Joras Ferwerda Discusses International Cooperation and the Effectiveness of Anti-Money Laundering Efforts
On January 28, 2025, the Georgetown Americas Institute and Transcrime - Università Cattolica del Sacro Cuore hosted their third and final installment of their series on money laundering, regulatory frameworks, and financial crime in Latin America.
The final seminar featured Joras Ferwerda, associate professor at the Utrecht University (UU) School of Economics, for a discussion on measuring the impact of criminal activity and money laundering, the challenges in asset recovery, and methodologies that measure illicit financial activities, including cross-border illicit financial transactions. The event was introduced by GAI Managing Director Denisse Yanovich and moderated by Sean Hagan, professor at Georgetown Law.
International Cooperation in Anti-Money Laundering Efforts
Ferwerda began by discussing the critical role of international cooperation in tackling financial crimes, particularly money laundering. He emphasized that the exchange of information between countries has become more streamlined, helping to improve the efficiency of investigations. According to Ferwerda, financial intelligence units (FIUs) have played a major part in this improvement. These units have become more interconnected, allowing for faster and more effective sharing of information, often in real time. Ferwerda believes this collaboration has been a significant advancement over previous systems that required formal requests and translations, which could delay responses.
Ferwerda noted that this enhanced communication has led to greater success in the investigative phase, as information is now more easily accessible across borders. He highlighted that in many cases, seamless data sharing among FIUs means countries are seeing results more rapidly than before. However, he pointed out that the legal and procedural processes following investigations, particularly in asset recovery and the extradition of criminals, still face significant challenges. The issue of returning illicit assets to their original countries remains a major hurdle, as many criminals manage to park their assets offshore, making them difficult to recover.
The Challenges of Measuring Effectiveness
A key theme throughout the discussion was the difficulty in measuring the actual effectiveness of anti-money laundering (AML) measures. Ferwerda acknowledged that despite the considerable investment in global AML efforts, there is still limited data showing a direct reduction in financial crime. He explained that although criminals are undoubtedly adapting their tactics to avoid detection, there is little concrete evidence to suggest that money laundering has decreased significantly as a result of the measures in place.
However, Ferwerda cautioned that the impact of these strategies should not be dismissed entirely. He noted that while financial crime may not have plummeted, the cost of committing crimes has likely increased, as criminals now have to go through more obstacles to launder money.
“Criminals are concerned about this; we see criminals adapting their behavior, and we see that crimes pay at least a little bit less than before.” - Joras Ferwerda.
Incentives and International Cooperation
Ferwerda pointed out that there can be a misalignment of incentives between countries involved in cross-border AML investigations. For example, in asset recovery cases one country may spend significant resources to apprehend criminals and seize their illicit funds, only for the money to be transferred to another jurisdiction, where the originating country may not receive credit or benefit from the recovery efforts. This creates a situation where the country that expends the most effort doesn’t always see the results they expect.
He added that this can lead to reluctance on the part of some countries to fully engage in efforts to combat money laundering, especially if they rely on foreign capital inflows. In these cases, a country might prioritize protecting its financial inflows over pursuing aggressive anti-money laundering measures, which could result in those inflows being cut off.
The Financial Cost of Anti-Money Laundering Measures
The discussion also addressed the high financial costs of AML enforcement. Ferwerda acknowledged the significant resources that go into both prevention and enforcement of anti-money laundering regulations. He highlighted the ongoing debate about whether the amount of money spent on these efforts is justified by the results achieved. Ferwerda was cautious in his assessment, noting that while international cooperation has led to some improvements in the investigative phase, the outcomes in terms of recovered assets and criminal convictions are still modest in comparison to the resources dedicated to these efforts.
Q&A Session: Measuring Effectiveness and the Future of AML
During the Q&A session, Ferwerda was asked about the difficulty of measuring the effectiveness of anti-money laundering strategies. In response, he reiterated that while the impact of these efforts may not be immediately visible in terms of reduced crime, there is evidence that criminals are spending more time and effort laundering money, which increases the costs for them.
Another question focused on the potential for new technologies to enhance the effectiveness of global AML frameworks. Ferwerda encouraged the academic community to explore the role of technological innovations in improving the effectiveness of financial crime prevention strategies. He also emphasized the importance of continued research on the impact of these efforts, particularly in terms of long-term outcomes for national development.
In closing, Ferwerda underscored the importance of continued international cooperation in the fight against money laundering, as well as the need for an ongoing academic and research-based approach to evaluating the effectiveness of current strategies.