IT'S BIG AND IT'S GLOBAL

`Money laundering', described as "the mother of all crimes" (Castells, 1997, p. 260) entered popular vocabulary in the 1970s in the aftermath of the Watergate scandal. It refers to the processes that enable knowledgeable persons to transmit "illicit funds through the banking system in such a way as to disguise the origin or ownership of the funds" (Bingham, 1992, p. 25) and thereby launder and legitimise the dirty monies. The amounts being laundered¹ are estimated to be anything between US $750 billion (Castells, 1997, p. 260) and a trillion dollars (Wiener, 1997), large enough to dwarf the Gross Domestic Product (GDP) of many nation states, including the United Kingdom.

The laundered amounts are large enough to stimulate and/or destabilise financial markets, national/world economies and social order (Home Affairs Committee, 1994; Rider, 1996). They can facilitate bribery and corruption at senior policy making levels and play havoc with democratic politics. Laundered monies enable some to maintain private armies of thugs and enforcers. The loss of tax revenues and the scale of illicit proceeds make it difficult for governments to manage national economies. Money laundering produces instability which can threaten the stable economic and political environment necessary for smooth accumulation of profits and revenues by business enterprises. It can threaten the safety of people's pensions, savings and bank deposits.

Money laundering has become a major activity because of the emergence of global markets and information technologies which enable footloose capital to move easily across national boundaries. The geographical mobility of capital has been vastly increased by the formation of global stock markets and markets in money, futures, derivatives, and currency and interest rates. Money easily roams the world and is itself traded as a commodity. Under pressure from international financiers and wheeler-dealers, governments have been obliged to restructure their economies to encourage an `enterprise culture' by lowering of international barriers to free flow of money. Combating money laundering requires greater openness, public accountability and empowerment of stakeholders, but deregulation and the reduction of public scrutiny and accountability has been the main political ideology. Unsurprisingly, organised white-collar crime is on the increase.

This easy flow of money has encouraged the development of new tax havens and offshore financial centres, such as the Channel Islands, which ask few questions, guarantee secrecy to their clients and obstruct inquiries by international regulators (Kerry and Brown, 1992; Hampton, 1996; Organisation for Economic Co-operation and Development, 1998; United Nations Office for Drug Control and Crime Prevention, 1998). As Barnet and Cavanagh (1994) put it, "Tax havens are nesting grounds for criminal gains or untaxed profits. Indeed, most of the deposits sitting in these out-of-the-way places are there to avoid scrutiny by regulators and taxing authorities" (p. 389). It is estimated that at least 10% of all the deposits held in offshore havens represent either the proceeds of tax evasion or drug money (Inman, 1997). Jersey, with a population of 86,000 has bank deposits of nearly £100 billion. How much of this is `dirty money' is not known.

Money laundering is not just the exclusive domain of offshore financial centres. Even in the major international financial centre, such as London, companies can be formed with minimum issued share capital of just £1 and used for legitimate and illegitimate purposes. The ownership of these companies can remain secret with professional nominees and agents providing respectable fronts. Some of these companies never undertake any trading and have little direct contact with the public. Instead, they can easily be used to launder the proceeds of drug-trafficking, robberies, smuggling, terrorism, tax evasion, bootlegging, art theft, vehicle theft, fraud and other anti-social activities.

Money laundering requires the services of an international elite. As the White House director of National Drug Control Policy put it, "You can't hide billions of dollars or move them around physically...... They have to be turned into transactions, cybercash, credit cards or offshore accounts" (Financial Times, 20 July 1998, p. 3). These facilities are provided by professionals, such as accountants and lawyers, commanding very high fees - as much as 20% of the money laundered (Hook, 1998). Those indulging in money laundering need to know the international financial systems, create and manipulate complex transactions and devise misleading transaction trails. The finger is firmly pointed at accountants. Large amounts of money cannot easily and expertly be laundered without the (direct or indirect) involvement of accountants (Kochan and Whittington, 1991; Barchard, 1992; Davies, 1992; Kerry and Brown, 1992; Financial Crime Enforcement Network, 1992; Ehrenfeld, 1992). The 1997 case of R v Abdul Chiragh showed that a chartered accountant² created false documentation and transaction trails to enable the Bank of Credit and Commerce International (BCCI) to launder monies through shell-companies located in the Channel Islands. It is accountants who are able to create and manipulate the complex transactions which make it difficult to identify and trace the origins and the ultimate destiny of the illicit funds (McBarnet, 1991). It is accountants who acting as auditors, are reluctant to reveal and report such activity (Bingham, 1992).

Contrary to the popular image, money laundering is not just the activity of deviant individuals in some Dickensian `den of crimes'. Rather it is planned, executed, minuted and concealed in clean, respectable, well-lit city centre offices by accredited professionals, wearing expensive clothes, driving expensive cars and living in fashionable suburbs. As the forced closure of BCCI showed, money laundering is facilitated through "the use of shell corporations, bank confidentiality, secrecy havens, layering of corporate structures, the use of front-men and nominees, guarantees and buy-back arrangements; back-to-back financial documentation, kick-backs and bribes, the intimidation of witnesses, and the retention of well-placed insiders to discourage government action" (Kerry and Brown, 1992, p.1). Like any other white-collar crime, money laundering is best understood as an activity that is increasingly undertaken by organised groups, corporations and elite occupations.

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