After understanding about the basic concepts of money laundering, let’s spend a moment to look at the consequences of money laundering. Although this is quite difficult to quantify, it is clear that money laundering is detrimental to a country.
Money laundering can occur almost anywhere in the world because it is a byproduct of almost all profit-generating crime. Money launderers, in general, seek out countries or industries where there is a low risk of detection due to weak or ineffective anti-money laundering programs.
Consequences Of Money Laundering
There are many negative risks and effects of money laundering. Governments are well-advised to take action against it to protect their economies, businesses, and societies. We will look at each of these areas individually.
Economic Consequences
Let us start looking at the economic consequences. Now, first of all, money launderers like to conduct their operations in growing economies. These countries’ governments are usually so busy dealing with handling all the growing industries and businesses.
They often make fighting money laundering a lower priority. But let’s not sugar-coat it; it’s a deficiency and a weakness. Money launderers exploit this weakness for criminal purposes, and they move their networks and operations to these countries. In turn, this will then harm the integrity of these economies, including the financial sector. Foreign investments and foreign businesses will turn very careful and eventually reject setting up their businesses in these economies, and investment funds will be funneled elsewhere. Once money launderers have infiltrated an economy, the economy will have a reputation to have only lax money laundering controls in place. Thus, it will be very hard to create a business-friendly environment.
Money laundering can also cause unpredictable changes in money demand and great volatility in international capital flows and prices. To understand this, you have to look no further than at the real estate sector. Let’s consider London real estate. Data shows London’s property boom is a money laundering horror and that criminals are laundering billions in London real estate. Don’t get me wrong here.
This is not limited to London, but happens in all metropolitan areas worldwide from Rio, to New York, to Tokyo. Criminals love luxury real estate, and governments worldwide are scrambling to find ways to stop them from scooping up addresses in their most renowned cities. Money laundering through real estate is a growing, worldwide problem. It is estimated that 1.6 trillion US-Dollar per year are laundered through real estate. Such volume making it virtually impossible for the cities’ residents to afford a property.
Business Consequences
Let’s continue looking at business consequences. Money laundering impairs the development of the legitimate private sector. Money launderers have different business economies and can offer their products below production costs. It sounds ridiculous, but they don’t have to profit with their products and earn a margin. Their primary goal is to launder the funds as they have already made a profit with criminal activity. This makes it very difficult for legitimate activities to compete, eventually forcing them to go out of business.
Criminals may also purchase initially productive businesses and turn them into crime partners to launder their funds. This leads to a decrease in the productivity of these businesses and, at scale, to a decrease in the economy’s overall productivity.
Social Consequences
Last but not least, let’s look at social consequences. Money laundering rewards corruption and crime. Successful money laundering damages society’s integrity, undermines democracy, and the rule of law.
If money laundering is not dealt with effectively, there will be negative social and political effects. Organized crime can infiltrate financial institutions, acquire control of large sectors of the economy through investment, or offer bribes to public officials and entire governments. Criminal organizations’ economic and political influence can weaken the social fabric, collective ethical standards, and ultimately the democratic institutions of society. Generally speaking, money Laundering enables criminal activity to continue.

Concept of Money Laundering
Money laundering as an expression is a relatively new one. Money laundering is a sophisticated crime that should not be taken seriously by anyone in society at first glance. It is a modern crime when compared to street crimes.
It is also referred to as a victimless crime at times, but the reality is that it is a crime against nations, economies, governments, the rule of law, and the world at large, rather than a crime against a specific individual. Money laundering has become a global problem. The goal of a large number of criminal acts is to generate profit for the individual or group who commits the act and then conceal the source or destination of the money.
Money laundering is the processing of criminal proceeds in order to conceal their illegal origin. This procedure is critical because it allows the criminal to enjoy the profits without jeopardizing their source.
Final Thoughts
Money laundering has a social cost in that it allows drug traffickers, smugglers, and other criminals to expand their operations and transfers economic power from the market, government, and citizens to criminals. Money laundering can, in extreme cases, lead to the complete takeover of legitimate government.
Anti-money laundering efforts are an important and effective component of anti-crime programs. Money laundering is a complex and dynamic problem that affects people all over the world. Because of the sheer global nature of money laundering, global standards and increased international cooperation are required to reduce criminals’ ability to launder their proceeds and carry out criminal activities.