INVESTIGATION OF IMPACT OF MONEY

LAUNDERING WITH CRYPTOCURRENCY ON GDP OF

UK

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 Abstract

Money laundering activities have become of a global concern these days. With the emergence of
cryptocurrencies, individuals are engaging in trading various blockchain platforms to generate
profitable gains through digital assets. Despite laws, rules and regulations enforced by a country,
criminal offences are quite prevalent in terms of money laundering with such digital assets. Anti-
money laundering campaign and procedures are still lacking efficient means to mitigate the rate
of such cases especially which is noticed in the context of the United Kingdom. It is a developed
country and had suffered a huge financial loss and has faced decline in its GDP growth
immensely during pandemic times. However, it could recover from such loss until cases of
money laundering with cryptocurrencies started rising in the current years of 2020, 2021 and
2022. Therefore, proper investigation regarding this issue is crucial to offer a deep understanding
and provide necessary recommendations. This would be beneficial for all countries facing
similar consequences.

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 Table of Contents
Chapter 1. Introduction....................................................................................................................4

1.1. Background...........................................................................................................................4

1.2 Problem Statement.................................................................................................................4

1.3 Aim and Objectives...............................................................................................................4

1.4 Rationale................................................................................................................................5

1.5 Research Questions................................................................................................................7

1.6 Significance...........................................................................................................................7

1.7 Dissertation Structure............................................................................................................8

Chapter 2. Literature Review...........................................................................................................9

Bibliography..................................................................................................................................19

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Chapter 1. Introduction

1.1. Background

Money laundering with cryptocurrency is a notable cybercrime which affects any particular
country’s GDP immensely. As per IMF, “Global Money Laundering” is estimated between 2%
to 5% of the World's GDP. In recent times, criminals involved in such illicit activities have
gained in numbers and therefore, it has become a global concern. The origins of certain
cryptocurrency holders are difficult to trace. However, in the United Kingdom, such dirty money
holders have increased due to which its government is concerned to a great extent. It is,
therefore, evident that proper investigation is required in this respect in order to punish convicted
terrorists or criminals. In UK’s context, it is witnessed that such heinous crimes are growing with
the passage of each year despite all concerned laws and regulations enforced by its government
regarding this issue. Thus, cryptocurrencies which are nowadays extensively used as an
alternative way of exchange of money or payment digitally, create a wider scope for shrewd
heads to misuse them for self-benefits in an illegal way.

1.2 Problem Statement

It is a matter of this research’s concern that: “UK’s GDP is getting immensely affected through
money laundering with cryptocurrencies ”

1.3 Aim and Objectives

Aim

The primary aim of this research is to investigate all notable aspects related to money laundering
with cryptocurrency that are collectively affecting UK’s GDP.

Objectives

● To understand concepts of cryptocurrencies and DeFi platforms

● To identify key aspects of money laundering with cryptocurrency in the UK
● To note the laws and regulations enforced by UK’s government to mitigate such dirty
activities

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 ● To investigate the impact of such money laundering activities on the UK’s GDP in recent
times

1.4 Rationale

Cryptocurrencies like Bitcoins, Litecoins and Ethereum are misused extensively. As per reports
of CNBC (2022), crypto-criminals have laundered a lumpsum amount of around 540 million
dollars through using “RenBridge’s service”. It is rather evident that criminals utilise such
advanced technological means to carry out their evil ways of money laundering. However, UK’s
government tried to bring innovative designs and reforms to bear down “kleptocrats”, criminals
and terrorists (Gov.uk, 2022). It has been undertaken by the government of this country to cease
these criminals’ fraud activities hampering its open economy. Despite these reforms, cases of
such fraud and scams have been increasing in this country. United Kingdom’s Financial Conduct
Authority (FCA) has opened about 432 regulatory cases related to significant crypto scams and
unregistered businesses (Financemagnates, 2022). Even this commission has further addressed
around 2700 cases in a single year (2021-2022). It is also covered by this UK-based commission
that customers reached out to financial watchdogs when their funds got stolen. Therefore, it
observed a hike of 59% in scams related to the crypto market during this reported time frame.
However, FCA is not responsible for controlling the market of cryptocurrencies.

It is also observed that this country has incorporated efficient measures to reduce cases of money
laundering activities. As stated under IFA (2022), Money Laundering Regulations 2017 and
Money Laundering Regulations 2019 are in effect to act as anti-money laundering to prevent
terrorist financing, transfer of illicit funds and other money laundering activities effectively.
Moreover, prior to this, the UK’s government had enforced a law through “Proceeds of Crime
Act 2002 (POCA 2002)”. This law trials a convict before the court if he or she is found indulged
in concealing, disguising, transferring or converting property and assets illegitimately from
England, Wales, Scotland and Northern Ireland under section 327. Furthermore, a similar
criminal offence is done by an individual in this regard if he or she controls, retains, tries to
acquire or has acquired possession of others illicitly, stated under sections 328 and 329 of POCA
2002. Under section 330 of this law, it is obligatory for UK citizens to report any suspicious
activity related to money laundering activities to any concerned authority of law. Therefore, this

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mentioned law was amended in 2005 as “SOCPA” (Serious Organised Crime and Police Act) to
put revise existing measures and laws with significant improvement in controlling money
laundering scams and fraud. In spite of all these regulations cryptocurrency market proves to be a
problematic aspect to be handled by this country’s government.

Figure 1: Hacks through DeFi applications from 2019 to 2021

(Source: Ciphertrace, 2022)

It is noted from the above-mentioned figure that “DeFi” applications that allow users to trade
their digital assets were hacked by criminals in an extensive manner in the year 2022. In 2020, it
grew at its peak in comparison to data displayed for 2019. While in 2021 hacking cases in this
regard reduced to some extent. Therefore, it can prove why UK’s economy had a negative
impact in these recent time periods. Fraud, scams and money laundering over such crypto-
trading platforms cause utter despair, as these types of applications claim that they provide safe
and well-encrypted media for users.

These prevalent situations bring a sheer need for conducting a practical and deeper investigation
of such criminal activities and offences which promotes financial loss of individuals and thus
affect the GDP of a country to a great extent. Therefore, this research work is practical and

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rational in all true terms. This is so because all information retrieved from secondary sources will
be discussed and analysed to provide a deeper understanding of this money laundering issue. It is
also a matter of great concern for this concerned country to come up with efficient and
innovative strategies and laws through full utilisation of cyber security technologies. Thus,
having discussed all such crucial areas and aspects related to money laundering activities in the
UK, suitable suggestions will be tried to be provided by the end of this research paper.

1.5 Research Questions

RQ1: Why and how is money laundering with cryptocurrency having a negative impact on the
UK's GDP?

RQ1.1: Why are the UK's laws and regulations on money laundering unable to mitigate such
crimes?

RQ1.2: What challenges are faced by the UK regarding money laundering?

RQ1.3: How is the GDP of this country getting affected by criminals misusing cryptocurrencies?

1.6 Significance

It is of great concern how with each passing year, criminal activities are getting enhanced in the
domain of exchanging money through cryptocurrencies. People's and the UK government’s
digital assets are also getting breached by hackers in this regard. Therefore, trafficking and
illegal money transactions are difficult to trace as terrorists who are involved in such activities
are utilising all advanced technologies and software to remain in disguise. It is also prevalent in
other parts of the world including this country. Therefore, this research is dedicated to
performing an extensive investigation on this matter. It will also try to identify certain loopholes
in this country’s laws and regulations on this concerning issue of money laundering with
cryptocurrencies such as “Bitcoins”, “Ether”, “Litecoins” and so on (Bhosale and Mavale,
2018). It is also noted in this regard that this sort of illegal money possessions by criminals are
having a negative growth of this country’s GDP. However, its government is not at all in support
of such activities and is striving hard to reduce their effect significantly. It is evidently crucial to
conduct a proper investigation on this matter. Thus, this research study will try to extract data

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from all authentic and reliable secondary resources like news articles, statistical reports, peer-
reviewed journals and law books.

1.7 Dissertation Structure

This research is primarily dedicated to examining secondary data and information to understand
UK’s economy that is getting affected by money laundering activities over the years. Therefore,
this extensive research contains five chapters. The first chapter is a basic ‘introduction’ which
includes a brief background to shed light on this research’s topic. Moreover, under this chapter
problem statement and, aim and objectives section will help to understand the purpose of this
investigational research. Furthermore, rationale and significance will justify the need for this
work of research which arises mentioned research questions in this chapter.

However, the second chapter is devoted to a ‘literature review’ where immense data from
extracted resources are covered and discussed through a comparative study. Immediately after
that chapter, the third one is a ‘methodology’ which highlights this research’s philosophy,
approach, design, data collection and analysis, sampling technique and ethical consideration.
Thereafter, chapter 4 is a crucial chapter where graphs, statistics and extracted information will
be discussed under ‘data analysis and discussion’. Lastly, the concluding chapter is dedicated to
‘conclusion and recommendation’. This ultimate chapter is loaded with certain aspects that
provide a deeper understanding of linking with this research’s objectives, limitations, future
scope and relevant recommendations.

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Chapter 2. Literature Review

Concept of cryptocurrency

Cryptocurrency refers to an encrypted data string denoting a unity of currency. It is extensively

monitored and organised by a “blockchain”: a peer-to-peer network. This network also serves as
a secured ledger of transactional facilities (Amsyar et al., 2020). Moreover, cryptocurrencies are
also treated as digital assets possessed by individuals. These individuals can further sell and buy
such assets over crypto-trading platforms. It is also a notable fact in this regard that, unlike
normal traditional currencies that are controlled by the government of any particular nation,
cryptocurrencies can circulate without any monetary authority such as a “central bank” of a
country (Amsyar et al., 2020). Investors in a crypto market buy coins like Bitcoins, Ethereum,
Ripple, Litecoins and many others and wait for their shares to rise to sell them and gain notable
profits. This process is very much similar to buying and selling shares of international or local
affluent companies over a share-market trading platform. Therefore, any cryptocurrency is
bought with the expectation to gain immense profit with a significant rise in its international
value. However, at times it is observed that people’s expectations do not get fulfilled with a fall
in a respective cryptocurrency’s value and they become impatient, thus selling their digital assets
at a loss too. They fear further losses. Investment in this crypto trading market requires both
patience and money. Only by being patient and understanding this crypto market with a deeper
knowledge one can be in a gaining position notably.

Concept of DeFi applications

“Decentralised Finance or DeFi” is referred to such financial systems that allow users
irrespective of their respective identity or origin, to use financial services. Therefore, it is
observed that DeFi applications are thus designed in such an encrypted way that allows
individuals to have proper control of their personal wallets possessing digital cash or money
effectively (Sriman and Kumar, 2022). These types of applications also serve as trading
platforms to buy and sell shares of any company or cryptocurrencies. Moreover, the DeFi
application serves as a blockchain technological medium or network to remove intermediaries in
a trading market. This rather helps individuals to enjoy maximum profit without sharing their

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part with any intermediary source. “BitGo”, “ZenGo”, “Nexo”, “Abra” and “YouHolder” are
some notable DeFi platforms prevalent in the United Kingdom. These platforms are crypto-
trading platforms (Wronka, 2021). It is also observed in this regard that there exists no tax
legislation on these platforms enforced by this country’s government as of now. However, profits
earned by individuals through these crypto trading platforms get subjected to Income Tax or are
observed as capital assets, thus falling under Capital Gains Tax. It can be well noted that this
trading medium offers individuals a great opportunity to invest their money and earn significant
profits. It is also sheer luck that enables huge profits to make a person rich overnight.

Concept of money laundering and its related causes and consequences

There are significant scams and fraud activities prevalent across the globe. Money laundering is
one such scam. Therefore, this type of fraud activity refers to an evil practice or approach to
possess others’ monetary assets illicitly (Kute et al., 2021). By doing so, criminals generate an
immense amount of profit without any notable effort. They use high-tech software and malware
to breach people’s bank accounts or digital assets like cryptocurrencies. Despite all encrypted
data and other cyber security facilities, hackers know proficient coding to do the same. It is also
noted in this regard, scammers also mislead innocent individuals or elderly people over phone
calls and thus extract information about their bank details (Jullum et al., 2020). Apart from this
factor, money laundering activity can also be initiated by a group of anti-social or terrorists to
affect a country's economic growth. This type of attack might be facilitated on any governmental
bank of any nation by such wicked terrorists. It is thus a matter of great concern when these
types of money-hacking or trafficking activities put a negative impact on a country’s GDP
(Vitvitskiy et al., 2021). Moreover, this type of criminal offense is also done by a cunning
person, gaining possession or control over any individual’s property and money in any known or
unknown person’s absence. It is noted that greed for money has become such a significant aspect
these days, it is turning humans into sheer devils. Moreover, a lack of proper employment
facilities in any particular country compels people to adopt evil ways of earning money.
Therefore, at times, raising questions against the morality of a convict, fingers should be pointed
at the respective country’s government which cannot create significant employment
opportunities for its concerned citizens. It is quite well signified by a well-known proverb that
“an idle brain is a devil’s workshop”. It has a practical implication in this context as

10
unemployment and sitting back at home devoid of professional opportunities, people start
thinking in a crooked manner to earn money. However, such a consequence does not justify a
crime by any means. As possessing others' assets is both legally and ethically wrong. It is rather
stated that persons who are victims of such monetary scams face immense financial troubles and
emotional breakdowns. This reflects the significant offensive consequences of money
laundering.

Significance of GDP and scenario of the UK

“GDP or Gross Domestic Product” is calculated by the monetary value of final goods and
services produced in a country that are bought by consumers in a certain period of time. It can be
a quarterly or a yearly based calculation. Therefore, it is noted as the total output generated
within a border of a particular country through its final production over a time period (HAMZA,
2018). The concept of GDP was introduced by an American economist named “Simon Kuznets”
in 1934. It is further adopted at the Bretton Woods conference in 1944 to primarily measure a
country’s economy (Vohra, 2019). Moreover, GDP is a gauge of any particular nation’s
economy to understand its overall health and size. There exist four aggregate expenditures that
are included in the calculation of a country’s GDP. They are “consumption by households”,
“investment by businesses”, “government’s expenditure on goods and services” and “net
exports”. This further leads to its primary components: consumption, investment, government
spending, imports and exports. As per Trading Economics, it is predicted that the UK’s GDP will
reach about 2870 billion dollars by the end of 2022. Therefore, in recent times this country is
considered the sixth-largest economy in the world. Quality of life is generally high in this
country and thus, its economy is quite diversified. However, it is also observed that money
laundering activities prevalent in this country are promoting negative growth in its GDP.
Hackers, terrorists and cyber criminals have been increasing over the years in the contemporary
age of modern technologies and advancements (Javaid and Arshed, 2021). The digital assets of
citizens of this country are facing potential threats where hackers are using malware and other
illicit software to steal such assets. People investing in cryptocurrencies over DeFi platforms in
the UK like ZenGo, BitGo, Abra, Nexo and others are also facing similar issues of theft (Salami,
2021). This sort of money trafficking is difficult to trace as hackers are utilising high-tech
services like that of RenBridge to launder an immense amount of cryptocurrencies. It is further

11
noticed that this type of service should be stopped under legal restrictions. This rather happens to
be unethical intruding on moral dimensions and hampering individuals’ safety and security in
cyberspace. Cyber attackers are increasing in numbers in this country despite laws and
regulations enforced by this country to mitigate such money laundering activities (Wronka,
2021). Therefore, it is notably observed that the people of this country are suffering from huge
financial losses due to the theft of such digital assets. Thus, it becomes a great concern for this
country which possesses a significant impact on its GDP.

Analysis of factors that contribute to money laundering

Advancements in technology and innovations are notable facts in a modern-day world.

Therefore, human lives are also getting ensnared in such technological progression to a great
extent. It is rather noticed that such a condition has its own advantages and disadvantages
significantly. On talking about the positive side, it can be well stated that in this fast pace of
human lives, technology has a wider utilisation to make one’s life and work easier. People have
become extensively dependent on technological means, tools and equipment in their daily lives
that they feel helpless without them. However, this leads to a negative aspect of such
technological advancements which further possess potential risks to human lives. In order to
maintain a quality lifestyle, people often fall prey or become victims of criminal activities that
are initiated through high-tech software or other means of technology. Money laundering is one
such criminal offence that gets supported in a highly advanced world of technology.

It is also a noticeable fact that technology has become a necessary evil in humans' lives these
days. Therefore, such adverse outcomes are inevitable in this context. Precisely, it has become a
contributing factor to money laundering, especially threatening digital assets like the
cryptocurrencies of individuals. Apart from technology, an inefficient legal framework in a
particular nation regarding this issue might prove as a notable factor too. Legal rules and
regulations enforced by any country’s government against such criminal offences should be
efficient enough to trace and punish the convicts before a court of justice. It is also assured by
such legal terms to instil fear in the minds of criminals so that they think twice before
committing one.

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There are also certain instances which escalate the risks of money laundering. One such instance
can be noted when a business offers services to its clients through a virtual space. In this context,
a particular client might get cheated or his assets might be theft by such an organisation which is
conducting its business operation virtually. Therefore, not being able to meet one's service
provider physically possess potential risks of money laundering in an extensive manner. Despite
this, other examples linked to money laundering activities, however, are not limited to it,
comprise: “tax evasion”, “smuggling”, “bribery” and so on. These aspects involve processes of
money laundering which are treated as not only mere criminal offences rather are considered to
be anti-social in all true terms. It affects any concerned society negatively and the lives of
individuals become miserable who are victims of such incidents. In recent times, “reselling of
assets”, “online gambling”, “trade-based money laundering” and “money laundering through
cryptocurrencies” happen to be some prominent examples of money laundering activities that are
contributed through means of modern technologies and cannot be put to an end due to devoid of
any proper measure or law to do so.

Evaluation of the factors that affect money laundering

There are several ways in which money laundering processes can be hindered. Anti-money
laundering disclosure is one such effective measure that significantly benefits in this regard.
Therefore, an anti-money laundering (AML) program is referred to as a collection of procedures
which are designed in order to offer protection against someone or a group trying to use a firm to
facilitate “terrorist financing” or “money laundering”. Furthermore, there exist four key elements
or pillars of the AML program. They are “development of internal policies”, “procedures and
controls”, “designation of AML officer responsible for the program” and “relevant training of
employees and independent testing”. Apart from these four pillars of AML, risk assessment and
detection of any sort of suspicious activity and reporting it at once to the concerned authority are
notable aspects covered under its procedures to mitigate the activities of money laundering to a
great extent. It is noted that money laundering generally consists of three stages: “placement”,
“layering” and/or “integration”. These sorts of stages in processes while laundering money can
be detected through AML procedures in an efficient manner. Moreover, officers are recruited to
understand and notice any means of little suspicion in this regard. It is also observed that in this
way, such criminal activities can be traced and spotted before it gets too late. AML rather acts

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most efficiently as a precautionary program to reduce the rate of money laundering in a society, a
country or rather worldwide. In addition to this, the governments of various countries like the
UK, US, India and others are adopting and following this sort of anti-money laundering
programs and procedures with an expectation to lessen the amount of terrorist financing or
money laundering.

Another important factor that is able to have an impact on money laundering activity is rules,
laws and regulations. Countries impose new laws and regulations from time to time to put an
end to this form of criminal activity. It is also noted that governments of such countries amend
pre-existing laws to declare it as a criminal offence. UK’s rules and regulations are very much
relevant in this regard. For instance, POCA 2002 was amended as SOCPA in 2005 to make it a
more contextual law in that contemporary period of time and age (IFA, 2022). Even the Money
Laundering Regulations of 2017 and 2019 are also significant to this matter in the UK. It is,
therefore, noted that several countries including the United Kingdom have laws, rules and
regulations to mitigate the risks of terrorist financing and its related criminal activities in an
extensive way. These rules and regulations consider activities related to the laundering of money
as a criminal offence, that is, a punishable act by law. Moreover, it tries to develop fear in the
minds of criminals before committing such activities.

A prominent factor of “strengthening auditing and reporting standards” in a country can

reduce potential risks of money laundering activities with utmost ease. It might be alike to one
AML’s procedures, however, it possesses a larger significance too. This can be directly adopted
by a government of a country where any individual noting a suspicious activity should report it
to a concerned authority immediately. It is also noted that this becomes obligatory by law where
remaining silent and blind after witnessing such hideous crimes is also a crime. Therefore,
making everyone highly alert proves to be an effective way to deal with money laundering
crimes. This alertness or awareness is created through the enforcement of strict laws and
regulations. Therefore, unlike assigned officers in AML programs, herein every individual is in
action to detect and report any sort of suspicious activity.

Therefore, these three aforementioned factors discussed in this subsection hinder the processes of
money laundering immensely. In such a way, individuals' or firms' assets are tried to be protected

14
from criminals. The government of a developed country like the UK utilises all these means to
mitigate money laundering cases which creates a negative impact on its GDP and also affects its
credibility in a great way as a developed country in front of other countries who consider it as
ideal. Thus, while evaluating all such measures and aspects affecting money laundering, it can be
understood why and how it is necessary for a country to mitigate these crimes. It is also essential
for a country to safeguard its GDP extensively by putting barriers to crimes related to money
laundering as far as possible.

Evaluation of the impact of digital currencies or cryptocurrencies on the UK’s GDP

Digital assets like cryptocurrencies create a notable impact on the UK’s GDP. As of 2016, it was
predicted by Cointelegraph (2022), Bitcoins had the potential to increase this concerned
country’s GDP by $80 billion. Therefore, blockchain in this country also had a wider opportunity
to grow in this regard. Blockchain network facilitated platforms of DeFi had a boost in offering
individuals to buy and sell cryptocurrencies over such platforms. Therefore, new infrastructure
was required in this context, which further led to the reinvention by “Blockchain-based
platforms” of omnichannel interoperability via validated event data. Therefore, it is noted in this
regard, that this country relies on digital currencies for making its GDP grow in a profound way.
It is also observed that this country encourages crypto trade in order to boost its economy.

UK’s GDP evidently grows through the trading procedures of such digital currencies. Even its
value of pounds also gets hiked to some extent in the international market due to increasing
demands of its goods and services. In such a way digital currencies also have a positive impact
on a nation’s actual currency where a seller of digital assets happens to be a British citizen. It is
rather noticed that such impacts are prominent and effective to mark the growth of its GDP
undoubtedly. Furthermore, an economic boost is rather crucial for a developed country like the
United Kingdom to retain its acclamation as a developed country. Moreover, it becomes a matter
of the nation’s concern to adopt innovative means as offered in a modem era and utilse it
extensively for the whole nation’s benefit to a large extent. Therefore, it becomes a primary duty
of a particular country’s government to promote such trading facilities and create proper and
efficient infrastructure in order to support it.

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However, with innovative implementations, risk management also comes into play. It is noted
that the UK impose several strategies, measures and regulations as a part of risk management
after implementing such innovative ways of trade and business. Therefore, for crypto trading
well encrypted Blockchain platforms like ZenGo, BitGo and so on are provided to users as a
protected space to trade cryptocurrencies in a convenient way. It is well-noticed that this sort of
innovative trading of digital assets is popular worldwide. People convincingly spend their
valuable money and time on these platforms to gain immense profits. The per capita income of
these individuals gets added to a country’s GDP growth which rather rises its original currency’s
value. Therefore, this might be a possible reason why this particular country encourages the
trading of digital currencies or cryptocurrencies extensively As per Finance-monthly (2021), the
UK government is even investing in blockchain to record and administer pension and benefit
payments. This serves as a justification and clears the fact that positive outcomes are
expected by this country from crypto trading or digital assets.

Investigation of various factors that have affected the UK’s GDP in recent years

In recent times, the pandemic of Covid-19 has affected UK’s economic growth significantly. Its
growth in GDP as of August 2021 witnessed a month-on-month rise of about 0.3% in services
which is comparatively lower than its rise of 0.6% in this sector during February 2020 (ONS,
2021). Therefore, pandemic hours were devouring the economic growth of developed countries
which in turn reflects the miserable conditions of other developing and under-developed
countries during the timespan of 2020 to 2021. This time period witnessed isolation and
quarantine procedures to mitigate the spread of coronavirus where offices remained closed for an
uncertain period of time while some initiated the facilities of WFH (Work from home). However,
a lot of people became unemployed during the initial months of this pandemic. Educational
sectors, industrial sectors and other service sectors were hugely affected during this time. It
rather justifies the situation of this country where its GDP was immensely affected. Therefore,
2020 and 2021 were trying years for this particular country in an extensive manner.

Amidst this global pandemic, increasing numbers of money laundering cases in the United
Kingdom also created a negative impact on its GDP. Therefore, money laundering with digital
assets like cryptocurrencies is significant in this regard. Cryptocurrencies like “Litecoins”,

16
“Bitcoins”, “Ethereum” and so on are traded by individuals profoundly on DeFi platforms in this
country. These assets were breached by cyber attackers extensively in recent years. Reuters
(2021), British police seized about 294 million pounds haul of cryptocurrencies of “Bitcoin”,
“Ripple”, “Ethereum”, “DogeCoin” and others as a part of their investigational procedures into
money laundering activities. However, as per the reports of BBC (2022), “London’s
Metropolitan Police” seized an asset of 180 million British pounds of crypto which is linked to
international money laundering in July 2021. Moreover, it was followed by a 114million-pound
haul by those crime investigation officers in June 2022. This rather determines a matter of
concern for this particular country where such incidents are taking place despite precautionary
measures and effective laws enforced by its government.

The above two factors discussed elaborately in previous paragraphs led to the decline of this
country’s economic growth extensively. This rather depicts how the GDP of this nation is
negatively affected. As per Macrotrends (2022), the UK experienced negative GDP growth in the
year 2020, which is -9.27%. It was mostly due to the consequences of the Covid-19 pandemic.
However, by 2021, it was able to recover to positive growth of 7.44%. This rate of growth could
be more if not hindered by money laundering crimes prevalent in this country during recent
years.

Analysis of ways money laundering can have an impact on a country’s GDP

After all the essential discussions in this chapter of the literature review, it can be well analysed
that a country like the United Kingdom, expects a boost in its economic growth through the
trading of cryptocurrencies or digital currencies. It is rather evident that this sort of trading
facility requires a highly technological infrastructure that is well encrypted through blockchains.
It is also observed in this regard, that people gain immense profits while buying cryptocurrencies
at a lower rate and sell it when their rate becomes significantly higher. It requires a lot of
patience to enjoy such gains in a crypto trading platform. Countries encourage this sort of crypto
trading as it possesses a positive impact on their respective GDP growth. It helps a country
achieve an economic boost in the most suitable way possible. Therefore, governments invest in
building infrastructures to promote such trading facilities within a country. It is also prominent
that DeFi platforms help citizens of a country to invest time and money in crypto trading. They

17
take an immense interest in generating digital assets. As mentioned earlier, when per capita
income rises through profits gained by individuals in such an innovative trading platform, it
results in the remarkable GDP growth of any particular country.

However, despite all benefits expected by a country, advanced means of technology also
showcase its evil side on a significant ground. It is observed that with an increased interest of
individuals in trading cryptocurrencies or digital currencies, cyber attackers or hackers have
become hugely active in order to steal those assets in illicit ways. Therefore, it is also observed
that despite rules and regulations enforced by the government of any particular country, these
sorts of criminal offences of money laundering are still prevalent within a country’s periphery
and outside in an international sphere too. It is rather meant that terrorist financing might be
initiated by any foreign person or group to a particular country or money laundering can be done
by an individual who happens to be a citizen of that concerned nation. Culprits within a country
can be traced easily, however, international-level criminals or terrorists are difficult to trace.
Furthermore, anti-money laundering programs and procedures are unable to mitigate those
crimes as per the secondary data and information provided earlier in this chapter.

It is rather prominent that money laundering activities affect a country’s GDP in all possible
ways. Theft by international criminals reduces per capita income by cutting down the assets of a
particular country’s citizens. Moreover, crime present within a country’s boundary also offers a
potential threat to a negative rise of its country’s GDP. In addition to these, it is also observed
that corruption and crimes slow down the process of any country’s economic growth which in
turn affects its rate of productivity to a great extent. Therefore, money laundering is very much
problematic for the world’s pre-existing as well as emerging financial markets (Brici, 2022). In
this regard, data is already presented to understand the context of the United Kingdom. Prior
discussions have been done on how it expects a positive outcome from crypto trading but face
immense difficulties by criminals initiating money laundering and terrorist financing with the
utilisation of other’s digital assets. Despite AML programs, enforcement of effective laws and
regulations and creating awareness to report suspicions regarding money laundering crimes to
police and other legal authorities, even a developed country of the UK cannot put an end to this.
Thus, as a consequence, its GDP gets affected negatively.

18
Bibliography

Journals

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