Why Money Laundering Persists

Money Laundering 1
“Critical analysis why money laundering persists despite many laws and policies"
Table of Contents
1. Introduction
2. Policies and laws enacted to stop money laundering in the US
3. The Patriot Act
4. Banking Secrecy Act
5. Money Laundering and Reporting
6. Currency Transaction Reporting
7. Regional Mapping of Money Laundering
8. Handling of proceeds associated with money laundering.
9. Challenges in Implementing Money Laundering Laws
10. Penalties and Convictions for Money Laundering
11. Conclusion

Money Laundering 2
Introduction
The fight against money laundering has faced many challenges despite stringent laws
enacted to stop the illicit trade. The National Crime Agency of the UK in 2018 reported a ten
percent increase in money laundering activities in the UK. According to the Financial Action
Task Force of UK, policymakers’ efforts to curb money laundering activities have partially been
effective. Money laundering has been defined as the act of concealing proceedings from criminal
activities from authorities. The three main sources of money laundering funds originate from
terrorism funding, drug trafficking or corruption-related activities. This assignment will critically
analyze the efforts made by policymakers in stopping money laundering activities and the
challenges faced. The ultimate goal of this paper is to address why despite having many laws,
money laundering is still thriving.
The three main concerns that have proved to be providing loopholes for money
laundering activities include lack of constitutional laws that criminalize money laundering
activities. Financial institutions have been accused of helping criminals sanitize illicit funds to
the mainstream economy. Lack of good government and judicial structures in some countries
have provided opportunities for money laundering activities. This paper will address solutions to
improving these shortcomings in the fight against money laundering.
Policies and Laws Enacted to Stop Money Laundering in the US
There have been several laws and policies that have been developed to stop money
laundering activities. This paper will first analyze the effectiveness of these policies and laws
and recommend measures for improvement. Money laundering activities are dynamic and affect
different jurisdictions and states. The focus will be on the policies in the US with a few case

Money Laundering 3
studies in other jurisdictions. Policy makers in the US in 1970 passed the Foreign Transaction
Reporting Act as the first attempt to stop money laundering activities. Before this act was
enacted tax laws were used to track and prosecute money laundering criminals. Among the
subsequent Legislative Acts that were also enacted to enforce money laundering laws faced
challenges from financial institutions like banks.
The Foreign Transaction Reporting Act purposed to hold banks accountable for reporting
all their foreign transactions. This was meant to help the authorities to closely monitor any forms
of tax evasions by financial institutions. This Act was challenged in court for violating the
privacy of financial institutions customer's. Due to the challenges faced by The Foreign
Transaction Reporting Act, the government developed other laws to prevent the advancement of
money laundering activities.
The Patriot ACT
This Act was developed by both the Senate and Congress in 2001. The main provisions
of The Patriot Act were to address organized crime challenges after the 2001 terrorist attack in
the US. Investigations into the events that lead to the terrorist attack were traced to money
laundering activities. Among the ten chapters of The Patriot Act included money laundering and
organized crime. Section 530(b) granted the state powers to investigate financial institutions
accounts on suspicion of money laundering activities1. This provision was a major boost to the
fight against money laundering activates which at this particular time had already been
criminalized into organized crime.
1 Baird and Ian, The global land grab meta-narrative, Asian money laundering, and elite capture: Reconsidering the Cambodian
context. (Geopolitics 19, 2nd edition, 2014)

Money Laundering 4
Financial institutions were ordered to oblige with the Secretary of Finance to provide
details of accounts that exhibited characteristics of money laundering. Financial institutions were
advised to critically analyze foreign banks that opened accounts with their banks. It was
discovered that due to the established nature of the financial industry in the US many organized
crime proceeds were banked in the US.
Section 350 of the Patriot Act demanded financial institutions to establish money
laundering policies in their banks. This is because banks were being mainly used for money
laundering activities. This provision was found to be one of the main challenges in the fight
against money laundering. Most banks were found to be reluctant to have stringent money
laundering policies. This was viewed by the banks as a way of preventing them from maximizing
on profits from foreign investments.
To make sure all financial institutions obliged, the Patriot Act included all money
handling companies including foreign exchange agencies and investment companies. The main
achievement of this Act was that it unified the legislature, executive, judiciary and the corporate
sector in the war against money laundering. The public was also made aware of the serious
effects of money laundering activities after the 2001 terrorist act. Despite the tremendous strides
made by this Act, one of the notable challenges was from financial institutions that have been
benefiting from money laundering proceeds.
Banking Secrecy Act
The US Congress in 9170 enacted the Bank Secrecy Act to compel financial institutions
to be transparent in their operations. The main difference in this policy from the Patriot Act is
that this required all the banking records to be available to the government at any given time