Money Laundering

Every year, hundreds of billions of dollars are illegally laundered through the U.S. banking system, mostly undetected.  Funds from illegal drug trafficking, fraud, terrorist financing, and sanctions evasion are transferred constantly. 

The United States uses an array of anti-money laundering (“AML”) laws to detect, deter, and slow this illegal activity.  Bank regulatory laws require financial institutions to report suspicious activity to the government.  Criminal laws authorize imprisonment for convicted money launderers.  And U.S. foreign policy, including U.S. participation in international bodies, works to fight money laundering on a global scale. 

But the effectiveness of this approach is an evergreen question.  The regulatory obligations are expensive.  Banks spend billions of dollars each year to comply, with very imperfect results.  And new hurdles are raised constantly by financial and technological innovation—for example, in the current era, by cryptocurrency and artificial intelligence. How satisfactory is the current scheme? What could be improved?  At what cost?

This course will review the foundational AML laws, as well as the institutions and personalities that animate them.  We will explore the policies behind AML laws, their origins and history, how they have shaped banking and the regulatory system, how markets and products have innovated around them, and the good and bad of what has resulted.