The West’s Dirty Financial Laundry
Since revelations of Danske Bank's role in the largest-ever money-laundering scandal, the United States and the European Union have been squabbling over who is to blame for the persistence of illicit money flows in their respective economies. But rather than pointing fingers, the US and the EU should start sharing pointers.
KYIV – The money-laundering scandals keep rolling in, most recently in Estonia, where a subsidiary of Danske Bank reportedly processed some €200 billion ($225 billion) in suspicious payments from around the region in recent years.
Nonetheless, the United States and the European Union have yet to muster a coordinated response to the problem. On the contrary, the US Department of the Treasury recently chastised the EU Commission for including four US territories (American Samoa, Guam, Puerto Rico, and the US Virgin Islands) on a list of jurisdictions with “weak anti-money laundering and terrorist financing regimes.” But instead of blaming each other, the US and the EU should be working together to develop a new consensus on how to address the issue.
Money laundering, in its current form, is relatively new. Starting in the late 1980s, financial liberalization around the world led to a substantial increase in tax evasion. But the problem wasn’t really on policymakers’ radar until the attacks of September 11, 2001, which revealed the connection between money laundering and terrorist financing. Shockingly, though, the US Supreme Court’s decision in Citizens United v. Federal Election Commission allowed unlimited amounts of so-called dark money to pour into the country’s elections. And since Russia’s attacks on the 2016 US presidential election, money laundering has again become a matter of national security.