By Samuel Rubenfeld
A study of studies by the United Nations Office on Drugs and Crime estimated that about $1.6 trillion was laundered in 2009.
The study, released Tuesday in Marrakesh, Morocco, where a U.N. Convention Against Corruption conference is being held all week, said its figures — that laundered funds constituted around 2.7% of global gross domestic product — were largely consistent with those released in 1998 by the International Monetary Fund, which said there was a “consensus range” of 2% and 5%.
More alarming, however, was that the UNODC found less than 1% of global illicit financial flows were being seized and frozen.
“Tracking the flows of illicit funds generated by drug trafficking and organized crime and analyzing how they are laundered through the world’s financial systems remain daunting tasks,” said Yury Fedotov, executive director of the UNODC, in a statement.
The 140-page report warned, however, there is no “gold standard” for estimating the extent of money laundering, because all methodologies have various biases and information gaps.
The most profitable form of transnational organized crime is the drug trade, which accounts for about one-fifth of all crime proceeds, the report said. Taken together, all proceeds of crime save for tax evasion reached $2.1 trillion in 2009.
The report focused on the cocaine market, which it said was probably the most lucrative illicit drug for transnational criminal groups. It found that gross profits for the drug were around $84 billion in 2009.
Another report issued this week by the UNODC, though this one jointly with the World Bank, examined the legal ways in which criminal funds can be hidden in the global financial system.
The report, called “Puppet Masters,” (pdf) showed how bribes, embezzled state assets and other corrupt funds are hidden in shell companies, trusts and other legal means. It recommended that more detailed information on beneficial ownership be held in corporate registries, and those who provide any sort of service to legal entities do better due diligence on controlling interests.
“We need to put corporate transparency back on the national and international agenda,” said Emile van der Does de Willebois, a World Bank specialist who led the StAR research team, in a statement. “It is important for governments to increase the transparency of their legal entities and arrangements and at the same time improve the capacity of law enforcement.”
