With the alarming growth of the illegal drug trade, money laundering has posed an increasing challenge to many countries, threatening them with financial instability and providing a source of funding for further criminal activities.

Money laundering today is one of the world’s severe problems and developing countries in particular, with its lack of adequate financial, human and technological resources are finding it very difficult to curb this scourge.
It has been estimated that each year $15 billion flows out of Russia – and it is almost impossible to determine how much of this figure is capital flight and how much is money laundering. Government figures in the mid 1990s calculated that 25 per cent of the country’s gross national income was derived from organised criminal activities.
The United Nations Human Development Report of 1999 commented that organised crime syndicates grossed $1.5 trillion per annum – which is more than many developed economies and multinational corporations. Recent figures from the International Monetary Fund suggest that the amount is now nearer $2 trillion.
In March 1998, Dow Jones News reported that money laundering amounted to between 2-5% of world GDP: in other words, between $1 and 3 trillion.
It is estimated that there are in excess of 200 million drug users in the world and in 1995 the world’s illegal narcotics trade was calculated at $400 billion. This total is equivalent to eight per cent of the world’s trade- that is more than motor vehicles, iron and steel and about the same as the gas and oil industry. In 1999, a Congressional hearing was told that up to $48 billion per year in profits were generated by illegal drug sales, which was laundered.

Min Zhu, Deputy Managing Director of the IMF, notes: “Money laundering and the financing of terrorism are financial crimes with economic effects. They can threaten the stability of a country’s financial sector or its external stability more generally. Effective anti-money laundering and combating the financing of terrorism regimes are essential to protect the integrity of markets and of the global financial framework as they help mitigate the factors that facilitate financial abuse. Action to prevent and combat money laundering and the financing of terrorism thus responds not only to a moral imperative, but also to an economic need.”–
According to the IMF, the international community has made the fight against money laundering and terrorist financing a priority. The IMF is especially concerned about the possible consequences money laundering, terrorist financing, and related governance issues have on the integrity and stability of the financial sector and the broader economy. These activities can undermine the integrity and stability of financial institutions and systems, discourage foreign investment, and distort international capital flows. They may have negative consequences for a country’s financial stability and macro-economic performance, resulting in welfare losses, draining resources from more productive economic activities, and even have destabilising spillover effects on the economies of other countries. In an increasingly interconnected world, the negative effects of these activities are global, and their impact on the financial integrity and stability of countries is widely recognised. Money launderers exploit both the complexity inherent in the global financial system as well as differences between national anti-money laundering laws and systems, and they are especially attracted to jurisdictions with weak or ineffective controls where they can move their funds more easily without detection. Moreover, problems in one country can quickly spread to other countries in the Region or in other parts of the world.
On this note, the Guyana Government has welcomed the support of developed world partners and important international institutions in strengthening efforts to promote anti-money laundering and countering the financing of terrorism initiatives, but also called on the political opposition to support legislation in this respect.
Indeed, developing countries such as ours definitely need the support of the developed world to develop the capacity to successfully fight the illegal drug trade and money laundering.
The commitment of the political opposition to the national interest would be further tested when legislation pertaining to the curbing of money-laundering activities is brought before the National Assembly.