In this summary, we will discuss the general elaborations of our sub-questions. First, we mention that black money is money that has been obtained in an illegal way. This can be done by work, but also by not completing the annual tax return. To ensure that the government cannot trace the origin of this money, the criminals launder this money. This can be done abroad, but also through a private company. The money goes through three phases; the place phase, the deposition phase and finally the integration phase. Cash sums earned often remain contact because when the bank deposits a large amount, the bank makes a report to the police.
To detect money launderers, the banks, the police, and the government work together. Rabobank has a special team that deals with this, called the CDD. These are active on local banks. When a money laundering practice is detected, the bank makes a report to the police. They do this at the FIU (Financial Intelligence Unit) department. After this, the bank does not hear any further information about the incident. The police trace about 1 in 1000 euros that are laundered. In the Netherlands, approximately 18 million euros are laundered every year. Researchers conclude that Dutch investigative services have (too) little financial and economic knowledge.
Money laundering has both advantages and disadvantages for the economy. One advantage is that there is more work in the labour market by money launderers. When criminals spend their money, for example on cars, the company makes a turnover. If this involves large sums of money, and the net profit grows, there is a possibility for salary increases for employees or new jobs. There must be more transported or repaired. It also has benefits for the government. They save costs on benefits. The criminals do not pay taxes, but in other areas, it saves the government.
Money laundering also has disadvantages. The money supply in a country can be much larger than estimated. This may cause effects on real interest rates and exchange rates. When the money supply rises too much, this can lead to a lot of extra spending, so much spending that the production capacity can no longer handle this. This can lead to even higher inflation. Many criminal activities have a consequence on the owner of the money. From low-yielding but relatively safe investments to high-yielding but risky investments. The economy will lead below.
Money laundering has advantages for the money launderers and the government, but there are also many risks and disadvantages. A criminal can also be caught and there is a possibility that he will be sentenced to a prison sentence.
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