Anti-money laundering (AML), while clearly a financial architecture issue in principle and in practice, stems from policy preoccupations external to the domain of financial and monetary governance. Impetus for the AML regime, in contrast to other policy areas covered in this volume, came from outside the financial policy community and the emerging rules are generated from a more heterogeneous set of actors. Yet it is important to look at the AML regime when discussing cross-border financial integration as, to fulfil its purpose, it is likely to constrain rather than facilitate the mobility of capital in a global era.

This chapter analyses the institutional and regulatory evolution of the regime developed over the past thirty years to fight money laundering. It identifies its characteristics as deriving mostly from the perception of policy-makers that they must be seen to be taking robust action to address a diverse set of public policy goals. These are often in tension with each other: related to criminal justice and security issues (corruption, drug trafficking and most recently terrorism) on the one hand, but also addressing global competitiveness issues between member countries of the Organisation for Economic Cooperation and Development (OECD) and offshore finance. As a side effect, the regime also shapes private sector practices in a way which can consolidate and strengthen the position of the largest global financial players. Despite the regime's ambitions, its achievements remain modest at best while many of its effects raise serious concerns about its substantive functioning, efficiency and legitimacy.