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Money laundering (ML), the effort to conceal the origins of the proceeds of crime, is an old activity but a new offense. The global regime of controls (anti money laundering: AML) that has emerged since 1990 represents a novel attempt to obligate financial institutions and professionals to check on the origins and uses of funds that they handle in order to deter crime and catch criminals. It has been hugely successful as an international legal innovation, with almost all nations signatories to the principles of the system created by the Financial Action Task Force (FATF).There are two distinctive features of the regime; its lack of any specification of goals and a consequent lack of any measures of effectiveness. Analysis of the history of the FATF system shows that it was designed not to eliminate money laundering itself but to use ML as a point of vulnerability for certain crimes; AML would help prevent the underlying criminal activities that generate the proceeds. Terrorism was added as a target activity following the Twin Towers disaster, even though the logic of the AML action was reversed; mostly white money is used to finance black activities. This presentation first describes the varieties of money laundering activities. Though some criminals do require the services of money launderers, the analysis also suggests that much of criminal proceeds are not laundered but simply used for the normal life expenditures of offenders. Moreover, there is a great deal of self-laundering. The markets for ML services appear quite segmented and highly variable, making it more difficult to assess how well the markets or the controls work.The second half of the presentation covers the rationale of the system and offer an assessment of its consequences, both intended and unintended. There is little reason to believe that it has done more than inconvenience some offenders and allowed prosecutors to get longer sentences in some cases. However the controls have been important for international strategic purposes, as they seem to have made it more difficult for Iran to acquire nuclear weapons and may have been instrumental in limiting the activities of the Ghaddafi regime in Libya.There are however many other consequences of the AML system. The international regime requires that all countries, even those that have no history or prospect of being used for ML activities, put in place the same complex system demanded of rich money centers such as the United Kingdom and Switzerland. The presentation examines the rationale for these requirements. It also examines how AML controls affect access to the banking system and the costs it imposes on different sectors of the economy. Finally, it discusses how decisions about the scope of the system should be made. Peter Reuter is Professor in the School of Public Policy and in the Department of Criminology at the University of Maryland. He founded and directed RAND’s Drug Policy Research Center from 1989-1993. . His books include (with Robert MacCoun) Drug War Heresies: Learning from Other Places, Times and Vices (Cambridge University Press, 2001), (with Edwin Truman) Chasing Dirty Money: The Fight Against Money Laundering (Institute for International Economics, 2004) and (with Letizia Paoli and Victoria Greenfield) The World Heroin Market (Oxford University Press, 2009).Dr. Reuter served as the founding president of the International Society for the Study of Drug Policy, from 2007-2011. He is a Fellow of the American Society of Criminology. Dr. Reuter received his PhD in Economics from Yale.