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The Washing Machine
How Money Laundering and Terrorist Financing Soils Us
By Nick Kochan
Texere
HC, 325 pg. US$29.95
ISBN: 1-5879-0159-4

The price of black money

By Steven Martinovich
web posted July 11, 2005

The Washing Machine: How Money Laundering and Terrorist Financing Soils UsHidden from view there exists a parallel economy alongside, and intertwined with, the economy we interact with every day. It is an economy that exists simply to handle the mind-boggling amounts of money that are produced by a variety of illegal activities. It shuttles money from countless drug deals to Colombian cartels, hides money from those seeking to evade taxation or who have stolen it and provides funding for terrorist activities. Some experts estimate that this underground economy is an incredible $2.5 trillion in size.

Journalist Nick Kochan explores this world in The Washing Machine: How Money Laundering and Terrorist Financing Soils Us, an eye opening book that should be a revelation for those who believe money laundering -- essentially the fabrication of a legitimate excuse for illegally gotten gains -- is an exotic crime that doesn't touch their lives. As Kochan illustrates, money laundering's tentacles reach into every aspect of society. Even respectable bank where your savings account is located may be involved in laundering -- knowingly or otherwise.

The Washing Machine explores the various criminal enterprises that rely on laundering to make their money appear more legitimate. In one respect the criminal world is little different from ours: criminals need a financial infrastructure to conduct business. They need to pay for product, receive profits and reinvest the money in order to continue their operations. They need to move large sums of money globally and convert currencies as necessary. Kochan shows that a variety of methods are used to complete these tasks including barter between different gangs and organizations, the use of diamonds as currency -- popular among weapons smugglers -- or simply smuggling money on one's person.

This financial infrastructure, however, would be almost useless if it wasn't for the international banking system. Somewhere along the line a legitimate bank is used to transfer and store black money. Although this is typically because banks are more interested in their profit then investigating the provenance of suspicious deposits and transfers, Kochan shows that occasionally banks are complicit in laundering the proceeds of crime. As he points out in one case, it would be hard to believe a bank wouldn't wonder how a leader of an impoverished African nation was able to deposit tens of millions of dollars in a relatively short period of time.

As informative as Kochan efforts are, unfortunately The Washing Machine mostly fails to live up to its title. Kochan spends the vast majority of his time chronicling the money laundering actions of drug gangs and organized crime, terrorists rate just two chapters out of fifteen, groups that may have some connection to terrorists but in general seem to usually only share a need for clean money. There is no doubt that the activities of criminal enterprises are even more corrosive to society then the occasional terrorist attack but Kochan's effort is sold to the reader as an investigation of terrorism and money laundering.

Civil libertarians and classical liberals might also have a problem with Kochan's work given he doesn't seem particularly concerned about their worries. When the issue of civil liberties does occasionally arise, Kochan seems to be unconcerned about the potential for governmental abuse with the vast new powers they have taken upon themselves since September 11, 2001, an event that forced the U.S. Department of Justice to take money laundering more seriously. Kochan also incredibly lumps the pursuit of free market policies along with regulatory failures and political opportunism in creating "a dangerous world where money laundering and the black market have thrived."

Despite those concerns, The Washing Machine is a valuable introduction to the world of money laundering and its destructive effects. Most large-scale criminal enterprises would simply be unable to function without the ability to cleanse their profits and the massive scale of this underground economy will likely amaze the average person. Kochan rightly argues that the price we all pay for money laundering isn't limited to enriched Third World leaders or powerful criminal enterprises, but also the debasement of the world economy, political and economic instability and ultimately threats to our own security.

Steven Martinovich is a freelance writer in Sudbury, Ontario, Canada.

Buy The Washing Machine: How Money Laundering and Terrorist Financing Soils Us at Amazon.com for only $19.77 (34% off)

 

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