Interesting articles talking about money laundering activities and how the AML law shares an inverse relationship with the money laundering activity. This questions the overall cost/benefit activity of the AML regulation.

1. MONEY LAUNDERING RESEARCH WITHIN A POSITIVIST PARADIGM PROFESSOR JACKIE HARVEY Newcastle Business School

3. Source: UNODC - UN Office on Drugs and Crime : The Money Laundering Cycle http://www.unodc.org/unodc/en/money-laundering/laundrycycle.html Three Stages of Money Laundering Newcastle Business School

4. Global Scale Newcastle Business School Institution Estimate Year OECD $1.1 trillion (drug money) 1995 IBRD $300 - $500 billion 1995 IMF 2% - 5% GDP ($0.62 – 1.55 trillion) 1999 UN Up to $1.5 trillion 1999 FATF 2% global GDP up to $1.5 trillion 2001

18. Expenditure on AML Compliance A profit maximising firm will invest in AML to the point where costs of compliance just offset ‘costs’ or losses arising from not undertaking such activity (AMLE) Expenditure Extent of AML Effort Cost of compliance ‘ Cost’ of noncompliance AMLE Total cost Newcastle Business School

25. Suspicious Activity Reports Newcastle Business School

26. Prosecutions * All legislation refers to S49-53 Drug Trafficking Act 1994; Criminal Justice Act s93A-93D as amended by CJA 1993 s29-32 and POCA 2002 s327-334 Newcastle Business School All Legislation* 2003 2004 2005 2006 2007 prosecutions 300 552 1327 2379 2318 convictions 123 207 595 1273 1348 sentenced 119 205 575 1244 1322 Of which POCA prosecutions 87 405 1295 2345 2281 convictions 15 123 566 1257 1330 sentenced 12 121 545 1229 1304

27. Prosecutions for Money Laundering

28. Conviction for Money Laundering Offences Newcastle Business School Data for 2005 Number % Total Convicted 595 Of whom ‘sentenced’ 575 100% Conditional Discharge 54 9.4% Fined 53 9.2% Community Sentence 240 41.7% Suspended Sentence 29 5.0% Immediate Custody* 194 33.7% Otherwise Dealt With 5 0.9% *Average sentence length: 25.7 months

30. Asset Recovery Restraints can be placed for any hypothetical value on assets ‘frozen’ in advance of investigation – key is confiscation orders imposed by court But not all of these are recovered Newcastle Business School 2006/7 2007/8 2008/9 £ £ £ Cash seizure 3.3m 8m 9.2m Restraint orders 27.2m 46.8m 128.8m Confiscation orders 14.5m 11.6m 29.7m Civil recovery n/a n/a 16.7m

31. Costs of the FIU *other agencies refers to ARA, NCS, NCIS and part of Customs and Excise. It was not possible to determine which of the costs and associated budget for HMRC was also transferred Newcastle Business School £million 2004/5 2005/6 2006/7 2007/8 2008/9 SOCA 419.4 456.5 465.3 Total for other agencies* 279.5 282.8

32. Is it entering the Financial System? US DEA seize $207 million, 200,000 Euros and 158,000 pesos in a drugs raid in Mexico http://www.washingtonpost.com/wp-dn/content/article/2007/07/24/AR2007072400150.html Newcastle Business School

36. Major Areas of Criminal Expenditure (ARA Data) Newcastle Business School UK Property 471 houses £75.02m High value goods Cars, paintings, jewellery £ 7.05m cash £ 9.68m Financial assets Bank accounts, insurance, pensions shares £11.02m