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Sunday, November 16, 2008

Consequences of AML/CFT

I have been a skeptic about anti money laundering and the attack on the `financing of terror'. My logic is that it only cost $100,000 to implement the 9/11 attacks, and this small sum of money can slip around the world in myriad and undetectable ways. As an example, gold is worth $23,661 per kg, and has a density of 19.3 g/cc. So gold worth $100,000 has a volume of just 220 cc! It's impossible to stop movements of these small sums.

While the benefits in terms of stopping terrorism are miniscule, the AML/CFT work has enormous costs. You might like to see Considering the Consequences: The Development Implications of Initiatives on Taxation, Anti-money Laundering and Combating the Financing of Terrorism by Percy Mistry and J. C. Sharman.

I read a fascinating article titled Stuart Levey's War by Robin Wright in New York Times which gave me a new angle on AML/CFT: it might not block Osama Bin Laden, but it could be used to go after State sponsors of terrorism. As an aside, it also gives you insights about what happens when trade finance gets scarce.

What are good resources on India and AML/CFT? I found this interesting blog.

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