Wash-out: A critique of follow-the-money methods in crime control policy

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 alternative 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. This revised version was published online in July 2006 with corrections to the Cover Date.