Op-Ed: The Global Curse of Money Laundering – Why Economics, Incomes and Politics Don’t Work Anymore

The price of bitcoin hit record highs in 2021, but slipped below $40,000 in January 2022. — © AFP

If you’re wondering why so much in the news seems totally irrational, there’s a simple answer: money. The main money transfer mechanism is money laundering. Billions, probably trillions of dollars are involved every day.

Money laundering impoverishes the world, day after day. The main drivers of money laundering are the three sacred pigs of the real economy – organized crime, politics and the incoherent dumb scientist of the three, the financial sector, the big dumb enabler of it all.

Organized crime is the major global social parasite. The drug laws and wars of the last century have simply enriched it. All that illegal money has also allowed him to influence global commerce on a truly colossal scale.

Forget the military-industrial complex and other peanut vendors; this is where the real money comes and goes. These guys are basically just high profile thieves. Organized crime can move illegal money around the world. A stolen fortune can be turned into lollipops one minute and cash to buy a super-mansion the next. Politics, especially anti-regulation politics, contributes to this process. The financial sector simply processes the money that comes into it.

(Other sectors, notably the holiest US real estate sector, also contribute to the movement of large sums of money. This is also one of the reasons why all real estate prices, from homeownership to property to rent, are so high. Interestingly, that kind of money can also buy a lot of stock in any company. The simple formula is that wherever there is a lot of money, there is as much money laundering.)

Name an industry – Hollywood, the music “industry”, fashion, education, whatever, money laundering is the name of the game. This is a culture of pure greed, as everyone knows. What not everyone knows is that this economy is far more efficient than the legal economy in far too many ways. Lots of money can be easily obtained from anywhere and turned into “legit” money fairly quickly. This includes drug money and any money obtained through illegal activities.

Laws? Oh good? You do not say !

The law, inevitably, is lagging far behind largely thanks to anti-regulatory politics. Although there are always many lawsuits and investigations for money laundering, these may only represent a relatively small percentage. New ways of managing money, or even inventing money (thanks a lot, jaded global credit markets) are hard to follow.

It’s not like nobody trying to enforce the laws. It’s just that the scale of money laundering is too much for local or even national jurisdictions. It’s a bit like tax evasion, but much bigger and more systematic. So many very rich people don’t pay taxes at all. It can take decades to prosecute them, even if they are liable to prosecution.

Politicians, meanwhile, keep pushing for tax cuts as revenues run out of money. Lower taxes benefit the wealthy, assuming they pay taxes. Your children may have to go to school in an underfunded war zone. You may not be able to afford housing, health care or education. …But you’ll be glad to know that these criminals and rich gentlemen feel pretty good about themselves with your money. Too cute for words, isn’t it?

The public sector, indeed, is a source of funding for money laundering. Get public money, do it, and you have money to hide abroad. Your tax money probably funds far more criminals than any expenditure on actual public services. However, this is almost legal insofar as the steps to obtain money are legal.

Social and economic impact

The bottom line here is that illegal money has more privileges than legal money. Wealthy criminals are almost untouchable in this area. They have far more influence than mere voters or political parties. They lead the decision-making processes that help whole countries fall apart.

Whenever you see a series of irrational political statements, you can be sure someone is making money out of it. Why, for example, are US healthcare and drug costs so high for patients? Who benefits? Not the patients, that’s for sure. Profits go where the money goes.

Try this for an interesting phenomenon – The United States dispensed 4.2 billion prescriptions in 2021. There are only 300 million people in the country. That’s about 1,500 prescriptions for every man, woman and child in the country. No one has heard of this topic. Hint: Organized crime has a lot to do with pharmaceuticals. Read Roberto Saviano’s book Gomorrah for some interesting facts about how money moves in this very expensive industry.

Money laundering is indeed a global financial disaster, driving up prices and simply stealing public and private money. The losers are the public.

Solutions? Maybe.

Laundered money is a moving target. It is only vulnerable when it stops moving and becomes cash or other assets. Existing methods of dealing with money laundering are not so much ineffective as overburdened.

Compliance by financial institutions is also rather iffy, and the reporting of suspicious transactions and activities is also not obsessively efficient. Transactions are supposed to be monitored. The sources of money are not much questioned. Corrupt insiders in banks and other institutions are not unheard of either.

The obvious but cumbersome solution would be blockchain. A “genealogy” of money and transactions makes sense. …But can you do this at the speed of the financial industry? Not with this level of technology.

Artificial intelligence blockchains could be the answer, but it’s a tough question. Algorithms are limited by their own function. How to teach an AI to recognize money laundering? How well can he do things? What are the legal issues if you obstruct a legitimate business because of your suspicions?

In theory, and only in theory at this time, you could have a series of processes that could clarify the legitimacy of any transaction. These processes should be incredibly secure and backed by basic accounting to show any anomalies. To do this well, you would need much more efficient technology than blockchain uses today, and much greater processing capacity. The technical problems are truly on a monumental scale.

However, you can find a real-time solution by asking about money laundering issues. It could get interesting. (The irony here is that the blockchain currently supports cryptocurrencies, which are legendary money laundering options.)

For example – If the question is “Where did this $50 billion come from?” the answer could be “We sold a lot of lollipops that day” or something equally believable. There would (or should be) collateral transactions showing where the $50 billion came from. The request is noted and someone is responsible for the legitimacy of this answer.

Yes, it’s a basic app with a bit of tech attached. There aren’t many choices, however. The alternative to a solution to money laundering is a global economy that only supports illegal money and raises prices to insane levels.


The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.