Day: January 30, 2025

How the Socio-economic Impact of Money Laundering Hurts Us

Socio-Economic Impact of Money Laundering in the UAE

Money laundering is a global issue that poses significant risks to economies and societies, but in the context of the United Arab Emirates (UAE), it takes on unique challenges. Money laundering involves illegally obtained funds being funneled through various financial systems to make them appear legitimate. In the UAE, as in many other nations, money laundering facilitates various criminal activities such as terrorist financing, corruption, and drug trafficking, which can undermine the country’s financial integrity and security.

While the UAE’s economy is robust and its financial systems are sophisticated, the country faces risks from money laundering, especially given its status as a major international financial hub. This article delves into the socio-economic impact of money laundering within the UAE and highlights the efforts being made to address this issue.

Social Impact of Money Laundering in the UAE

Money laundering does not only have economic consequences—its social effects can be equally far-reaching. In the UAE, the negative outcomes are especially evident in society. Criminals who engage in money laundering often gain access to illicit funds, which they can use to expand their operations, thereby increasing social instability. This leads to higher costs for the government, including investments in law enforcement, healthcare, and public welfare to mitigate the impact of criminal activities linked to money laundering.

In addition, money laundering can distort the political landscape by empowering criminals to wield influence over public institutions. This undermines trust in governance and promotes corruption, impacting the nation’s social fabric.

Increased Government Spending on Law Enforcement

In response to the rise in money laundering activities, the UAE government has to allocate significant resources to strengthen its anti-money laundering (AML) frameworks. This means more spending on law enforcement, security measures, and public services, which ultimately affects ordinary citizens who rely on these services.

Economic Impact of Money Laundering in the UAE

The UAE’s economy is highly dependent on financial services, trade, and foreign investments, all of which can be severely impacted by money laundering activities. Financial institutions, as well as Designated Non-Financial Businesses and Professions (DNFBPs), play a critical role in maintaining the country’s economic stability. When money laundering runs rampant, it hinders economic growth, encourages corruption, and discourages foreign investment.

Money laundering in the UAE can have a ripple effect across various sectors, especially as criminals use the country’s financial systems to launder illicit wealth. This leads to negative consequences for sectors such as real estate, construction, and luxury goods—all of which are common targets for money launderers seeking to disguise their funds.

Macroeconomic Consequences of Money Laundering in the UAE

The UAE’s financial system is exposed to several macroeconomic risks stemming from money laundering, including:

Weakened banks and financial institutions
Increased crime and corruption
Discouraged foreign investments
Economic instability and market distortion
Tax evasion and revenue loss
Reputational damage on a global scale
International sanctions
Advantage for criminals
Depreciation of the UAE Dirham (AED)

The influx of illicit capital into the UAE economy distorts financial markets and disrupts normal economic operations, especially with regard to international capital flows and exchange rates.

Implications for the UAE’s Socio-Economic Landscape

Money laundering has profound socio-economic consequences, especially for countries like the UAE that are still growing as global financial centers. Despite its strong economic growth, the UAE remains vulnerable to the destabilizing effects of money laundering, particularly given its high levels of international trade, large foreign investments, and economic dependence on global financial flows.

1. International Reputation and Foreign Investment

Countries with weak AML regulations or a reputation for facilitating money laundering risk losing international credibility. In the UAE, this means that foreign financial institutions may hesitate to engage in transactions with local entities, fearing the reputational damage of being linked to illicit financial activities. This can result in:

Restricted access to global markets
Higher transaction costs due to increased regulatory scrutiny
Disruption of legitimate business operations

A negative international reputation as a money laundering haven can also affect foreign aid eligibility and government support from other countries.

2. Increased Corruption and Crime

Money laundering acts as a catalyst for other forms of criminal activity. The UAE, like other countries, faces the challenge of corruption that stems from weak AML enforcement. Criminals use money laundering to finance illegal operations such as drug trafficking and terrorism. This increases the burden on law enforcement and public safety resources.

Weak enforcement of AML laws can lead to a rise in bribery and corruption, as criminals may attempt to influence political leaders, law enforcement officials, and financial regulators to turn a blind eye to illegal activities. This undermines public trust in institutions and makes it harder for law-abiding citizens to rely on the rule of law.

3. The Role of Shell Companies and the Private Sector

Money laundering often involves the use of shell companies—businesses that exist on paper but are controlled by criminals or money launderers. These companies mix illegitimate funds with legitimate business revenue, making it difficult for authorities to trace the original source of the money.

In the UAE, shell companies may be used to infiltrate various industries, including real estate and luxury goods, through undocumented financial flows. This distorts the market, creates economic instability, and limits fair competition.

4. Weakened Financial Institutions

Financial institutions in the UAE are vulnerable to the reputational risks and operational losses associated with money laundering. As global scrutiny on financial institutions increases, banks and financial entities in the UAE may face higher compliance costs and potential sanctions for failing to enforce AML policies. This creates a challenging environment for growth and innovation within the financial sector.

5. Privatization and Economic Integrity

Money laundering activities can interfere with privatization efforts by enabling criminals to acquire state-owned assets and public resources at unfair prices. This not only distorts the market but also hinders the ability of legitimate businesses to compete fairly for valuable assets.

The Importance of a Robust AML/CTF Framework in the UAE

To combat the socio-economic impact of money laundering, the UAE must maintain and strengthen its anti-money laundering (AML) and combating the financing of terrorism (CFT) frameworks. The benefits of having a solid AML/CFT framework in place include:

1. Enhancing the Stability of Financial Institutions

A strong AML/CTF regime helps ensure that financial institutions in the UAE remain safe and secure from illicit activities. By enforcing Know Your Customer (KYC) and Customer Due Diligence (CDD) regulations, these institutions can reduce exposure to fraud and financial crime, ultimately boosting public confidence.

2. Encouraging Economic Growth

Money laundering can hinder the legitimate flow of investments by diverting illicit funds into non-productive ventures. A robust AML framework ensures that investments support real economic growth and contribute to the overall productivity of the UAE economy. By minimizing illicit activity, the government can foster an environment conducive to legitimate business activities.

3. Fighting Corruption and Crime

A well-structured AML/CFT regime acts as a deterrent to criminal activities. By targeting the roots of money laundering, the UAE can curb the power of corrupt individuals and criminal organizations. Seizing assets from money launderers and enforcing stringent penalties reduces the incentives for criminals to engage in illegal activities.

Conclusion

Money laundering poses a significant risk to both the social fabric and economic stability of the UAE. Its impact is far-reaching, affecting everything from public trust and political integrity to the very structure of the country’s economy. By strengthening its AML/CFT frameworks, the UAE can protect its financial reputation, encourage sustainable economic growth, and reduce the criminal activities that threaten its future.

For businesses in the UAE looking to comply with AML regulations, FTI Audit offers tailored solutions designed to reduce the socio-economic consequences of money laundering and help organizations navigate the evolving regulatory landscape.

7 High-Risk Customer Types That Could Destroy Your Business!

Businesses must stay alert when dealing with high-risk customers to prevent fraud, money laundering, and terrorist financing. From my experience, financial institutions that follow a risk-based approach can identify threats early while ensuring compliance with regulatory rules. Every regulated company is required to apply strict customer due diligence (CDD) and ongoing monitoring to catch suspicious activity.

This process includes thorough verification, constant scrutiny of transactions, and applying enhanced due diligence (EDD) when needed. Without these processes, firms risk failing their obligations, which can lead to severe penalties. A proper assessment and structured approach allow businesses to enforce KYC rules and take strong prevention steps to protect their operations.

What Makes a Customer High-Risk?

Identifying Risky Customers

Many financial institutions and banks face serious risks when customers commit fraud, engage in identity fraud, or launder money. In my experience, some individuals try to create an account using fake details, often coming from higher-risk countries. Others hide their real identity behind opaque beneficial ownership structures, making financial tracking difficult. Some customers even borrow money without plans to repay, leading to defaulting and financial losses. These cases pose the highest level of risk, forcing businesses to strengthen security and compliance measures.

To protect their operations, companies must apply strict customer due diligence and identify unusual transactions with no economic purpose or lawful purpose. Criminals may use complex transactions to hide funds, violating AML regulations. If security is weak, an attempted cyber security breach or account takeover can occur. Ignoring a compliance issue can cause financial and reputational damage. Businesses must act fast to reduce money laundering risk and other financial threats in the online world.

Key Signs of High-Risk Customers

Customers from higher-risk countries with financial crime links
Opaque beneficial ownership structures hiding true asset holders
Identity fraud or fake details used to create an account
Complex transactions with no lawful purpose
Attempts to launder money through unusual transactions
Customers who borrow money but later default
Account takeovers or cyber security breach attempts
A history of violating AML rules or committing fraud
Transactions lacking a clear economic purpose

7 Types of High-Risk Customers You Must Watch Out For

In my experience, businesses in the financial services sector must identify high-risk customers to minimize financial losses and legal issues. The risk lies in certain customer types who attempt fraud or exploit loopholes. To understand these threats, companies must analyze patterns within their industry and assess potential risks. When they encounter unusual behavior, early intervention can help prevent damage and ensure compliance with regulations. Recognizing these warning signs allows businesses to protect themselves and make informed decisions.

Customers Connected to High-Risk Countries

Some fraudulent actors attempt to launder money by establishing links with high-risk countries, avoiding strict regulations. The Financial Action Task Force (FATF) continuously updates its list of nations with strategic deficiencies in anti-money laundering and counter-terrorism financing (AML/CTF) regimes. Countries like Iran, Myanmar, and the Democratic People’s Republic of Korea face increased monitoring due to their higher level of money laundering risk. Criminals take advantage of weak regulations in these regions, making it critical for businesses to stay informed around the world and understand this subject to prevent financial crimes.

Customers Associated with High-Risk Business Sectors

Some business owners unknowingly deal with fraudsters who use cash-intensive businesses like a nail salon or launderette to launder money. If a business shows suspiciously high earnings, it may be linked to money laundering. Criminals often target industries where they can make a large amount of illegal money disappear in a single transaction. High-value assets such as art, property, or cars are commonly viewed as ways to hide illicit funds.

Those posing as legitimate customers may attempt a purchase to move illegal money. It’s important for businesses in these sectors to stay vigilant and note unusual financial patterns, especially when customers are attempting to conduct quick, high-cash deals. A successful scheme can allow criminals to disguise large sums, making financial monitoring even more critical in higher-risk industries.

Customers with Complicated Ownership Structures

Some businesses set up a complex ownership structure to hide the proceeds of crime, making it a red flag for financial institutions. It is crucial to identify the ultimate beneficial owner, as defined by FATF, to ensure transparency. A beneficial owner is the natural person who owns or has effective control over a company or legal person.

If businesses struggle to establish ownership or find links to an offshore tax haven, they should request further information. While most corporate structures are legitimate, some are conducted with ill intent or malice for money laundering purposes.

Criminals use these arrangements to disguise illegal funds through complex transactions, making it essential for businesses to recognize these risks and take preventive measures.

Customers Engaged in Unusual Account Activity

Once a customer is onboarded, businesses must monitor their account activities to ensure they remain consistent with their risk profile. If a customer suddenly deposits large amounts of cash, makes frequent transfers to another country, or starts to send money to a high-risk individual, it could be a sign of suspicious activity.

These patterns indicate that the customer’s behavior is changing and their risk level has shifted. Such activities must be monitored closely and compared to the established profile to prevent financial crimes. Detecting these irregular transactions early allows businesses to act quickly and prevent potential threats.

Politically Exposed Persons (PEPs) and Their Risks

Politically exposed persons (PEPs) hold a prominent position in public life, making them vulnerable to corruption, bribery, and money laundering (ML). The FATF defines a PEP as an individual who has been entrusted with a public function and holds significant influence. Their position can be abused to commit offences, including terrorist financing (TF) and other predicate offences.

The definition of a PEP also extends to their family members and known associates, increasing the risk of illegal activity. Financial institutions must stay alert to these risks and conduct enhanced due diligence to prevent financial crimes.

Customers with Questionable Reputations

During the onboarding phase, businesses must screen customers for potential risks by monitoring adverse media from traditional news sources, blogs, and web articles. If news sources or international databases link a high-risk customer to terrorist financing, money laundering, trafficking, or sanctions, they should be monitored closely.

Businesses using customer due diligence solutions can automatically detect changes and receive alerts if new risks appear. Newswires and monitoring tools help companies notify authorities about alleged involvement in illegal activity, strengthening their business relationship security.

Customers Without a Residential Presence

If a resident is not required to sign-up for an account, but a person is attempting to do so without a valid business case, it signifies a potential risk. In many instances, a high-risk individual may be setting up multiple accounts across different jurisdictions to avoid reporting requirements.

This raises concerns about illegal activities, as they might be trying to launder funds through a company or use multiple companies for fraudulent financial activities. When facing this question, businesses must closely examine the customer’s intent before opening an account.

How the Socio-economic Impact of Money Laundering Hurts Us

Money laundering is a serious crime that allows criminals to hide illegal funds and expand their criminal pursuits. It fuels illegal activities such as drug trafficking and terrorist financing, making it easier for terrorists and cartels to operate. These hidden transactions help criminals achieve their unlawful purposes without being caught. Unfortunately, weak anti-money laundering regimes in several countries allow them to continue occupying money obtained through illegal means.

The economic consequences of money laundering are especially damaging in developing countries with fragile financial systems. These nations experience financial disruptions, rising corruption, and a loss of investor confidence. Over time, businesses fail, and people struggle due to inflation and job losses. The social consequences are equally severe, as essential services decline and trust in governments weakens. The significant implications of unchecked laundering threaten global stability. If left unchallenged, its effects will continue to harm economies and societies worldwide.

The Alarming Social Consequences of Money Laundering

Money laundering does more than harm the market—it shifts economic power from honest citizens to criminals who manipulate the system. These launderers use hidden funds to expand illegal operations, influence political parties, and take control of businesses. Over time, they create a virtual takeover of legitimate sectors, making illegal activities harder to detect. In response, the government enforces stricter AML regulations, increasing costs for law enforcement. As a result, the repercussions fall on ordinary citizens, while criminals continue growing wealthier and more powerful.

The negative consequences of money laundering deeply impact society and the world community. To fight back, authorities prioritize law enforcement, diverting funds from the healthcare sector and vital services. This forces the government to take preventive measures, cutting public spending and reducing investments in public welfare. These challenges leave vulnerable communities struggling with fewer resources and limited opportunities. If unchecked, money laundering will weaken economies, widen inequality, and destroy trust in institutions.

The Severe Economic Consequences of Money Laundering

Money laundering is a growing persistent problem that threatens global economic growth. It allows launderers to disguise illegal funds, making it easier to manipulate financial markets and exploit emerging markets. These criminals target developing markets in their development phase, using loopholes to expand their reach. As illicit money flows through Financial Institutions (FIs) and Designated Non-Financial Businesses and Professions (DNFBPs), the overall economy suffers from instability and reduced investment confidence.

The impact extends to key nation-development sectors like real estate and infrastructure, where fraudulent investments slow productivity and worsen corruption. Money laundering fuels crime, diverting resources away from economic development and damaging long-term growth. As dirty money continues to spread, legitimate businesses struggle to compete, leading to economic stagnation and a weaker financial system.

The Widespread Macroeconomic Effects of Money Laundering

Weaker banks struggle to maintain trust as illegal funds pass through financial institutions, making them vulnerable to collapse.
Corruption increases as money launderers bribe officials, leading to financial mismanagement and instability.
Increased crime flourishes when illicit money fuels illegal businesses, making law enforcement efforts less effective.
Economic instability worsens as dirty money circulates, causing sudden distortion in major markets and unpredictable financial shifts.
Discourages foreign investments because international businesses hesitate to invest in a country with weak financial regulations.
Reputational risks damage the nation’s credibility, leading to a loss of trust from global financial organizations.
Widespread tax evasion results in the loss of tax revenue, reducing funds for public services and economic development.
International sanctions may be imposed on nations that fail to prevent money laundering, cutting them off from global trade.
Depreciation of the official currency occurs as illegal transactions manipulate exchange rates, devaluing national wealth.

Money laundering activities create an unpredictable flow of cash, making it difficult to track a traceable source of funds. This uncertainty leads to sudden dramatic fluctuations in exchange rates and international capital flows, destabilizing the economy. As a result, financial institutions struggle to maintain stability, while money demand experiences frequent changes. The adverse results extend further, affecting growth rates, reducing tax revenues, and worsening income distribution. These distortions impact crucial economic concepts, making long-term development more challenging.

The Devastating Impact of Money Laundering on Developing Countries

Money laundering causes massive disruption in developing countries, weakening their economy and making them more vulnerable to terrorism and criminal activities. These nations often have fragile financial systems that cannot withstand the severe impact of illicit transactions. Corrupt networks take advantage of weak security measures, allowing terrorist financing to thrive. The damage extends beyond finances, as social stability declines and people with a weaker social status suffer the most. The overall economic impact worsens when dirty money flows into markets, manipulating investments and reducing trust in financial institutions.

The destruction caused by money laundering also affects a country’s financial stability, making it harder to sustain growth. Criminals with mala fide intentions exploit weak regulations, worsening the economic condition and increasing the effect of illegal operations. Businesses struggle, investors withdraw, and governments lose crucial funding due to corruption. Ultimately, these factors create a cycle of instability that keeps developing countries trapped in financial distress.

Global Consequences and the Impact on Foreign Investment

A developing country known for money laundering activities or terrorist funding faces a negative impact on its economy and growth. Foreign financial institutions (FIs) hesitate to engage in transactions with enterprises operating in money laundering heavens due to concerns over compliance risks. This leads to higher costs for businesses and increased scrutiny on their ownership and control systems. As a result, even legitimate businesses suffer, struggling to access world markets and attract foreign private investments.

Additionally, weak enforcement of AML and CTF policies creates hardships for countries seeking foreign state help or financial aid. Their eligibility for funding and international support becomes restricted, making investments less attractive to global partners. Organizations operating under lax regulations often lose credibility, reducing the chances of development and financial stability. This cycle continues to weaken global trust, leaving affected nations with limited economic opportunities.

The Alarming Surge in Corruption and Crime

Countries known as money-laundering heavens attract criminals who exploit weak laws and selective enforcement of anti-money laundering measures. Corrupt management and employees in financial institutions help in money laundering activities, making it difficult to track illicit transactions. Weak AML and CTF regulations, combined with limited sanctions, allow illegal networks to thrive. Bribery becomes a common tool, influencing central institutions, police officials, and supervisory authorities to overlook violations. Even legislatures and prosecutors may turn a blind eye, making enforcement weak and ineffective.

With burdensome seizure provisions, authorities struggle to recover illicit funds, reducing the scope of justice. Criminals manipulate profit margins from financial frauds, keeping their illegal operations running. Courts often face challenges in convicting offenders, while accountants help disguise financial flows. Without stronger policies for combating the financing of terrorism, the risk of organized crime and economic instability continues to rise.

Corporate Sector

Shell companies play a major role in money laundering, allowing criminals to mix illegal funds with legitimate funds to avoid detection. These entities give the appearance of commercial existence, but they are actually controlled by illicit networks. Many front face companies are not just focused on booking profit but also on hiding an illegally occupied sum. By disguising unexplainable shares of income, money launderers gain an unfair share in various industries, influencing key sectors of economies worldwide.

The misuse of investments in legit companies creates monetary instability and leads to an improper allocation of resources. This process also results in taxation loopholes, further depriving countries of essential revenues. As money laundering spreads across economies, it weakens financial trust and reduces business transparency. Without strict oversight, these illicit financial flows continue to disrupt legitimate businesses and harm overall economic growth.

Fragile Financial Institution

Money laundering creates serious negative consequences for financial institutions, leading to reputational risks and loss of public trust. When banks face allegations of involvement in criminal activities or terrorist financing, their reputation gets distorted, causing negative publicity. This results in customers, depositors, and borrowers withdrawing their funds, weakening the entire financial sector. The crisis escalates as investors lose confidence, affecting business relationships and market stability. Additionally, operational risks, legal risks, and concentration risks become interrelated, increasing financial costs for affected institutions. This widespread damage impacts the entire country, reducing the soundness of its economy.

The Impact of Privatization Initiatives

Money launderers and criminal organizations take advantage of privatization to gain control over state-owned businesses. Instead of legitimate buyers acquiring these assets, criminals use illegally occupied funds to outbid fair competitors. Once invested, these funds strengthen their potential to expand criminal activities, further destabilizing economies. This process leads to a negative impact on growth, as illegal capital flows distort fair competition and weaken financial integrity in many countries. Money laundering in privatization not only harms industries but also increases corruption, making economic recovery more difficult.

The Critical Benefits of a Strong AML/CTF Framework

To reduce the risks of money laundering, governments and financial institutions must implement a robust framework that strengthens oversight. Strong AML and CTF programs help detect suspicious transactions effectively, preventing criminals from exploiting financial systems. The benefits of such measures include improved transparency, better risk management, and enhanced global trust in financial operations.

Strengthening the Stability of Financial Institutions

Money laundering poses serious financial risks to financial institutions, increasing the chance of fraud and the violation of laws and regulations. Weak internal controls make it easier for criminals to carry out the execution of criminal activities without detection. To reduce these threats, strong banking practices are essential, ensuring that institutions follow strict compliance measures. The AML and CTF regime enforce policies that help detect and prevent illegal transactions, keeping financial systems secure.

The use of Customer Due Diligence (CDD) and Know Your Customer (KYC) processes is critical in identifying high money laundering risk. A strong framework acts as a risk management tool, lowering the probability of damage to organizations due to fraudulent activities. These protective measures strengthen financial stability, ensuring that banks and businesses remain resilient against economic threats.

Driving Strong and Sustainable Economic Growth

Money laundering disrupts the economy by diverting illegally occupied funds into vicious investments instead of productive businesses. Criminal organizations manipulate financial systems by using illegal means to acquire high-value consumption assets such as luxury cars, real estate, art, antiques, and jewelry. These sterile investments do not generate additional products or contribute to the broader economy. Instead of being used for profit-making enterprises, these funds are transformed into hidden assets that do not align with customer’s needs or real economic growth.

Strong AML/CTF regimes act as hurdles to the execution of money laundering, preventing the misuse of statutory funds and directing further investments into productive avenues. When laundered amounts are redirected toward legally occupied funds, financial systems stabilize, enhancing overall productivity. A country’s response to financial crimes determines how well it can protect its economy from the negative impact of dirty money. By enforcing strict measures, governments can secure long-term development and a healthier financial environment.

Combating Corruption and Criminal Activities

A CFT institutional framework combined with robust AML/CFT regulations plays a key role in preventing criminal actions. These sturdy regimes ensure strict enforcement, making it harder for criminals and money launderers to hide illegally occupied funds. By treating bribery as a primary offense, authorities can reduce the ability of public officials to accept a bribe in exchange for favors. Effective AML programs act as a deterrent, discouraging underlying criminal acts by increasing the risk of detection.

Another essential strategy is the confiscation and seizure of proceeds from money laundering activities. Taking away these illicit funds leads to a loss of revenues for organized crime, directly reducing profits and eliminating incentives for further wrongdoing. The success of these policies depends on continuous monitoring and strong cooperation between financial institutions and law enforcement agencies to curb corruption and financial crime.

Final words

The socio-economic impact of money laundering activities weakens the economy and creates negative consequences for every country. To reduce these adverse effects, strong AML/CFT policies must be enforced. Proper implementation helps organizations stay compliant and prevent financial crimes. As an expert in the field, AML UAE provides strategies to overcome risks and strengthen regulations. Their efforts contribute to minimizing the economic impact and improving the social impact of financial security worldwide.

Frequently Asked Questions (FAQs)

1. How does money laundering affect the economy?

Money laundering disrupts economic stability by injecting illicit money into the legitimate financial system. This leads to liquidity problems, reduced government revenues, and discourages investors from funding legitimate businesses. It also increases the risk of economic instability and damages a country’s reputation.

2. What are the socio-economic impacts of money laundering?

The socio-economic impacts of laundering include increased crime, corruption, and the entry of criminal companies into the economy. It weakens development schemes, increases taxation, and harms human well-being by diverting public resources.

3. How does money laundering affect taxation and government revenues?

It reduces tax revenues by enabling businesses involved in criminal activities to evade taxes. This results in a loss of revenues, making tax collection more difficult for the government, forcing honest taxpayers to bear a heavier burden.

4. Can money laundering impact public health and social structure?

Yes, laundering contributes to rising healthcare costs by promoting drug trafficking and organized crime. It also affects the social structure, leading to inequality and unrest within societies.

5. How does money laundering affect businesses and trade?

Illegal financing allows criminals to monopolize markets and conceal their illicit origin of funds. This harms legitimate businesses, discourages fair competition, and causes negative reputation issues for a country’s financial sector.

6. What role does the UN Vienna 1988 Convention play in fighting money laundering?

The United Nations introduced the UN Vienna 1988 Convention, defining laundering as the conversion or transfer of illegally obtained funds to disguise their illicit origin. It also mandates international cooperation to combat financial crimes.

7. How does money laundering contribute to environmental and social issues?

Illegal investments lead to site degradation, increased dust pollution, and noise pollution in construction projects. Criminal networks exploit public services and weaken the legal financial system, affecting overall social stability.