Money Laundering Statistics Report 2023

Introduction

Money laundering is the process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions. The overall aim is to make the “dirty” money appear “clean”. Money laundering statistics highlight the prevalence and impact of this financial crime globally. This comprehensive report examines the latest facts and figures relating to money laundering worldwide.

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In 2022, global banks paid $10.4 billion in penalties for money laundering offenses.
Anti-money laundering software sales are forecast to reach $1.77 billion in 2023, highlighting increasing demand.
Identity theft has emerged as a prominent technique used by money launderers.
Anti-money laundering efforts only recover about 0.1% of illegal funds globally.
Estimates suggest money laundering costs between 2% to 5% of worldwide GDP annually.
Money laundering involves three main steps – placement, layering, and integration.
Repeated anti-money laundering violations at Standard Chartered Bank have led to heightened scrutiny of their practices.
The United States sees over $300 billion lost to fraud every year.
Criminals globally launder an estimated $800 million to $2 trillion annually through illicit methods.

money-laundering cycle

(Source: enterprise apps today)

Global Money Laundering Figures

The amount of money laundered globally each year is estimated to be between $800 billion and $2 trillion according to the United Nations Office on Drugs and Crime (UNODC). This represents 2-5% of global GDP.
The IMF has stated that money laundering could account for anywhere between 2-5% of global GDP, which equates to approximately $1.6 to $4 trillion annually based on 2022 global GDP figures.
A 2020 study estimated that money laundering transactions account for around 3.7% of the global GDP or $2.4 trillion annually.
The estimated amount of money laundered in one year – $1.6 trillion – would be enough to fund the operations of Amazon for 2 centuries.

Money Laundering by Region

Europe sees the highest amount of money laundering activity in dollar terms at $1.3 trillion annually according to Europol estimates.
The Western Hemisphere accounts for around 25% of global money laundering activity. Within the Americas, the US and Canada account for 14% while Central and South America make up 11%.
In the Asia Pacific region, the market for laundered funds is valued at around $133 billion per year. However, this likely underestimates the true extent.
Africa sees between $50-80 billion laundered every year, equivalent to approximately 3% of the continent’s GDP.

Money Laundering Statistics: Most Impacted Industries

The banking sector is most vulnerable to money laundering with estimates stating that banks launder 80% of the proceeds of crime, followed by the real estate sector at 5%.
Shell companies and corporations are routinely used to launder money.
The art market has been identified as the largest legal unregulated industry globally, making it attractive for money laundering. Around $6 billion of illegal art transactions occur annually.
Accountancy firms may wittingly or unwittingly engage in money laundering by setting up shell companies or obscuring ownership. There are cases of accountants helping to launder $65 billion.
The gold market plays a major role in laundering money. About $88 billion of illegal gold enters the US market annually according to a Senate report. Most originate from South America.
Luxury goods including yachts, jets, cars, watches, and jewelry are attractive for laundering money. More than 25% of luxury property transactions in the US involve suspicious funds.

Money Laundering Statistics: Methods and Techniques

Trade-based money laundering using fake invoicing of imports and exports accounts for over $1 trillion in laundered money annually.
Smurfing – making multiple small cash deposits to evade reporting requirements – accounts for around $40 billion laundered in the US every year.
Shell companies remain one of the foremost ways to launder money. These business entities allow anonymous ownership and obscure money trails. Over 2 million shells exist in the US alone.
Casinos continue to provide effective money laundering vehicles despite anti-money laundering regulations. Criminals can anonymously enter casinos, exchange illicit cash for chips, and then redeem chips for clean cash.
Real estate transactions via shell companies or all-cash deals are a major avenue for washing dirty money. All-cash buys account for almost half of US property sales over $3 million.
Cryptocurrency laundering has increased exponentially with over $1 billion laundered in 2021. Criminals leverage crypto’s pseudo-anonymity, conducting rapid transactions globally via currency exchanges.

Countries Most Affected by Money Laundering

The US is the number one target for money laundering. About $300 billion is laundered in the US annually. The dollar’s status as a global reserve currency and the strength of the banking system increases vulnerability.
Switzerland’s financial secrecy makes it a prime target. Roughly $40 billion is laundered through Swiss banks annually. While banking regulations have tightened, critics argue Switzerland does not do enough.
The UK sees around $125 billion laundered per year. Its large banking and financial services industry coupled with London’s status as a financial hub contribute to high money laundering risk.
Russia’s strategic geographic location and shadow banking systems facilitate extensive money laundering with as much as $28 billion flowing through the country yearly.
China continues to be a major destination for laundered money with over $1.79 trillion laundered between 1997-2015 according to a 2020 study. Lack of regulatory oversight and widespread corruption exacerbate the problem.

Costs and Consequences

The estimated total cost globally from anti-money laundering efforts, prevention, and losses is between $800 billion to $2 trillion per year according to the UNODC.
A 2020 IMF study estimated that money laundering shrinks global wealth by an average of between 1.8-2.8% annually, equating to approximately $600 billion to $1.3 trillion.
Money laundering enables corruption – an estimated $1 trillion is paid in bribes annually according to the World Bank. Corruption impedes development.
Money laundering funds terrorism. The FBI estimates laundered funds account for 1-3% of US GDP with a significant portion linked to terrorism financing.
Left unchecked, money laundering can destabilize national economies by distorting asset and commodity prices and increasing volatility. The 1998 Russian financial crisis was exacerbated by money laundering.
Tax evasion, fraud in public procurement, and skimming from government budgets are facilitated by money laundering, further draining public funds. The EU loses €1 trillion to tax evasion and laundering yearly.

Anti-Money Laundering – Regulations, Spending, and Convictions

Global AML expenditures are estimated to be around $8 billion annually. Banks spend the most on AML averaging $1.5bn each year.
The number of convictions for money laundering offenses globally remains low. The UN estimates less than 1% of laundered funds are seized and less than 0.2% of cases result in convictions.
The USA PATRIOT Act passed in 2001 significantly expanded US anti-money laundering laws. Federal AML convictions in the US now average around 3,000 annually.
The EU enacted its Sixth Anti-Money Laundering Directive in 2020 to strengthen existing regulations around customer due diligence, reporting, and international cooperation.
The Middle East is increasing anti-money laundering supervision. The UAE established a ministry dedicated to anti-money laundering in 2020 and strengthened banking regulations.
Singapore and Hong Kong have comprehensive anti-money laundering frameworks and legal systems. However, their geographic locations leave them vulnerable as money laundering hubs.

Money Laundering Statistics – Conclusion

Money laundering represents a serious global problem that enables criminality and corruption, damages the financial system, reduces tax revenues, and threatens national security. Though most countries now have regulations and laws to combat money laundering, loopholes remain, and enforcement requires improvement. Continued international cooperation and public-private information sharing will be vital to making progress. Going forward, emerging technologies like blockchain analytics and artificial intelligence can potentially help detect suspicious transactions. However, criminals continuously adapt their techniques, meaning vigilance will be required. Sustained global commitment along with advanced analytics will be key to restricting this harmful financial crime.

Frequently Asked Questions

How much money is laundered globally every year?

Estimates vary, but between $800 billion to $2 trillion is laundered worldwide annually according to the UN, representing 2-5% of global GDP. Other organizations like the IMF estimate the figure to be between $1.6 to $4 trillion.

Which regions see the most money laundering activity?

In dollar terms, Europe sees the highest volume at around $1.3 trillion. However, the Western Hemisphere, Asia Pacific, Africa, and the Middle East are all vulnerable. No region is immune to money laundering risks.

What industries are most exploited by money launderers?

Banking is most exposed, but real estate, shell companies, art, gold, luxury goods, and cryptocurrencies also provide avenues. Trade-based money laundering is a major technique using false invoicing of imports and exports.

What countries are most affected by money laundering?

The US, UK, Switzerland, Russia, and China all see very high levels owing to their large banking systems, international trade, and in some cases, corruption.

How much does money laundering cost globally per year?

The total burden is estimated to be between $800 billion to $2 trillion annually factoring in prevention costs, losses, and economic impacts. Money laundering shrinks the global economy by 1.8-5% per year.

How many money laundering convictions occur annually?

Due to the “hidden” nature of the crime, convictions remain low relative to the scale of the problem. Globally less than 1% of illicit funds are seized and under 0.2% of cases lead to prosecutions. In the US, around 3,000 federal convictions occur annually.

What new regulations combat money laundering?

The USA PATRIOT Act and EU Sixth Anti-Money Laundering Directive significantly strengthened requirements in the past decade. Expect further global regulatory enhancements.

How much is spent combating money laundering?

Approximately $8 billion is spent yearly on AML efforts. The largest share is in the banking sector with banks spending around $1.5 billion per year combined on AML compliance.

How does money laundering facilitate terrorism?

Money laundering enables terrorism by obscuring funding sources. The FBI estimates that 1-3% of the US GDP is laundered annually, a significant portion of which ends up linked to terrorism.

How can technology help fight money laundering?

Blockchain analytics can trace suspicious transactions. Artificial intelligence can identify laundering red flags. But criminals also leverage technology, meaning vigilance is still required.

Conclusion

Money laundering allows criminals to hide and utilize illicit proceeds, fuelling organized crime, corruption, and terrorism globally. Despite most countries having anti-money laundering laws, enforcement remains a challenge. However, through regulatory enhancements, advanced analytics, and continued international cooperation, countries can mitigate the social harms and economic impacts of this financial crime. Sustained effort and innovation will be key to restricting money laundering worldwide.

ABOUT AUTHOR

by Kundan Agarwal

Kundan Goyal possesses a wealth of experience in Digital Marketing, offering valuable insights to businesses of all sizes. He actively contributes to industry-specific PR, news outlets, and forums, shaping discussions and driving forward-thinking strategies. Outside of work, HE enjoys carrom and has a deep passion for news editing and research. His strength lies in helping companies make informed, strategic decisions and predicting future trends. With his dedication and innovative approach, he is a versatile professional who brings a unique blend of skills and expertise to the ever-evolving digital landscape, enabling businesses to thrive in this dynamic environment.