The general conclusion of this report is that there is no discernable link between money laundering and poverty, or by extension, between anti-money laundering (ALM) initiatives and poverty reduction. There is however some debate on the impacts of money laundering on economic growth and development more generally, split into two broad camps.
Firstly, it is argued that money laundering has negative impacts for developing country economies through: increased crime and corruption, reduced foreign investment, weakened financial institutions, compromised economy and private sector, damaged privatisation efforts, and loss of tax revenue. Others argue, however, that this link is at best tenuous given that it is largely based on the contested role that the financial sector plays in economic development.
More widespread is the scepticism about the extent to which AML initiatives are beneficial to economic development. This is partly due to difficulties of measurement but there is broader scepticism as to how well suited AML policies are, especially for developing countries. AML regulations are generally expensive to implement, are designed to fit developed rather than developing economies, and their effectiveness in reducing and deterring financial crime is unproven. A further issue is the opportunity costs of governments diverting money from development programmes to meet AML standards. AML initiatives are seen as particularly inappropriate for preventing and detecting money laundering in predominantly cash-based economies or in countries where reliance on parallel or informal transfer systems is the norm, as is the case in many developing countries. They are also seen as unduly restrictive on financial service providers working with low-income people, such as micro-finance institutions.
