An international financial centre that is used for money laundering can become an ideal financial haven . An international financial centre perceived to be opening its doors to drug traffickers' cash and organized crime will eventually fail to keep the accounts of major legitimate corporations because they fear tarnishing their own reputation by association. Money laundering is bad for development. Left unchecked, money laundering can erode a nation's economy by changing the demand for cash, making interest and exchange rates more volatile, and by causing high inflation in countries where criminal elements are doing business. The siphoning away of billions of dollars a year from normal economic growth poses a real danger at a time when the financial health of every country affects the stability of the global market.
Money laundering is bad for the economy.
Most disturbing of all, money laundering empowers corruption and organized crime. Corrupt public officials need to be able to launder bribes, kick-backs, public funds and, on occasion, even development loans from international financial institutions. Organized criminal groups need to be able to launder the proceeds of drug trafficking and commodity smuggling. Terrorist groups use money laundering channels to get cash to buy arms. The social consequences of allowing these three groups access to the capacity to launder money can be disastrous.