Money laundering has social and economic impacts, especially within developing countries. A high volume of money laundering in a country may: (Select Two.)
A.
Reduce confidence in the country's financial sector.
Money laundering negatively affects economic stability by discouraging investment, distorting markets, and eroding public trust.
Option A (Correct):A financial system tainted by money laundering loses credibility, leading to reduced investor and consumer confidence.
Option D (Correct):Foreign investors avoid jurisdictions with weak AML controls due to the risk of sanctions and reputational damage.
Option B (Incorrect):While tax evasion is linked to money laundering, it does not directly affect the decision to implement tax incentives.
Option C (Incorrect):Unemployment may result from economic instability, but money laundering does not directly cause job losses.
Option E (Incorrect):Money laundering often increases volatility in financial markets, not reduces it.
[Reference:FATF Report on the Consequences of Money Laundering (2011); World Bank Report on Financial Integrity (2020)., , , ]
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