If you’ve been wondering why so many things in the news seem totally irrational, there’s a simple answer – Money. The primary mechanism for moving money is money laundering. Billions, probably trillions, of dollars are involved every day.
Money laundering is impoverishing the world, day by day. The prime movers of money laundering are the Three Sacred Pigs of the real economy – Organized crime, politics, and the incoherent idiot savant of the three, the finance sector, the big dumb penny-pinching enabler of it all.
Organized crime is the major global social parasite. Laws and drug wars over the last century have simply made it richer. All that illegal money has also made it able to influence global business on a truly colossal scale.
Forget the military-industrial complex and other peanut vendors; this is where the real money comes and goes. These guys are basically no more than much-hyped thieves. Organized crime can move illegal money worldwide. A stolen fortune can be turned into lollipops one minute and the hard cash to buy a super-mansion the next. Politics, particularly anti-regulation politics, helps this process. The finance sector simply processes whatever money enters it.
(Other sectors, notably the holy-of-holies US property sector, also help with the movement of large amounts of money. It’s also one of the reasons all real estate prices, from homeownership to rent, are so high. Interestingly, this sort of money can also buy a lot of equity in any corporation. The simple formula is that wherever there’s big money, there’s just as much money laundering.)
Name a sector – Hollywood, the music “industry”, fashion, education, whatever, money laundering is the name of the game. This is a culture of pure greed, as everyone knows. What everyone doesn’t know is that this economy is far more efficient than the legal economy in far too many ways. Big money can be easily obtained from anywhere and turned into “legit” money pretty quickly. This includes drug money and any money obtained by illegal activities.
Laws? Really? You don’t say!
The law, inevitably, is way behind largely thanks to anti-regulatory politics. While a lot of money laundering prosecutions and investigations are always happening, these can only be a relatively small percentage. New ways of managing money, or even inventing money (thanks so much, blasé global credit markets) are hard to track.
It’s not like nobody’s trying to enforce the laws. It’s just that the sheer scale of money laundering is too much for local or even national jurisdictions. This is a bit like tax dodging, but much bigger and more systematic. So many very rich people don’t pay tax at all. It may take decades to prosecute them, even if they’re prosecutable.
Politicians, meanwhile, endlessly call for lower taxes while revenues are starved of money. Lower taxes benefit the rich, assuming they pay taxes at all. Your kids may have to go to school in an underfunded war zone. You may not be able to afford housing, health or education. …But you’ll be pleased to know these criminals and nice rich guys are feeling pretty good about themselves with your money. Too cute for words, isn’t it?
The public sector, in fact, is a source of funding for money laundering. Get public money, get away with it, and you’ve got money to hide offshore. Your tax dollars probably fund far more criminals than any spending on actual public services. This is however quasi-legal insofar as the processes to obtain money are legal.
Social and economic impact
The bottom line here is that illegal money has more privileges than legal money. Rich criminals are almost untouchable in this area. They have far more influence than mere voters or political parties. They drive the decision-making processes that help whole countries fall to bits.
Whenever you see a series of irrational political statements, you can be damn sure someone’s making money out of it. Why, for example, are US health and drug costs so high for patients? Who benefits? Not the patients, that’s for sure. The benefits go where the money goes.
Try this for an interesting phenomenon – The US dispensed 4.2 billion prescriptions in 2021. There are only 300 million people in the country. That’s about 1500 prescriptions for every man, woman, and child in the country. Not a peep has been heard from anyone on this subject. Clue: Organized crime has a lot to do with pharmaceuticals. Read Roberto Saviano’s book Gomorrah for some interesting facts about how money moves around in this very expensive sector.
Money laundering is in effect a global financial catastrophe, driving up prices and simply stealing public and private money. The losers are the public.
Solutions? Maybe.
Laundered money is a moving target. It’s only vulnerable when it stops moving and becomes hard cash or other assets. The existing methods of managing money laundering aren’t so much ineffective as overstretched.
Compliance by financial institutions is also rather iffy, and reporting transactions and suspicious activity isn’t exactly obsessively efficient, either. Transactions are supposed to be monitored. Sources of money aren’t questioned much. Corrupt insiders in banks and other institutions aren’t unknown, either.
The obvious but cumbersome solution would be blockchain. A “genealogy” of money and transactions does make sense. …But can you do that at the speed of the finance sector? Not with this level of tech.
Artificial intelligence blockchains could be the answer, but it’s a tough question. Algorithms are limited by their own function. How do you teach an AI to recognize money laundering? To what extent can it get it right? What are the legal issues if you obstruct legitimate business on suspicion?
In theory, and only in theory at the moment, you could have a series of processes which could clarify the legitimacy of any transaction. These processes would have to be incredibly secure and backed up by core accountancy to show any anomalies. To do this well, you’d need much more efficient tech than blockchain uses today and far higher processing capacity. The tech issues are truly monumental in scale.
However, you could come up with a real-time solution by asking questions about money laundering issues. That could get interesting. (The irony here is that blockchain currently supports cryptocurrencies, which are legendary money laundering options.)
For instance – If the question is “Where did this $50 billion come from?”, the answer could be “We sold a lot of lollipops that day” or something equally credible. There would be (or should be) collateral transactions showing where the $50 billion originated. The query is noted and someone’s responsible for that response being legitimate.
Yes, that’s basic enforcement with a bit of tech attached. There’s not a lot of choice, though. The alternative to a solution to money laundering is a global economy that does nothing but support illegal money and raises prices to insane levels.
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Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.
