Conclusion and Recommendations

Improving MLA regulations may contribute to increasing the awareness about the way financial institutions manage their AMLs activities and the potential negative financial consequences of MLAs to the economy of a country. They might also provide information about different money laundering methods and how to mitigate them.

Money laundering activities do not only emanate from terrorist or criminal groups. Indeed, money laundering may also emanate from financial activities such as: avoiding tax payments.

Applying anti-money laundering activities is necessary for financial organizations to meet the legal requirements. AML regulations could prevent unwanted results as follows:

    •  Reduction of investor confidence because of the country’s reduced financial market credibility.

Countries with high money laundering ratios also have low investment ratios because of the lack of trust that investors have for those countries’ financial markets.

    •  Affecting one country’s financial market.

This situation increases the risk of the involved financial institutions’ position in the market and may result in its bankruptcy.

    •  Economic crisis in the country where MLA takes place.

Financial crises may also affect other countries that have business relations with the source country.

    •  Change in assets and liabilities that may affect the financial situation of the affected financial organization.

    •  Instability in money demand within in affected countries.

    •  Large variation of various currencies.

Launderers would use different type of money transactions to launder their funds. Criminals would transfer money in and out of the country and exchange the currency several times to achieve their goals. The situation would result in financial instability when large variation of money is entering a country.

    •  Unbalanced income distribution.

Laundering money involves other financial crimes such as tax evasion because the source of the money is not official and legal.

Money laundering activities would also decrease people’s welfare within a country. Citizens would not be comfortable and happy in the country they are living in. The gap between high and low- income people would be high. People would question the financial, political, and social system as they discover the inequalities that those systems create. The dissimilarity in life standards would affect people’s life emotionally as well. People would become unsatisfactory and unhappy as a result of the high ratio of money laundering activities in their countries.

To prevent the effect of illegal financial and political activities, people should support the regulations and policies governments’ aim to apply. Negative results of illegal activities would motivate people to develop and implement additional solutions to prevent the effects of money laundering actions.

People can research the organizations in detail before sending or receiving funds.

Money laundering is an international problem. In a global finance system, countries with ML problems affect each other. Governments and financial institutions cannot prevent money laundering only by themselves. People should be aware of the problem and support the AML regulations with no hesitation.

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