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It can be easy to understand the impact of money laundering on the initial victims – those who lost funds as a result of the predicate crime – but there can be an even deeper, more lasting effect on society as a whole.

While some fear that Anti-Money Laundering (AML) efforts can have a damaging effect on commerce, especially in developing nations, let us take a look at a number of ways money laundering hurts us all. We'll focus on emerging nations as the impact there can be magnified to extreme proportions.

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The first, and most obvious, the impact is the increase in corruption and crime. In many jurisdictions that are havens for successful laundering one often finds lax concern on the part of government and/or regulators – few predicate crimes, little or no reporting, enforcement, penalties or provisions to confiscate illicit funds, etc.

Those conditions can then foster bribery of government and bank officials, lawyers, accountants, and others. Once that beachhead is established, it is not long before bribery turns eyes away from other, even violent, crimes.

The second impact (valid in any jurisdiction) is on legitimate businesses. Where a launderer uses a front company to hide his illegal funds, it is possible, even probable, that the operations of the front company may be subsidized.

This can enable the front company to sell products at or below cost, driving their legitimate competition out and opening the door for expansion by the front company. As the front company grows, it provides a greater opportunity for the launderer to move even more illicit funds. In a developing country, it would not take long for the criminal/launderer to gain control of an entire industry.