The economic effects of money laundering on the Nigerian economy: some emerging issues.

Abstract

Although the economic effects of money laundering on economic development are difficult to quantify, it is evident that such activity damages the financial institutions which are critical to economic growth. Besides, it reduces productivity in the economy's real sector by diverting resources and encouraging crime and corruption, which slow economic growth. Furthermore, such activity can distort an economy's external sector through international trade and capital flows to the detriment of long-term economic development. This paper attempts to explore the economic effects of this malaise on the Nigerian economy. It observes that if money laundering is not tamed, it has the potential of propagating banking system distress, capital flight and exchange rate misalignment. The paper therefore, calls for a technologically driven regulatory framework, reforms of the existing law of evidence to tackle electronic dimension of money laundering and domestic forfeiture laws, the hastening of e-banking and electronic payments system and, finally, a need for global cooperation in implementing money laundering laws and jurisdictional issues.