draining development.pdf - Khazar University

12How Well Do Anti–MoneyLaundering Controls Work inDeveloping Countries?Michael LeviAbstractMuch of the attention to the link between corruption and money launderingunderstandably has focused on the developed world, given that itis the businesses of the developed world that mostly pay the bribes andthat it is the banks and other institutions of the developed world thatreceive and recycle the bribes. However, this is not the whole picture.Substantial sums arising from corruption are often retained or evenimported into developing countries to pay off political rivals, satisfyobligations to families, friends, and clans, and invest in local businessesand property. Kleptocrats usually wish to retain power and thereforerequire such funds.Historically, the principal benefit of anti–money laundering (AML)regimes in developing countries has been the international political andeconomic acceptance and the avoidance of sanctions that they bring.This has to be set against the substantial costs of introducing suchregimes in human resource–poor countries. If nations are to be requiredto have AML measures, one component of optimizing the benefitsinvolves using these measures to combat corruption, especially corruptionat a high level. Namibia and Nigeria excepted, there do not appear373