CAPITALISM'S ACHILLES HEEL Dirty Money and How to

227. “Report on Relations between the Central Bank of Russia and the Financial
Management Co. Ltd,” PricewaterhouseCoopers, August 4,
1999, www.legacyrus.com/library/PWCOOPRussiaReport.htm.
228. David E. Sanger, “In House Testimony, Rubin Admits Loans to
Russia May Have Been Used ‘Improperly’,” New York Times, March
19, 1999.
229. Interview by the author with a Russian banker, Moscow, Russia, not
for attribution.
230. Stephen F. Cohen, Failed Crusade: America and the Tragedy of Post-
Communist Russia (New York: W.W. Norton, 2000), 41.
CHAPTER 4 Magnitudes and Misunderstandings
Notes 403
1. Michel Camdessus, “Money Laundering: The Importance of International
Countermeasures,” (address to the plenary meeting of the Financial
Action Task Force on Money Laundering, Paris, February 10,
1998), www.imf.org/external/np/speeches/1998/021098.htm.
2. Caroline Doggart, Tax Havens and Their Uses (London: Economist Intelligence
Unit, 1997), 7.
3. Another way to get a feel for the annual flow of global dirty money is to
look at domestic unregistered economic activity, that is, the grey market
or underground economy. How big is it, and how much of it might feed
cross-border transfers? A recent study of 21 wealthy OECD member
nations estimated underground activity at 16.7 percent of recorded
GDP. (Schneider and Enste, “Shadow Economies: Size, Causes, and
Consequences,” Journal of Economics 38, no. 1 (March 2000): 77–114.
Applied to the total GDP of developed countries, some $25 trillion, this
would suggest that unrecorded activity in the richer nations is more
than $4 trillion annually. Various studies in developing and transitional
economies place underground economic activity at 35 to 80 percent of
registered activity. Taking a modest figure of 40 percent and applying it
to the combined $6.5 trillion GDP of developing and transitional
economies produces an estimate of $2.6 trillion in underground economic
activity. For all countries, the sum of $4 trillion by the richer
group and $2.6 trillion for the poorer group is $6.6 trillion in unregistered
activity. Cross-border flows then would comprise (1) a percentage
of $6.6 trillion in unrecorded domestic economic activity plus (2) the