Nexus Between Money Laundering and Sustainable Development Goals: A Threat to Developing Countries

Introduction

Crime is not fruitful for economic growth in any condition. Criminal activities lead to social inequalities and unbalanced economic growth. One of the most harmful phenomena which illegal activities for any society or country is bad reputation itself. The high rate of crimes usually presents a lack of law and punishments and low moral values of the people. Similarly, countries can achieve growth and overall success without justice. Education always plays a vital role in the success of society. Training and schooling provide a way to the people to distinguish between bad and good for them and others. Highly educate society able people to contribute their positive for the healthy atmosphere with in the community. Literature also reveals a consensus on the negative impact of crime on economic growth and development, thus crimes generate more inequality and poverty in society. The magnitude of money laundering varies in different countries. It is hard to enlist the negative effect of money laundering on an individual state, thus it based on various factor and different by which illicit money flow in the economy. However, such criminal activities damage every element of the economic cycle. Trade, productivity, service sector contribution of the financial sector itself, furthermore at the micro-level, money laundering effect can be observed at the primary, secondary and tertiary sectors as well.

The factor of globalization, new inventions and innovation dramatically change the overall world, thus from the last few years these dynamic and threats are collected under the head of sustainable development goals. Migration of people, changes in economic and social clusters, technological advancement, and more specifically, trends towards environmental deterioration are counted as these dynamics. In recent time, the demography of the world population changes dynamically, which lead movement of people from rural areas to urban areas for better living, especially in developing countries where majority of people living in rural areas because their lives attach with gaining benefits from natural resources like forest, rivers, lakes, and cultivation of land, but due to the factor of global warming these natural resources are destroying rapidly and people moving towards urban areas for better life. Although urbanization becomes a significant cause of structural change, as people are shifting from traditional farming to the employment sector, thus it provides jobs to those who don’t want to engage with the conventional industry of agriculture. However, on the other hand, it increases the concentration of people in cities which directly affects on the demand for energy, water, sanitation, and public services like education and health care. The major problem while implementing strategies related to urbanization is corruption and also the rule of law which is a significant issue in middle income and low-income countries. Urbanization increases consumption. With limited supply, it induces inflation, lack of jobs in cities with increases in poverty in towns as well; however, these are a common threat in achieving sustainability. On the other hand, due to a high level of corruption in developing countries, the implementation of strategies and flow of fund which are providing through AID along with clean distribution is one the most significant issue nowadays. Initially, with corrupt practice, these funds are misused and then these funds are converted in to black money as well. Furthermore, in the other step, these funds are converted from black money to white money and then laundered around the world. According to the estimate, around 3%-5% of world GDP is the estimated amount of money which is laundered around the world, however, in developing countries, it is assumed that the situation is worse which is due to the lack of financial money units, and weak Anti Money Laundering laws.

This chapter explains the nexus between money laundering and, its negative impact on the economy and sustainable development goals. The growing magnitudes Money laundering and new techniques are becoming challenges task for international regulatory bodies to stop its flow. Economic development and growth always a vital topic to discuss among the policymakers, but recently both phenomena are packed in a box of sustainability. Economic growth itself is a complex phenomenon, but understands “Sustainable growth and development” is more complicated; however, its scope is more comprehensive. Section I, of this chapter, briefly highlights the concept of sustainable development goals and its pillars and its importance in current world dynamics. Section II illustrates the idea of money laundering and its different flows within the economy. Section III, explain nexus between money laundering sustainable development goals along with economic growth mechanism