INTRODUCTION TO MONEY LAUNDERING

Money laundering is the process to hide the illegal source for their money collection to a

legitimate source. To make it clearer, it is a process of clean up the money that comes from

criminal activity such as drug trafficking, corruption, arms trafficking, human trafficking, and

invested in the hotel, restaurant, or casino businesses.

The reason why people launder money is due to the difficulty in earning money through

legitimate ways. That is why some people tend to do this illegal and immoral activity to earn

more money. This activity is illegal because it allows criminals to profit from crime, and it usually

involves more than one illegal step to take place. To use illicit money is a big problem because it

cannot be easy to explain where the money comes from and the crime can be traced easily.

Three steps involved in money laundering

1) Placement
Placement is the movement of cash collection of dirty money into the Financial
Institutions. Depositing the cash into the bank account will make the money easier to
be control and transfer.

2) Layering

Layering is a technique use to layer the money by separating process of criminal

activity from its derived. For instance, using a multiple of commercial banks and

accounts number, layers of complex financial transactions, such as converting cash to

 a valuable asset by buying gold, investing into bonds and stocks, funding money to the

company, banknote, electronic fund transfer, etc.

3) Integration or extraction

Integration is the last steps of the money laundering process.in this steps, the money

from the criminal activity that seems to be legitimate will be returned. After that, they

can spend money freely because all suspicious traces have been erased.

Laundered money most vulnerable to detection may arise due to suspicion of an official due

to holding and placing a large amount of money into a legitimate financial system. The most

vulnerable to launderers are banking institutions since they are being the foremost part of the

money laundering ring. To screen money laundering risk, they should be equipped with

adequate infrastructure.
EXAMPLES OF MONEY LAUNDERING CASES IN WORLDWID

1. Bank of Credit and Commerce International (BCCI) - $23 Billion

BCCI was founded in Luxembourg by Pakistani Businessman Agha Hassan Abedi in 1972. The bank

obtained much of its capital from Abu Dhabi and although having its headquarters in Belgium, it

quickly spread internationally and worked largely out of United Kingdom. The bank expanded

rapidly, and it did not take long for the trouble to begin, when BCCI faced its first money laundering

charges in the US in 1988. The accusations turned out to be true and from there it just when

downhill. By 1990, after an inquiry by Price Waterhouse, suspicions had emerged that BBCI was

falsifying transactions. It came to light at the end of the year that big, unrecorded deposits were

being made at the bank. For figures such as Saddam Hussein, Abu Nidal, Samuel Doe, and other

unsavory characters, BCCI was charged with laundering money. In 1991, the bank was closed down

by the Bank of England in the UK and across the globe elsewhere. A year later, despite failing to

intervene earlier, the Bank of England faced huge backlash. Although BCCI had been liquidated and

was not longer operating, it still owed creditors over US$10 Billion. Liquidators then sued the Bank

of England, arguing that their BCCI regulation was reckless and that the warning signals should have

been noticed earlier. There was no resolution, unfortunately, BCCI no longer existed and liquidators

reported that 75% of the money owing to creditors had been compensated. The lawsuit against the

Bank of England was abandoned.

2. Nauru - $70 Billion

With a shady past and an almost shady current, Nauru is the smallest island country in the world.

The island is northeast of Australia, and in the 20 th century, it was largely divested by phosphate

mines. Nauru got a huge reward from Australia for the profits from mines after winning

independence from the British Empire, which rendered it one of the world’s richest countries. A
cynical and unaccountable bureaucracy with hair-brained plans easily squandered the money, one

of their ideas to boost revenue was to make a musical about Leonardo Da Vinci that was an absolute

flop. Nauru was turned into a tax haven in the 1990s, albeit a very polluted one. Russia, like al-

Qaeda, took interest quickly and started to launder money into shell banks. Nauru did not check and

ask questions about the identity of its banking customers. To sweeten the bargain, the government

started to sell visas, banking licenses, and diplomatic favors. In 2002, Nauru was declared a money

laundering state by the US treasury and imposed harsh sanctions rivalling those imposed on Iraq. By

2005, with help from the Financial Action Task Force, Nauru had passed anti-money laundering

(AML) and tax haven laws (FATF). Sadly, today Nauru faces a new collection of concerns. A hefty sum

has been paying to Nauru since 2001 to be an overseas asylum seeker reception center for Australia.

Any asylum seeker who arrives by boat to Australia is sent to Nauru automatically, where conditions

are at best doubtful. Australia has been accused of detaining refugees in Nauru by different

countries, human rights groups and the United Nations.

3. Ex-Prime Minister Nawaz Sharif: Pakistan

The former Prime Minister Nawaz Sharif was exposed in the leaked Panama papers in April 2016 to

have owned offshore properties and enterprises under the name of his three grandchildren, which

was not disclosed in the family wealth statement. Fund is channeled to enter investments in various

countries through these businesses. Four apartments came into the limelight in the Avenfield house

in London, among other properties. Nawaz Sharif’s daughter Maryam Nawaz was revealed in the

Panama papers to be the owner of the assets that she refused by sending a trust deed claiming her

as a trustee and not the beneficial owner. The paper that the British forensic specialist had

unexpectedly tested was determined to be fabricated. The font used in the document was Calibri,

which when the document was signed in February 2006, did not exist and became commercially
available only after 2007. By paying taxation and acquiring illegitimate money through bribes that

was laundered by shell firms, the illegal funds were obtained. The family struggled to provide the

money trail for the properties and the enterprises purchased by them, though. The Supreme Court

of Pakistan ruled in July 2017 that Mr. Sharif refused to satisfy the standards of integrity and justice

under Article 62(1)(f) of the Constitution of Pakistan because he was dishonest with the courts and

the parliament. In relation to their profit the Supreme Court found significant differences between

Nawaz Sharif’s and the actual wealth of the family. As well as Mr. Sharif’s association with Capital

FZE firm in Dubai and other properties connected with him and his relatives, the family could not

provide the origins of the assets. He then stood down as Pakistan’s prime minister after announcing

that he was not fit to hold the position by disqualifying him in the case of corruption and the

Panama papers. The case was appealed to the National Accountability Bureau (NAB), which

sentenced Nawaz Sharif to 10 years’ imprisonment in July 2018 and a fine of 8 million pound in

relation to expensive apartments purchased in the 1990s by laundered funds and possessing non-

income properties. His daughter, Maryam Nawaz, is also facing a 7 years’ jail term for abetment,

along with a 2 million pound fine. This is just the tip of the iceberg, as two ever sources are under

investigation by the NAB in relation to an exhaustive list of corporations and other properties held

by Mr. Sharif and his relatives. This latest example shows the degree of corruption and tax

avoidance carried out by those in power who are not only manipulating he funds of the public, but

also challenging the legitimacy of the law enforcement authorities

4. Paul Manafort and Rick Gats (2006-2017)

According to NBC, the crux of the first series of Manafort and Gates indictments was: “As a result of

their lobbying work for Ukraine, both men generated tens of millions of dollars.” From 2006 through

2016, they disguised the payments by laundering the funds, according to the allegations, through
dozens of U.S. and international companies, alliances and banks. In an attempt to stop taxation, the

Special Procedures singled out $18 million that Manafort hid from the U.S. government. According

to NBC and other recent news, the prosecutions were brought in part in order to circumvent

possible conflicts with the statute of limitations, which would prohibit the conviction of earlier

offences. Additional financial offences, including bank theft and wire fraud, linked to the pair’s

suspected money laundering operations were included in the superseding indictment filed in

February 2018. Manafort and Gates initially carried out spirited opposition to the claims of the

Special Counsel, but both ultimately capitulated as legal bills and prosecutions in the case of

Manafort accumulated. Both men will be convicted for their respective offences after they have

completed the terms of their corporation arrangements, which may take several months or years.

The Special Counsel also reserved the righ to bring new charges in the case of Manafort.

5. Luxury accessories, 500 lottery tickets and even bars of gold

Before looking his home in February 2019, police tracked a string of suspicious transactions by

Stephen Burton, finding a large array of possessions with a valuation of nearly 1 million dollars.

These contained solid gold bars, watches for designers, thousands of pounds and euros, 500 tickets

for the lottery and fake identities. In this situation, police were able to trace the cash as transactions

that are outside the reach of ordinary people are also signs of dishonest conduct.

6. Bank of Scotland’s scandal

Due to rogue staff at Bank of Scotland’s (HBOS) reading branch colluding with contractors to defraud

small companies of about 245 million dollars between 2003 and 2007, hundreds of individuals were

left in severe financial difficulties. Until flooding them with astronomical loans and payments, the

scam involved directing small firms to a turnaround consultancy who would tell the companies they
needed support. HBOS was fined over 45 million dollars for failure to reveal details about the

operation.

7. Standard Chartered Bank fined 102.2 million Dollar

In April 2019, the Financial Conduct Authority (FCA) levied the second largest fine, a nine-figure

amount of £ 102,163,200 for anti-money laundering (AML) offences, to Standard Chartered Bank.

Severe and protracted deficiencies in the strategy of Standard Chartered to recognize and rectify the

risks of money laundering contributed to this fine. An instance of these errors involves opening an

account without checking the funds of 3 million UAE Dirham (£ 500,000) deposited from cash in a

suitcase. In order to avoid violation of AML regulations, companies particularly those in financial

sector, must take an aggressive approach on detecting possible money laundering threats and

reports suspicious transactions. Investing the time to ensure that all money laundering procedures

are water-tight would save corporations cash in the long term when if caught, the resulting fines will

be much higher than the illegal funds.

8. Ex-President Chen Shui-bian (Taiwan)

From 2000 to 2008, Chen Shui-bian serve as Taiwan’s President. Presidential immunity, amid claims

of wrongdoing during his two terms, stopped investigators from suing Chen while he was in office.

However, as soon as he stood down in May 2008, court charges started against him. Chen stated in

his defense that “money is dry, and it can’t be laundered. The money is tidy, it’s not filthy and

there’s no need for laundering. After being found guilty on charges of money laundering, extortion

and embezzlement of government funds totaling NT$490m (USD $15m), Chen obtained a life term

in September 2009. His wife, Wu Shu-chen, who was still incarcerated in this case for perjury, was

also sentenced to life for corruption. Speaking of the conviction, court spokesman Huang Chun-ming
described the corruption of Chen as having done “serious damage to the nation.” Chen argued that

there was political motive behind both the allegations and the prosecution, prompting him to appeal

against the decision. This culminated in one of the smaller allegations of misconduct, that he had

embezzled diplomatic funds of USD $330,000, being overturned on the grounds of insufficient

evidence. While Chen’s term has been shortened to 29 years in prison since then, both Chen and

Wu remain in jail today.

9. BNP Paribas

In 2014, after the institution was found to have breached U.S. sanctions against Cuba, Sudan and

Iran, BNP Paribas, a French bank with global offices in London, pleaded guilty to falsifying corporate

documents. As a result, BNP was ordered to pay a $8.9 billion settlement, the highest fine ever

levied for breaking such penalties.

10. Commonwealth Bank agree to pay £400 million fine

The Commonwealth Bank of Australia has said it would pay a fine of $700m (£400m; $530m) for

breaking anti-money laundering and counter-terrorist funding legislation. The scandal involves

53,000 irregular transactions that were not disclosed directly by the bank to the authorities. The

lender was convicted of ‘serious and systematic’ law abuses by Australia’s financial intelligence

department last year. It would be the highest civil penalty in Australian business history if a judge

accepts the fine. The bank, Australia’s biggest lender, said that legal costs accrued by investigators

would also cover A$2.5 million. “While not deliberate, we fully appreciate the seriousness of the

mistakes we made,” Chief Executive Matt Comyn said on Monday. The scandal-plagued financial

industry of Australia is at the forefront of a nationwide corruption investigation.

11. ‘Mr. Big’ on the run

In 2012, Maythem Al-Ansari, also known as ‘Mr. Big’, served another jail term for multi-million-

pound mortgage fraud after serving a three-year prison sentence for money laundering for cocaine

traffickers. A misunderstanding allowed Mr. Big to contact the Home Office to acquire a new

passport, which he immediately used to escape to Syria, after turning over his passport when he was

released on bail. This left millions of pounds unaccounted for at the moment, but Al-Ansari

surrendered himself at London Heathrow in 2016. This mishap was solely due to the lack of

cooperation between different government agencies and teamwork. These government agencies

must aim to work more closely together to ensure that seized identity papers cannot be reapplied

for when a citizen is out on bail in order to prevent any similar blunders in the future.
EFFECTS OF MONEY LAUNDERING / SCAMMER

Money laundering is the way of the thief seeking to ensure the fraud pays, in the end. The

prerequisite demands that criminals mask the sources of their illegal currency, whether they drug

dealers, organized criminals, terrorists, weapons traffickers, blackmailers, or credit card swindlers, so

that they can escape identification and the possibility of arrest when they use it. There are potentially

damaging economic, defense, and social ramifications of money laundering. It provides fuel for the

activity and extension of its criminal activities through cocaine traffickers, militants, illicit weapons

dealers, crooked elected officials and others. Crime has become more multinational in nature, and

because of accelerated technological developments and the transformation of the financial services

industry, the financial aspects of crime have become more complicated. So, here are some of the money

laundering effects.

 THE MONEY LAUNDERING EFFECT TO ECONOMY.

Money laundering is hurting industrial growth-critical financial sector institutions, encouraging

corruption and violence that delays economic growth, decreasing productivity in the actual sector of the

economy. Two big money laundering fields are the subject of several global research: drug trade and

terrorist groups. The result of drug money being successfully cleared is clear: more cocaine, more abuse,

and more violence. It can be a little more difficult to link money laundering to terrorism. Terrorists, for

instance, knock down the cash so that they cannot be traced by the government to escape their planned

assaults.

First and foremost, money laundering can effect on money demand. It occurs more often in

countries where the risk of money laundering is poor. The proportion of the informal economy to the

national economy is high in an economy where there are no fraud regulations, where there is a system

which stores bank or customer information, and where banking secrecy is strictly controlled. Cash
inflows and outflows are easy to launder. With the rapid and unregulated inflow of capital into the

world, consumption rates and in particular, luxury consumption are increasing. However, there could be

major rises in exports, imports, international payment deficits, prices, interest rates and unemployment

rates. Naturally, such rises in demand for money generated by black money will have a negative

influence on monetary policy.

Next, it will affect to growth rates. Real industries are likely to suffer dramatically from financial

uncertainty in the region. As a result, international buyers have been essential to businesses. However,

attracting foreign investors to the country in money laundering countries is not straightforward. Since

the price uncertainty caused by black money in the financial sector will have an effect on the economy's

reputation in the global world, prudent entrepreneurs will find it confusing to start new businesses

because they will also recognize the country's danger while investing. If legal capital escapes from

entering the government, the investment rate will not increase. There would also be a long-term

reduction in sustainable productivity. Countries with a high sum of capital are known to be dangerous

locations for investors. For those who wish to draw foreign capital to their nations, the battle against

black money is an essential message that brings trust to investors. The success of the war would raise

buyers, which would have a positive impact on growth rates and the economy.

Besides, it also affect to income distributions. In the functioning of the financial economy, serious

reductions in revenue sources triggered by black money face huge problems. The social consequences of

these challenges faced by the economy still remain. The increasing enrichment of unique individuals and

groups is causing social degeneration. One of the most substantial black cash damages to be assessed is

the adverse effect on wage distribution. Although the negative impact of the reduction in wealth

streams and the disparity in income distribution is difficult to measure, it is also difficult to respond to
social disruption. The disparity in income disparities between persons increases the desire to commit

crimes and makes gains appealing.

Not only that, money laundering also can affect to tax revenue. Revenue from taxes is the most

significant share of federal revenue. If this income is insufficient, it will raise the likelihood that

discretionary expenditure will not be offset by a surplus in the economy and that deficit expenditure

would arise if that possibility occurs. Earnings that are not taxed by countries are income generated by

dirty money. These increases would result in tax collection decreases. There are two options for a state

for declining tax receipts, including the one that is leveraging. It decreases the efficient savings of private

industry with the impact of government crowdedness, which promotes funding from the successful

shareholders of the private market. In addition, as the valuation of bonds grows as an effect of

borrowing, market interest rates spike, causing several challenges. The pollution strategy is also another

method of closing deficits. This policy's consequences are identical to everyone else. As a result, we

might assume that all decisions adversely affect the economy.

Last but not least, it effect towards financial institutions. Unexpected consequences can appear on

the assets and liabilities of financial institutions that are unwittingly used in money laundering, posing a

risk to the institutions. The reports of the money laundering of these financial institutions attracts the

attention of the public authorities. In that situation, the burden on auditing for these institutions will

intensify and the credibility of the institution will be weakened.

 MONEY LAUNDERING EFFECT TO BUSINESS.

Anti-money laundering ("AML") policies and regulatory initiatives are hitting new heights all around

the world in 2018. Although some nations, such as Colombia, are fraught with illegal proceeds from

criminal activities, their AML and terrorist financing systems have also been improved in recent years.

Although other nations promote money laundering by inadequate laws on AML, graft, and missing of
financial flow accountability. The credibility of a corporation, and the finance system as a whole is

compromised by money laundering. In criminal activities, institutions may become involved, leading to

harmful criticism from regulatory agencies, consumers, and other businesses. Nations fraught in money

laundering have seen organized crime overtaking whole economies, leading to heightened levels of

graft, fraud and illegal violence in their communities.

 MONEY LAUNDERING EFFECT TO FINANCIAL SYSTEM

Money laundering has a wide variety of negative impacts on the fiscal, political and social

institutions of all communities. Money laundering also has many consequences for financial markets

as a whole and banks in particular, because laundered money flows through the financial system.

Any of the implications of this include:

First, weakening real private sector practices. In order to hide the proceeds of illegal activities

and to mask ill-gotten profits in the meantime, money launderers use front companies. These

companies have access to considerable illegal finance, enabling them to subsidize front-line firms

and to sell their goods and services at prices below market prices. They sometimes quote prices that

are below the cost of demand. For this cause, front companies have a comparative edge over

financial markets firms who have their funding. This makes it hard, if not difficult, for law firms to

contend against those corporations. This situation will lead to legitimate private sector companies

being squeezed out by criminal organizations. Clearly, those illegal companies would not stick to

sound business governance standards as legal enterprises would do.

 Second, when launderers spend their funds where their schemes are less likely to be detected

than where return rates are larger, money laundering will also affect currencies and interest rates.

Owing to the misallocation of capital, money laundering will also raise the possibility of monetary

turmoil. Money laundering can in this regard, lead to unexplained shifts in the money market and to

a rise in the instability of foreign currency, interest and exchange rate flows. The unpredictable

nature of money laundering would make it impossible to achieve sustainable economic policy, along

with the resultant lack of political power.

Third, economic distortion and volatility may result from money laundering. Their money will be

spent in activities that are not necessarily economically useful to the country where the funds are

based, so money launderers are not interested in creating wealth from their savings, but rather in

protecting their profits. In addition, economic growth would suffer to the point that money

laundering and organized fraud would move funds from good investments to minimal investments

that cover their earnings. For certain countries for example, not because of real demand, but

because of the short-term desires of money launderers, entire sectors, such as construction and

hotels, have been sponsored. If these undertakings no longer cooperate with the money laundering

program, they leave them, forcing them to collapse, and causing substantial damage to the

economies.

Fourth, laundering money will lead to sales losses. Cash laundering is making it impossible to

collect income, leading to a drop in tax receipts. Reducing incomes ensures that the government

levies higher tax rates than is usually the case.

Fifth, money laundering could lead to the possibility of programmers being privatized. Money

laundering poses a threat to the economic reform efforts of governments especially the

restructuring of country entities. The financial strength of money launderers is to out-bid real
 investors. Moreover, although privatization programs are mostly socially advantageous, they may

often be used to launder funds as a vehicle. In order to conceal their illegal profits and further their

fraudulent activity, criminals have been identified to buy privatized banks, resorts, etc. Regrettably,

developing countries such as Zambia risk exposing themselves to the pressure of capital. Laundering,

so they become more vulnerable to accepting laundered funds in the course of gaining investment.

Last but not least, money laundering could expose reputational risk to any recipient country.

Nations do not continue to see by associating themselves with money laundering schemes in today's

global economy, their reputations have diminished. Money laundering and other violations are

eroding trust in the capital markets, and the bad image that comes from these practices is

diminishing every country's legitimate global prospects, which may slow down sustainable economic

development.

 MONEY LAUNDERING EFFECT TO THE SOCIETY

The war against clandestine operations is costly and government funds are invariably redirected

from other public spending areas such as health or schooling for AML law enforcement and other crime-

fighting programs. When 'black money' is effectively cleaned up by extremists in an ever-increasing

circle of crime that draws more and more people into its net, it contributes to more drugs, abuse,

intimidation and extremism. If illegal operations were to make such huge strides, formerly legal

companies, as well as public and government workers, could be tempted to get a share of the booty on

the crime train. With the implementation of several new anti-money laundering (AML) laws and a

number of legislation dictating how banks and other financial institutions must protect against, monitor

and disclose fraudulent conduct, a concentrated global campaign to fight money laundering has been

launched in recent years.

  MONEY LAUNDERING EFFECT TO POLITICAL

Therefore, money laundering poses a significant danger not only to sound economic and financial

growth, but also to the political legitimacy of states and corporations. Many other high-

visibility corruption allegations including 'suffering from diseases people' or PEPs' and the theft of large s

ums of illegal profits across multiple jurisdictions have been reported and prosecuted in the

past few years.According to the Basel Committee on Banking Oversight, politically vulnerable people are 

entities charged heads of state or administration, senior politicians, senior government officers, judicial

or military officials, chief management of publicly owned corporations and senior leaders of political

parties have influential public positions. This persons, particularly when they come from countries with

severe corruption issues, could misuse their official duties for their own financial benefit by

misappropriation, bribery, and other criminal activity. Mostly for the purposes of laundering, the illicit

proceeds gained by their associates' PEPs are transported abroad. It is believed that there are two key

areas of weakness that could be abused by crooked PEPs or their associates. The first is where the

private banker fails to conduct due diligence to the client and his actions in an acceptable and detailed

way. Criminal or PEP will typically seek out private banking facilities as they present a perfect

opportunity for them and close associates to perform complex financial transfers that help shield their

illegal assets. Although a private bank is always interested in helping the customer spend or secure his

or her money, a private bank that fails to apply due diligence can find itself helping a crooked official to

set up nominees and shell firms, thus ensuring that the beneficial ownership stays secret. The second is

the use of a skilled broker to open an account on behalf of a customer, which would also allow a

compromised official to open and run an account practically anonymously.

Analysis shows, however that facilitating unchallenged money laundering is not an ideal economic

progress strategy because it hurts financial institutions that are vital to economic growth, undermines
real-world competitiveness by diverting capital and fostering crime and corruption, and can undermine

foreign trade and corruption in the economy. Overall, money trafficking poses a complex and diverse

threat to the international community. Indeed, if we are to decrease the potential of terrorists to

launder their profits and carry out their illegal activity, the systemic essence of money laundering

requires global rules and international cooperation.

OWN OVERVIEW HOW MONEY LAUNDERING ACTIVITIES ARE REGARD AS “BAD” TO THE

GOVERNMENT

Overall, money laundering is considered as a method for criminals to prevent risk of prosecution

and avoid detection. It generally involves a chain of numerous transaction as a camouflage to source of

financial assets to enable the assets to be used without compromising the criminals that seeks them.

Money laundering has a potential to overwhelm the economy and security as it offers the fuel to

criminals such as illegal arms dealers, credit card swindlers and corrupt public officials to operate and

increase their criminals activities. The financial aspects of money laundering crime became more

complex because of the globalization in service of financial industry and rapid technology advancement.

Therefore, money laundering activities are considered as bad to the government as it has caused the

government to suffer in maintaining and monitoring the country’s safety from crimes.

Money laundering may inflict a huge damage on the financial sector which would hinder the

growth of economy, as well as causing the promotion of corruption and crimes. For example, when the

criminals successfully clear the drug money, the amount of drugs will be increase. Hence, it will

encourage more crimes to occur which would lead to more violence and draws more people into the

circle of criminality. When a vast amount of money are able to be produced through illegal activities,

public and governments employees has a potential to be convinced to be involved in money laundering

crime to obtain the share of money.

Terrorism can be linked with money laundering activities as the terrorists can knock down the

money, causing the authorities unable to observe and prevent terrorists’ attacks. This would greatly

harm the government and the country to maintain safety of people. The battle against stealthy activities

could cost a fortune and government funds would be inevitably be spent on executing Anti Money
Laundering (AML) regulations as well as other methods in preventing crimes. The funds expenditure will

be diverted from other fields in public spending such as education and health.

Government revenue could be significantly be reduced through money laundering as it cause

the government to face difficulties in collecting revenue from transaction related. The primary factor of

the difficulties is because the transaction is frequently take place in the underground economy. The

underground economy is related to receiving money through illegal activities such as money laundering

and sales of illegal drugs, as well as widely refers to any income or transaction that become unreported.

Underground economy becomes one of the aspect that becomes the reason in distortion in the accuracy

of the country’s Gross Domestic Product (GDP). Consequently, the monetary policies of the government

may be undesirably affected.

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