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Questions and Answers
What is the estimated percentage of global GDP that is affected by money laundering?
What is the estimated percentage of global GDP that is affected by money laundering?
- 3%
- 5% (correct)
- 1%
- 7%
What is one of the negative consequences of money laundering for developing countries?
What is one of the negative consequences of money laundering for developing countries?
- Increased economic growth
- Difficulty in attracting foreign investment (correct)
- Improved reputation among legitimate investors
- Increased foreign investment
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Study Notes
- Money laundering weakens a country's financial sectors and impedes economic growth.
- It facilitates corruption, crime, and other illegal activities.
- Global money laundering accounts for up to 5% of the global GDP.
- Money laundering compromises the integrity of financial institutions.
- Tax evasion is a significant by-product of any money laundering scheme.
- Member States lose between 2% and 2.5% of their combined GDP annually to tax evasion.
- Money launderers set up front companies to launder their ill-gotten wealth.
- These front companies sell their products at lower-than-market prices, undermining legitimate businesses.
- Developing countries with poor track records of dealing with money laundering face difficulty in attracting foreign investment.
- Legitimate investors are wary of associating with nations with negative reputations.
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