How Much Money is Laundered Every Year? (2023 Data)

If you have watched an episode in the popular Netflix series “Narcos” where large packs of drug money were buried underground, chances are you became curious if this ever gets back into legal circulation at one point. 

Sadly, it does, and this is what money laundering is all about – high rates of criminal and illegal remittances are detected every year.

How Much Money is Laundered Every Year?

Between $800 billion to $2 trillion is laundered every year.

This accounts for an estimated 2% to 5% of the world’s annual gross domestic product, and this only suggests that a significant percentage of the money circulating globally comes from illegal activities. 

What is Money Laundering?

Money laundering is the attempt and actual process of “converting” illegally-sourced money, often in large amounts, to legal.

This is done by employing different techniques, such as assimilating them to financial institutions, gambling facilities, and cryptocurrency, to make them seem legitimate.

From the word “laundry,” meaning “to make clean,” laundering is simply the process of cleaning away dirty money. 

Three Stages of Money Laundering 

According to the United Nations Office on Drugs and Crime, money laundering has three stages.

The first stage is placement, where dirty money is moved to financial circulation via a legal medium.

Financial institutions collectively paid $10 billion for money laundering fines in 2019, accounting for more than 65% of the total amount paid for all violations. 

Banks are the prime target for the placement stage, but criminals are becoming more creative with their ways in the past years.

Registered gambling businesses, particularly casinos, have become frequent targets in the past years.

The second stage is layering or the employment of various concealing tricks to prevent authorities from noticing their activities.

This is normally done by putting it as a de jure “loan” to another institution, creating false invoices, and putting it in offshore banks with relaxed local regulations. 

Lastly, there is the integration stage where money has officially become legal and can now be withdrawn from legitimate banking institutions. 

Money Laundering in the United States

The United States is among the countries with the highest money laundering incidences.

Exactly how much money is laundered every year in the US?

It is estimated that $300 billion of illegal money is laundered in the country yearly. 

Nevertheless, the incarceration rate for offenders is also high.

According to the US Sentencing Commission, 91% of all offenders of the crime have been imprisoned with an average 70 months jail sentence.

Basel AML Index

The Basel AML Index is a trusted and independent scoring of money laundering and terrorist financing conducted by the Basel Institute of Governance.

It aims to identify countries with the highest and lowest risk of these kinds of activities for future guidance.

The Basel AML Index tracks five major standards namely quality of the anti-money laundering framework, the incidence of bribes and corruption, the country’s financial transparency and standards, public transparency and accountability of the current administration, and legal and political risks. 

Countries with the Highest AML Risk in 2020 

1. Haiti – the country topped the ranks with an AML risk score of 8.49 during the year

2. The Democratic Republic of Congo – the country came second with an AML risk score of 8.35 during the year

3. Myanmar – the military junta’s forced takeover had taken a toll on Myanmar’s AML risk score which came at 7.83 during the year

4. Mozambique – the country recorded an AML risk score of 7.71 during the year

5. Cayman Islands – the country recorded an AML risk score of 7.66 during the year

6. Madagascar – the country recorded an AML risk score of 7.40 during the year

7. Mali – the country recorded an AML risk score of 7.37 during the year

8. Mauritania – the country tied with Mali and recorded an AML risk score of 7.37 during the year

9. Senegal – the country recorded an AML risk score of 7.25 during the year

10. Uganda – the country recorded an AML risk score of 7.18 during the year

Countries with the Lowest AML Risk in 2020

Meanwhile, here are the countries that fared well and scored lowest in the AML risk assessment during the year:

1. Andorra – the country recorded the lowest anti-money laundering risk during the year and scored 2.73 overall

2. Finland – the country that recorded an AML risk score of only 3.06 during the year

3. Cook Island – the country that recorded an AML risk score of only 3.13 during the year

4. Slovenia – the country that recorded an AML risk score of only 3.30 during the year

5. Norway – the country that recorded an AML risk score of only 3.35 during the year

6. Sweden – the country that recorded an AML risk score of only 3.36 during the year

7. San Marino – the country that recorded an AML risk score of only 3.42 during the year

8. Denmark – the country that recorded an AML risk score of only 3.46 during the year

9. Lithuania – the country that recorded an AML risk score of only 3.51 during the year

10. New Zealand – the country that recorded an AML risk score of only 3.53 during the year

World’s Biggest Anti-Money Laundering Software Companies by Revenue

Here are the world’s biggest anti-money laundering software companies and their respective revenue figures. 

1. Accenture – the company leads the anti-money laundering software market with an annual revenue of $44.00 billion

2. Oracle Corporation – the company comes second in the anti-money laundering software market with annual revenue of $39.07 billion

3. BAE Systems – the company is an important player in the anti-money laundering software market with an annual revenue of $26.58 billion

4. Cognizant – the company is an important player in the anti-money laundering software market with an annual revenue of $16.65 billion

5. Fiserv, Inc – the company is an important player in the anti-money laundering software market with an annual revenue of $14.85 billion

6. SAS Institute, Inc – the company is an important player in the anti-money laundering software market with an annual revenue of $3.1 billion

7. ACI Worldwide – the company is an important player in the anti-money laundering software market with an annual revenue of $1.29 billion

8. NICE Actimize – the company is an important player in the anti-money laundering software market with an annual revenue of $169.40 million

9. RiskMS – the company is an important player in the anti-money laundering software market with an annual revenue of $6.80 million

10. 4x Labs – the company is an important player in the anti-money laundering software market with an annual revenue of $4.00 million

Conclusion 

Research shows between $800 billion to $2 trillion worth of dirty money is assimilated into the legal money system every year. 

Companies like Accenture and Oracle in the anti-money laundering software business are raking in billions of cash to protect businesses from falling to these risks. 

Sources