Book Review: The Washing Machine — Money Laundering And Terrorist Financing Soils Us

The global black economy is now estimated at over $2.5 trillion, according to the opening pages of "The Washing Machine", a detailed look at money laundering and terrorist financing by Nick Kochan, investigative reporter, who earlier has investigated scams like the Guinness scandal, and BCCI.

Dirty money makes us all victims. Money laundering controls cost about 10 cents on every dollar of global income. Major financial and commercial institutions, as well as governments facilitate the handling of dirty money, often for personal and corporate benefit, and thereby deny the inhabitants of developing nations their benefits. As Nick puts it, "Western financing schemes hollow out the wealth of poor countries, leaving behind economic deserts and volatile forces bent on political instability.This form of wealth transfer by deception benefits a few sharp or crooked entrepreneurs to the detriment of the larger economy".

The larger challenges of threats to global security put a darker spin on things. Were it only base criminals, drug lords and money-hungry corporations moving illicit funds around, it would be a matter for regular law enforcement. Bad money, though, like people, tends to coagulate, and separating out the greedy from the truly evil terrorist wishing to strike a blow against the establishment for this ideology or that, is next to impossible.

As Nick shows, Colombian drug money is laundered by the same channels, and often by the same people, as a Rwandan warlord wishing to pay for some shoulder-fired missiles, or a Tamil Tiger paying off a shipping agent for his services. He terms this global super-structure of money laundering the 'washing machine', and goes into great detail on it's layers, threats and effects.

The first section looks at the criminal oligarchy typified by the Russian mafia. Political instability and social change tend to stimulate criminal activity. The Russian Federation has had ample space for the former, and produced much of the latter. The Russian mafiosi are on a variety of watch-lists, as well as have been involved in numerous scams of large scale. Nick explores the career of one senior member of the Moscow-based Solntsevo crime gang, Semion Mogilevitch. He has allegedly been involved in a variety of schemes, including the Eastern European sex trade, providing expert money laundering services to the Japanese Yakuza and the Italian Camorra, running a scam (BoNYGate) through the Bank of New York, and most prominently, the creation and (mis-)management of a public company, being admitted to the Toronto Stock Exchange 300 index - YBM-Magnex International.

Along the way, he looks at how even stable countries like Israel become witting partners of the Washing Machine operators. He notes the high proportion of Russian Jewish members in the Russian mafia, attributing this to the marginalization of the Jews under the Tsars, and the subsequent lack of respect for Soviet law, and disdain for its social structures. This, coupled with "Israel's political insecurity and it's lack of international friends outside the United States...exacerbated its dependence on dubious sources of funds"

Israel's desperation for foreign exchange means Russian Mafiosi have been allowed to integrate themselves into the country's political and financial system. It also means Russian Mafioisi have been given shelter and a great deal of security, which they would not have experiened either in Russia or in Western Europe"

Article Author: Aaman Lamba

Aaman Lamba is a Blogcritics editor, as well as the Publisher of Desicritics.org, a Blogcritics network site covering media, politics, culture, sports and more with a global South Asian focus

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