1. The economic effects of money laundering are on a large scale. For example, in developing countries the governments are still in the process of establishing regulations for their newly privatized financial sectors. This makes them a prime target. In the 1990s numerous banks in the developing Baltic countries ended up with huge deposits of dirty money. Bank founders started to withdraw their own clean money for fear of losing it, if the banks came under investigation and lost their insurance. The banks collapsed as a result.
2. Another issue is errors in economic policy resulting from artificially inflated financial sectors. Massive inflows of dirty cash into particular areas of the economy that are desirable to money launderers create false demand, and officials act on this new demand by adjusting economic policy. When the laundering process reaches a certain point, or if law-enforcement officials start to show interest, all this money will suddenly disappear without any predictable economic cause, and this financial sector will fall apart.
3. Some problems on a more local scale relate to taxation and small-business competition. Laundered money is usually untaxed, meaning the rest of us ultimately have to make up the loss in tax revenue. Also, legitimate small businesses can't compete with money-laundering front businesses that can afford to sell a product for cheaper because their primary purpose is to clean money, not turn a profit. They have so much cash coming in that they might even sell a product or service below cost.
4. As for two prime money-laundering industries - drug trafficking and terrorist organizations - the effect is clear. Successfully cleaning drug money means: more drugs, more crime, and more violence. The existence of terrorist organizations depends on people supporting them financially. These people do not simply write a check and hand it over to a member of the terrorist group. They send the money in roundabout ways that allow them to fund terrorism, remaining anonymous. Interrupting the laundering process can cut off funding and resources to terrorist groups.
Ex. 1 Decide whether the information is: True False Not stated
In the 1990s many banks in the Baltic countries laundered money.
Ex. 2 Decide whether the information is: True False Not stated
Dirty money does not influence economic policy.
Ex. 3 Decide whether the information is: True False Not stated
Legitimate enterprises can’t sell products as cheap as those which launder money.
Ex. 4 Decide whether the information is: True False Not stated
Drug traffickers are connected with corrupt politicians.
Ex. 5 In what paragraph (1, 2, 3, 4) is there the following information?
Businesses laundering money can sell products below their market cost.
Ex. 6 In what paragraph (1, 2, 3, 4) is there the following information?
Many developing countries are used for money laundering.
Ex. 7 Answer the following question: What happens with dirty money when law-enforcement officials start to show interest?
· It goes to deposits of insurance companies.
· It goes to inflated financial sectors.
· It disappears without any economic cause.
· It begins to stimulate business competition.
Ex. 8 What is the main idea of the text?
· Many Baltic banks launder money.
· Without dirty money the financial sector will fall apart.
· Money-laundering businesses sell products below cost.
· Money laundering has a number of negative consequences.