Threat of money laundering

This chapter presents a Walker gravity model to calculate the amount of money laundering threat for 27 EU Member States. It is found that the threat of money laundering is greatest in the United Kingdom, Luxembourg and other west-European countries, as a result of their relatively sophisticated financial markets, their relatively high GDP per capita levels, their trade, as well as cultural links to a wide range of proceeds of crime-generating countries. The picture changes dramatically, however, when expressed as a percentage of each country's GDP. The threats can be very high - particularly for the smaller countries, such as Estonia, Latvia, Malta and Luxembourg. These countries are bordering or related to much larger countries that generate large amounts of money potentially available for laundering. They therefore face threats equivalent to a significant proportion of their total GDP, even - in those four countries - greater than their entire GDP. The threat assessment presented in this study, based on the Walker gravity model, appears to be quite robust.