In November 2015, CGD published the report Unintended Consequences of Anti–Money Laundering Policies for Poor Countries, which warned that efforts to curb illicit finance were producing significant adverse side effects. This new report takes stock of what has been accomplished as well as what remains to be done.
Money laundering, terrorism financing and sanctions violations by individuals, banks and other financial entities are serious offenses with significant negative consequences for rich and poor countries alike. Governments have taken important steps to address these offenses. Efforts by international organizations, the US, UK and others to combat money laundering and curb illicit financial flows are a necessary step to increase the safety of the financial system and improve security, both domestically and around the world. But the policies that have been put in place to counter financial crimes may also have unintentional and costly consequences, in particular for people in poor countries. Those most affected are likely to include the families of migrant workers, small businesses that need to access working capital or trade finance, and recipients of life-saving aid in active-conflict, post-conflict or post-disaster situations. And sometimes, current policies may be self-defeating to the extent that they reduce the transparency of financial flows.
Statement of the Honorable Clay Lowery Before the U.S. House Subcommittee on International Monetary Policy and Trade
On June 17, 2015, CGD visiting fellow Clay Lowery testified before the U.S.
A Proposal for IDA-17: Instead of an Income Transfer, Direct the IFC to Invest Its Time, Resources, and Expertise in IDA Countries
Instead of giving an income transfer, the IFC should provide financing and its expertise in a way that fits what it does best—investing in the private sector—while giving the IFC incentives to accelerate what it should do even better—taking greater risks in poorer countries.