Money Laundering Crimes’ Impact, on the Economic Policies, Revisited

Any economic policy, requires a specific plan, in order to be implemented, in a certain time.

The meaning of an economic policy can be summarized as ensuring knowledge of the actual reality of a specific economic situation, in order to move forward towards a better one, that contributes to the revival of a given state and/or a society.

Undoubtedly, money laundering operations negatively affect mechanisms used in formulating the country’s economic policies, due to the inaccuracy of the data and information, needed to prepare and set up these policies, subsequently, the results would produce, an array of incorrect outcomes that will not lead to achieving the objectives of these desired policies, such as overestimating inflation rates.

 As well as tax and unemployment rates, as the crime, in general, and money laundering operations, in particular, take place on a large scale and are very difficult to measure, because of their secret nature, which leads to distortion of the economic data, necessary for the formation of these policies, as mentioned above.

On the ground, many countries, especially those with free-flowing exchange rate economies, faced numerous obstacles, due to the influx of large amounts of laundered money, resulting in the appreciation of the exchange rate or the expansion of the monetary base.

In response, economic policy makers have used to wrongly respond to such data, by adjusting fiscal or monetary policies, and eventually, eroding the effectiveness of both..

Work is currently underway, at the international level to develop the best mechanisms, to counter the harmful impact of money laundering crimes, on financial systems and the real economy.

Perhaps the modern financial techniques used, in economic transactions, will make the innovators of these technologies a greater assets, as well as policy makers.

But what is the most appropriate way, at the present to deal with the impact of money laundering, on the policy making?

Sparing or allocating space for incorrect data is, either, a reasonable and somewhat safe approach, when it comes to designing economic policy research responses.

These policy measures that would take into account important topics, shall include the role of prudential supervision of the financial system, in addition to regional as well as international cooperation among states and institutions.