Money laundering and its effects on the American economy
Money laundering often sounds to some like part of a crime show plot. To others, it is simply a confusing term that they hear about a few white-collar criminals in the financial district. Though it is nice to think that it would never happen in your hometown or affect your life, that is just simply not the case. Money laundering is a criminal act that affects Americans on many levels, and fighting it should be made a very high priority. In fact, fighting money laundering has the propensity to solve other issues taking place in America now. The following are some ways in which money laundering affects American citizens.
Loss of taxes
As much of the laundered money is moved underground, the government has no way to track it or tax it. This, unfortunately, leads to higher tax rates on everyone else. As we fight such a deficit and poverty crisis in the United States, there are continual talks of raising taxes, cutting financial assistance programs, and more. If fighting money laundering was a higher priority, these talks could change course.
The downfall of legitimate companies
It is difficult for some to believe, but it is not always the leaders of legitimate organizations that allow or provide the money-laundering services. At times, business owners or bank managers are unaware. Instead, an employee is to blame. Sadly, though, if the money laundering comes to light, those in charge are blamed regardless of their involvement or lack thereof. Even worse, most tax-paying citizens do not want to be involved with organizations that are involved in criminal activity. All of this often leads to the downfall of legitimate businesses leading further to a loss in jobs and another loss in taxes.
Front companies destroying the market
Businesses used specifically for laundering dirty money are known as front companies. Most front companies have a large amount of money coming through, and they want to cover their tracks. To make it look like their company brings in more, they often offer lower prices than competitors, pushing competitors out of business. This leads criminal organizations to purchase businesses and take over entire communities. Though this does lead to job loss and, of course, a loss in taxes, it also makes these communities more potentially dangerous.
Moving money hurts the economy
While money circulating through the economy would normally stimulate it, it is a bit different when referring to money laundering. This is because money launderers do not move their money to stimulate the economy. If they choose to move it — which is often when they feel the law might catch up — they move it underground instead. If the money was previously parked in anything positive, including investments, it is suddenly no longer an asset to America. It actually seems to just disappear.
It funds weapons and terrorism
Though the effects on the economy are horrid, it is important to face facts: A large amount of laundered money funds weapons and terrorism. Though legitimate funds can do this as well, they can normally be tracked. If there is any indication to the government of someone who might fund terrorism, they will keep a watch. Money that is moved underground, though, cannot be traced. Therefore, it might never be known that someone who lives or works beside us might actually be funding terrorism.
There are many issues that America faces on a regular basis, and many of them have a large impact on citizens and the economy. However, some of those issues are surface issues, and solving those will not help unless the root is ripped up. Money laundering needs to be acknowledged as the troublesome root that it is, and fighting it should be made a top priority.