Book review: Dirty Dealing - Peter Lilley

Jan 31

Money laundering is the engine behind the ever expanding scourge of global organised crime. After reading this book one has an appreciation of the magnitude of the problem and a basic understanding of the mechanics behind laundering. Money laundering is conceptually fairly simple. As Lilley confirms there have been developed no truly new vehicles for money laundering since the early days when criminals washed their proceeds by mingling them with clean money from businesses with high cash turnovers such as launderettes. The internalisation of the business environment, the proliferation of sophisticated financial instruments, the speed of new technology (fax, the internet), and the removal of (intra-EU) border controls are factors that contribute to the widening repertoire of launderers, going beyond banks to include the global world of business. Despite this surface complexity it appears that schemes remain variations on a few basic old themes. These methods encompass surprisingly simple mechanisms as hard cash deliveries and invoices for fictitious consultancy services to complex multi-jurisdictional offshore structures. Anonimity (of false identity) is the pivotal element in all. Complicity of high-level officials and decision-makers and lax oversight procedures from financial institutions help tremendously in lowering the transaction costs for criminals (and increasing them for law enforcement). Reining in money laundering is - given the geographical scope of the dealings, the seamless meshing with the legal economy, the superficial diversity of schemes, and the enormous volumes of cash involved - a significant challenge. It relies to a large extent on a “soft” approach, sensitising banks, businesses and their employees to take personal responsibility in reporting suspicious transactions. Opportunism and greed make this very hard to do.

Lilley’s book reads like a kind of consultancy report, suitable for quick access to the facts (insofar as known) but it is not a great literary treasure. Sometimes it looks more like a dressed-up powerpoint presentation, with lists of bullet points to summarise key facts. There’s a fair amount of repetition as well. I guess the book could be quite easily condensed to two thirds of its present volume. Surprisingly, Lilley discusses some of the better known laundering setups - such as the black market peso exchange system, or the Bank of New York case - very summarily. A book such as Nick Kochan’s The Washing Machine does a better job here.

Common to much of the laundering literature is the paradoxical feeling that, although laundering is conceptually simple (despite the occasional technical complexity), it remains hard to grasp exactly how the washing ties into the criminals’ business models. For example, why exactly are “International Business Corporations” the key laundering vehicles for drug traffickers? What other instruments to they use? What other criminal entrepreneurs make use of IBCs? A simple typology of laundering mechanisms - derived from a few basic operational principles and linked into logic of various type(s) of illicit business - could be of great help here. Maybe the authors are hard to fault as the details of these setups are probably not even known or privy to criminal investigators. The suggestion to draw up a clear typology may also run counter to Lilley’s assertion that “laundering is just as likely to be a self-perpetuating cycle or continuum as opposed to a clearly definable process with a discernible beginning and conclusion.” Despite this assertion it seems still a good idea to systematise the book’s ideas in a few clear conceptual frameworks.

Lilley’s book is useful as a broad, general survey of laundering (and terrorist financing, which is of a different nature), but one will have to read further afield to get a better understanding for how laundering and trafficking mesh in creating viable, criminal business models. I’d give the book 3,5 stars.

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