The evolution of money laundering: A descriptive analysis of agency response and legislation

Abstract

During the years 1984 to 1990, the U.S. government has been fighting a war on drugs and financial proceeds utilizing specific legislation enacted in the Money Laundering Control Act of 1988 and its 11 criminal offenses. An important aspect of this has been the selection and prosecution of individuals who attempt to launder the profits they gain from the illegal drug trade. The fight against money laundering involves many agencies of the federal government. What makes this research unique is the data set is from the Internal Revenue Service (IRS), Criminal Investigation Division (CID) and offers a first-hand look at IRS involvement in money-laundering cases in the United States. The study seeks to overcome this historical general lack of knowledge about the prosecution of money launderers in 1989 by analyzing IRS cases to answer four unique questions. To what extent does the IRS make use of recently passed legislation of money launderers? How successful is the IRS in prosecuting these cases? To what extent does the allocation of resources by the IRS to the investigation and prosecution of these cases pay off for the agency? To what extent can money launderers be considered white-collar offenders? In answering these questions the role of recent legislation designed to punish these criminals is examined along with the associated enforcement efforts using univariate and bivariate including the use of analysis of variance (ANOVA). The results of this study suggest the legislation enacted to combat the laundering of drug proceeds in 1989 was effective by the IRS.