Challenges of money laundering for sovereign states that uses the US dollar
| DOI | https://doi.org/10.1108/JMLC-06-2021-0056 |
| Published date | 21 October 2021 |
| Date | 21 October 2021 |
| Pages | 306-312 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Prosper Simbarashe Maguchu |
Challenges of money laundering
for sovereign states that uses the
US dollar
Prosper Simbarashe Maguchu
Public International Law, Vrije Universiteit Amsterdam,
Amsterdam, The Netherlands
Abstract
Purpose –There has been almost no scholarly work on thechallenges of money laundering in sovereign
states that use the US dollar as theircurrency of choice. This study aims to break the silence by highlighting
how money launderingthrives in these situations mainlydue to lack of or weak regulation of the US dollar by
both the adopting statesand the USA.
Design/methodology/approach –The research depended on varioussecondary data sources. It is an
adapted academic version of a shorterpiece for a professional magazine for professionals in the Anti-Money
Laundering(AML) Field.
Findings –Preliminary findings show that due to the lack of regulation of the US dollar in dollarized
economies, unscrupulouspoliticians, organized criminal gangs and multinational corporationsamong others
can use a variation of the BlackMarket Peso Exchange (BMPE) to counteract money launderingcontrols and
launder ill-gotten gains fromcrimes such as corruption, transnational crimes and tax evasion. Furthermore,
ordinary citizens,migrant workers and small businesses avoiding stringentexchange rates are also using the
black market,posing a further challenge to the law enforcement authorities.
Practical implications –The practical implications of thispaper relate to how the mutations of money
laundering techniques, as they are adopted by criminals, to operate in different conditions are making it
difficultnot only to dictate but also to addressusing traditional AML techniques.
Social implications –BMPE has far reaching social consequences. Hence, this study is significant to
instigate a search for solutions and for further detailed studies into the money laundering techniques in
countriesthat do not have a sovereign currency.
Originality/value –Tothe best of the authors’knowledge, this is the first paper to discuss the unique
challenges faced by countries that have adoptedthe US dollar for domestic use. The paper also shows how
dollarizationis a modest reminder that money laundering technique such as the BMPE can evolve to counter
the legislativeand regulatory environment of the various jurisdictionsin which they are laundered.
Keywords Zimbabwe, Black-Makes Peso Exchange
Paper type Viewpoint
Introduction
Some countries have abandoned their sovereign currency in times of economic crisis for
other stable currencies.According to the World Bank, seven sovereign countries usethe US
dollar as their official currency of exchange. This paper uses the case of Zimbabwe as a
© Prosper Simbarashe Maguchu. Published by Emerald Publishing Limited. This article is published
under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute,
translate and create derivative works of this article (for both commercial and non-commercial
purposes), subject to full attribution to the original publication and authors. The full terms of this
licence maybe seen at http://creativecommons.org/licences/by/4.0/legalcode
JMLC
25,2
306
Journalof Money Laundering
Control
Vol.25 No. 2, 2022
pp. 306-312
EmeraldPublishing Limited
1368-5201
DOI 10.1108/JMLC-06-2021-0056
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