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32 Crime L. & Soc. Change 1 (1999)

handle is hein.journals/crmlsc32 and id is 1 raw text is: rA   Crime, Law & Social Change 32: 1-57, 1999.                              1
Y    © 2000 Kluwer Academic Publishers. Printed in the Netherlands.
Wash-out: A critique of follow-the-money methods in crime
control policy
R.T. NAYLOR
Department of Economics, McGill University, Montreal, Quebec
(email: naylor@ leacock.Ian. mcgill.ca)
Abstract. Over the last 15 years there has been a quiet revolution in law enforcement. Instead
of simply closing rackets that generate illegal income, the central objective has become to
attack criminal profits after they have been earned. The underlying theory is that this will
eliminate both the motive and the capital for further crimes. The principal legal instruments
take the form of tougher regulations to hamper the infiltration of criminal money into the
legitimate economy, and of sweeping asset-seizure laws to help take away from criminals
the profits of their crimes. This paper examines the origins of the policy, finding its roots in
myth and misunderstanding about the nature and operation of the criminal marketplace. It
critically scrutinizes the rationalizations by which the policy is justified. It raises questions
about how illicit profits can be measured, and how their presumed damage to the legitimate
economy can actually be assessed. It dissects the methods through which a follow-the-money
policy is implemented, attempting to determine criteria by which success of such a policy
could possibly be judged. It looks at the incidental costs of the proceeds-of-crime approach,
for example the skewing of law enforcement priorities, egregious violations of civil rights and
potentially serious damage to the integrity of the tax system. Finally it suggests an altern-
ative approach, well grounded in history and proven in experience, that would achieve the
fundamental objective of taking away from criminals the profits of crime without the dangers
attendant on the current follow-the-money fad.
Taken to the cleaners?
Over the last 15 years there has been a quiet revolution in the theory and
practice of law enforcement. Instead of simply closing rackets that generate
illegal income, the central objective has become to attack the flow of criminal
profits after they have been earned. The justification is that taking away assets
accumulated by criminals simultaneously removes the motive (profit) and the
means (operating capital) to commit further crimes.
Prodded on first by the U.S., then by the Financial Action Task Force of
the OECD, then, in more recent years, by the United Nations, the pursuit of
the proceeds-of-crime has been elevated to the status of a Crusade. Country
after country has criminalized some concept of money-laundering. And
many law enforcement agencies now host special units for pursuing, not mal-
efactors, but bank accounts, investment portfolios, houses and cars. The two

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