CHAPTER 4

Effects of Money Laundering on the Macro Economy

Money laundering has significant effects on a country’s macro economy. The effect can be direct or indirect.

Direct effect of money laundering on economy could be:

    •  Tax Evasion,

    •  Low-quality investments, and

    •  Decrease or stability in a country’s economic growth.

Laundered money would enter the economy with no official records, thereby evading taxes. Money launderers would not pay tax on their ‘earnings’. As a result, economic growth of the country will suffer. Investments would decrease because of the lack of economic growth stability. Investors prefer more profitable countries to meet their earnings expectations.

Money laundering can also affect indirectly the macro ...

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