Electronic Trade and Money Laundering

Electronic Trade and Money Laundering

ELECTRONIC TRADE — FEATURES AND EXPECTATIONS

Electronic trade is a reality that reveals and promises both rapid and

exponential growth. Its constant progress, as well as increasing

innovation in electronic payments, has for long been the subject of

wide attention, especially for regulatory bodies, in respect of the

opportunities for money laundering that these new instruments can

provide, and of the responses that regulatory systems can and must

develop in their regard. Detailed reports on the wholesale

implementation of the new payment systems are available from the Bank

for International Settlements. These reports show that, with greater

or lesser speed, such systems are taking on a global dimension.

Innovation continues incessantly; and rumours spread every day about

the development of newer instruments, residing even in the most

familiar tools such as mobile telephones."

Aside from unpredictable shocking events, which could thwart the

advance and availability of technological resources, electronic trade

is eventually likely to become the norm, at least in the most advanced

countries. It will spread over all markets, just as other instruments

— cars, household appliances, telephones — have done before, because

it is equally effective, cheap, and within everybody's reach. The main

factors still inhibiting widespread diffusion are security risks —

such as problems of transparency and symmetry of information; a need

for defence from intrusive technologies; a call for guarantees against

threats deriving from fraud, embezzlement, counterfeiting, false

identities and privacy.

These risks are likely to be scaled down, as the diffusion of the new

instruments enlarges the market in such a way as to make lawful

behaviour thoroughly prevail — which in turn will make the market

itself more reliable. Under such conditions, obstacles and constraints

that interfere with market development will not be able to resist its

inner pressure, or will turn into discriminations and losses in

commercial competition, which is positively unwelcome for the

economies involved. It is certainly not by chance that in this matter

the governments of many countries have so far shown a 'wait and see'

attitude.

NEW INSTRUMENTS AND MONEY LAUNDERING RISKS

In its broadest sense, money laundering includes whatever activity is

apt to disguise the source of illicitly earned wealth, dissolving the

tracks that can lead back to it. To this goal, whatever means the

economic and financial system can supply is beneficial.

Experience has shown that money launderers prefer environments

featured with poor control, high risks that justify high losses and

profits, multiplier effects, little transparency and thus asymmetric

information, ease of manipulation, chance of connivance or illicit

profit sharing. In this perspective, the internet is an ideal

environment. The access to new technologies is more effective, and at