Money laundering is, no doubt, practised everywhere in the world. The social and economic stabilities are greatly impacted by money laundering. The effects of money laundering phenomena on economic, political and social structures are intense. Amongst other crimes, money laundering has had better success to weaken economic and social stability by creating economic digression and political instability. Countries all around the world are fighting with this crime in the best way possible through legislative measures. The impacts of money laundering are huge in number; some of those are discussed below:
- Money laundering is a huge challenge for lawmaking and regulatory systems of a country. Money launders are the ones who fuel the criminal behaviour in society in order to earn profits.
- By reducing tax revenue, money launders create difficulties for the government to collect revenue from related transactions which frequently takes place in the underground economy which is equal to stealing the money rights of people.
- Money laundering affects the development of the legally working private sector by supplying products priced below production cost that threats the legitimate activities to compete.
- In worst case scenarios, money laundering may also result in bank failures and financial crises by damaging the reputation of financial institutions involved in the scheming process.
- Money laundering fuels the rate of criminal activities in society because it transfers economic power from markets and government to criminals.