market participants. The discrepancy may reflect the incapacity of police to detect sophisticated money laundering but it may also represent the reality; that different groups of offenders choose different methods. This paper presents a theoretical framework to explain how offenders choose to launder their criminal earnings. Specifically, it asks: what determines the sophistication of the method chosen? Among the variables that we suggest influence the choice are: (a) the type of predicate crime and of crime proceeds, (b) the type of offender (age, education, social status), (c) his/her motivations, (d) the AML environment and the level of AML controls. The paper provides arguments from criminological and economic theory for how these variables might play a role. Without claiming that individual cases can test the theory, we offer some case narratives to suggest the plausibility of the factors that we propose.

European Journal on Criminal Policy and Research, Volume 30, pages 333–358, (2024)

By Anthony Morgan

This report examines the effect of money laundering on the harm associated with organised crime by linking data on organised crime groups known to law enforcement, and data on suspicious transactions reported to the Australian Transaction Reports and Analysis Centre (AUSTRAC). This study is the first step in assessing the social and economic harms associated with money laundering and terrorism financing in Australia.

Key Findings

• Suspicious matter reports captured a high proportion of individuals and groups known by law enforcement to be involved in organised crime.

• Known organised crime groups accounted for a very small proportion of suspicious matter reports.

• The amount of money laundered by groups varied according to where they laundered their funds and whether they had professional facilitators.

• The presence and amount of money laundering was consistently associated with an increase in recorded crime-related harm and the probability of organised crime.

• Evidence indicates that the laundering of illicit funds preceded increases in crime-related harm.

Consultancy Report Canberra: Australian Institute of Criminology, 2024. 73p.

By Jo‑Anne Kramer,  Arjan A. J. Blokland, ·Edward R. Kleemans, Melvin R. J. Soudijn

In order to launder large amounts of money, (drug) criminals can seek help from financial facilitators. According to the FATF, these facilitators are operating increasingly business like and even participate in professional money laundering networks. This study examines the extent to which financial facilitators in the Netherlands exhibit business-like charac teristics and the extent to which they organize themselves in money laundering networks. We further examine the relationship between business-like behavior and individual money launderers’ position in the social network. Using police intelligence data, we were able to analyze the contacts of 198 financial facilitators who were active in the Netherlands in the period 2016–2020, all having worked for drug criminals. Based on social network analysis, this research shows that financial facilitators in the Netherlands can be linked in extensive money laundering networks. Based on the facilitators’ area of expertise, roughly two main types of professional money laundering networks can be discerned. Some subnetworks operate in the real estate sector, while others primarily engage in underground banking. Furthermore, the application of regression models to predict business-like behavior using individual network measures shows that facilitators with more central positions in the net work and those who collaborate with financial facilitators from varying expertise groups tend to behave more business-like than other financial facilitators

Kramer JA, Blokland AAJ, Kleemans ER & Soudijn MRJ 2023. Money laundering as a service: Investigating business-like behavior in money laundering networks in the Netherlands. Trends in Organized Crime.

By Peter Gerbrands, Brigitte Unger, Michael Getzner & Joras Ferwerda 

Aim

There is a growing literature analyzing money laundering and the policies to fight it, but the overall effectiveness of anti-money laundering policies is still unclear. This paper investigates whether anti-money laundering policies affect the behavior of money launderers and their networks.

Method

With an algorithm to match clusters over time, we build a unique dataset of multi-mode, undirected, binary, dynamic networks of natural and legal persons. The data includes ownership and employment relations and associated financial ties and is enriched with criminal records and police-related activities. The networks of money launderers, other criminals, and non-criminal individuals are analyzed and compared with temporal social network analysis techniques and panel data regressions on centrality measures, transitivity and assortativity indicators, and levels of constraint.

Findings

We find that after the announcement of the fourth EU anti-money laundering directive in 2015, money laundering networks show a significant increase in the use of foreigners and corporate structures. At the individual level, money launderers become more dominant in criminal clusters (increased closeness centrality). This paper shows that (the announcement of) anti-money laundering policies can affect criminal networks and how such effects can be tested.

EPJ Data Science, 11(1), [15]

By Joras Ferwerda, Alexander van Saase, Brigitte Unger & Michael Getzner

 It is important to understand the amounts and types of money laundering flows, since they have very different effects and, therefore, need different enforcement strategies. Countries that mainly deal with criminals laundering their proceeds locally, need other measures than countries that mainly deal with foreign illegal investments or dirty money just flowing through the country. This paper has two main contributions. First, we unveil the country preferences of money launderers empirically in a systematic way. Former money laundering estimates used assumptions on which country characteristics money launderers are looking for when deciding where to send their ill‑gotten gains. Thanks to a unique dataset of transactions suspicious of money laundering, provided by the Dutch Institute infobox Criminal and Unexplained Wealth (iCOV), we can empirically test these assumptions with an econometric gravity model estimation. We use this information for our second contribution: iteratively simulating all money laundering flows around the world. This allows us, for the first time, to provide estimates that distinguish between three different policy challenges: the laundering of domestic crime proceeds, international investment of dirty money and money just flowing through a country  

Ferwerda J, van Saase A, Unger B & Getzner M 2020. Estimating money laundering flows with a gravity model-based simulation. Scientific Reports 10(1).

By Guadalupe Correa-Cabrera, Charles Lewis and William Yaworsky

This article explains some of the mechanisms through which corruption by high-level Mexican politicians and other organized crime members is facilitated in the United States through money laundering operations. The analysis is based on information contained in court records related to key money laundering cases, as well as in news articles and reports from law enforcement agencies. These materials highlight the interrelationships among U.S. drug use, cartel activities in Mexico, human rights abuses, Mexican political corruption, and money laundering in the United States. This work demonstrates the pervasive use of legitimate businesses and fronts in the United States as a disguise for criminal activity. Finally, it provides recommendations for a reformation of policies and penalties directed toward U.S. institutions and persons that facilitate money laundering.

Journal of Illicit Economies and Development, 6(1): pp. 64–78. 2024

MAY CONTAIN MARKUP

Donato Masciandaro, EI6d Takats and Brigitte Unger

FROM THE INTRODUCTION: “Traditionally, monetary and financial economics has focused on legal financial transactions, while the economics of crime - following Becker - has neglected the financial aspects. Hence, black finance - finance that relates to illegal or criminal activities - has fallen between the two stools. Due to this separate development in the two sub-disciplines of economics, economic theory has not addressed financial crime sufficiently, so far. This creates a particularly disturbing gap in the literature, since lately, especially in connection with terrorist financing, the financial side of crime has become accentuated in the public and political debate.”

Edward Elgar. Cheltenham, UK • Northampton, MA, USA. 2007. 274p.