Lance Charnes's Reviews > The Washing Machine: How Money Laundering and Terrorist Financing Soils Us

The Washing Machine by Nick Kochan
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bookshelves: nonfiction-crime-espionage, reviewed
Recommended for: readers willing to forego interesting prose to get good info

Money laundering is a gift-that-keeps-on-giving topic. Like other financial scams and money-related bad behavior, it keeps changing, growing and shifting as governments plug old holes in their regulations only to open new ones. As finance globalizes, minor nations compete to be snug havens for ill-gotten or tax-averse money, and bankers continue to be dissatisfied with their eight-figure bonuses, the opportunities and tools available for turning black money white will continue to morph and expand.

This is a two-edged sword for any author wanting to concoct the authoritative text on the subject. On the one hand, there's so much to write about, and anything involving so many zeroes and so many shady characters can't help but be interesting; on the other hand, whatever s/he writes will be out-of-date in five years or less.

Nick Kochan, a British journalist and financial reporter for such publications as the Financial Times and The Economist, has been cut by both edges of this sword. The Washing Machine is chock full of information and has some interesting stories to tell. Having been written in 2004-5, however, it can only speculate about the effects of the PATRIOT Act and its foreign analogues. The changes wrought by subsequent anti-terrorism legislation and the Dodd-Frank Act aren't even on its horizon.

The author attempts a broad survey of the different flavors of money laundering, though (as you might guess from the subtitle) his main concern is how terrorist groups and supporters use the methods and vehicles of the megawealthy and the drug cartels to hide and clean their funds. He covers conflict diamonds, arms trafficker Victor Bout (a section less about laundering than Fun with Front Companies), private banking for kleptocrats, Colombian drug cartels (how quaint), and how Irish and Tamil terrorists installed the pipes that Mideastern terrorists now use to move their money around. It's a lot of ground to cover -- perhaps too much.

If you've been following my reviews for awhile, you'll know I've been looking for a book about money laundering that actually explains how it's done (as one Goodreads friend put it, the "Anarchist Cookbook version"). Kochan actually does spell out how some of the processes work, although he doesn't make it easy for the reader to follow. This isn't by any means the For Dummies intro to money laundering. You'll want to have explored this subject in other books (such as Crime School: Money Laundering: True Crime Meets the World of Business and Finance, reviewed here) before you plow through this one.

Which leads to my major quarrel with this book: it reads like a 280-page feature article in some serious newspaper. That style and tone works when the piece is just on the front page and a couple jump pages; it gets old after the first fifty pages here. Part of this is down to Kochan's no-doubt ingrained journalistic habit of squeezing as much information as possible into every paragraph. The chapter on Victor Bout, for instance, screams for some diagrams to help the reader sort out the tangle of shell companies and false fronts that the "Merchant of Death" used to cover his tracks. I can't help but think a couple simple graphics could better explain the Black Market Peso Exchange than do the blocks of prose the author throws at it. The processes of money laundering are deliberately opaque and confusing, and unfortunately, Kochan doesn't always succeed in making them less so.

Still, there's a lot of good information in this book if you can only get to it. The bibliography is useful if you want to do further study, even though the sources are now more than ten years old. It's because of this that I struggled with the overall rating. I didn't exactly "like it" (three stars), but I'll find it useful down the road (four stars), even though the prose made the reading a chore (two stars). Three stars it is, but with a pack of caveats you should keep in mind depending on your purposes for reading this.

The Washing Machine throws you into the deep end of a very broad and deep subject. It will download a lot of information that was au courant a decade ago, but is now dated as the state of the art has marched on. As long as that works for you, and you already have some acquaintance with the subject, give it a try. Don't expect the road to be smooth or the going easy, but at least you'll come out more informed than you were going in.
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Reading Progress

January 11, 2015 – Shelved
September 1, 2015 – Started Reading
September 28, 2015 – Finished Reading

Comments Showing 1-4 of 4 (4 new)

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message 1: by Jim (new)

Jim Crocker A thought full review. Yeah, I'll start with the Dummies book myself. I ran into some characters from LA back in the '80 who were pretty slick moving virtual money through a whole sequence of deals around the world. They always walked away from the table holding all the actual cash in the deal and left the rest holding paper based on nuthin at all. Astounding. People who "worked" for them could never see the big picture. The one day these hot dogs would vanish into thin air. All were amazing characters who would be at home in South Beach wearing straw hats, white belts and white shoes. So they weren't really "from" LA at all. Probably all had estates in the Dominican Republic.

Lance Charnes Their money was probably all in the Bahamas or the Caymans, too.

The really fun thing -- which Kochan mentions in the book -- is that until fairly recently, a lot of the stuff the launderers do was legal. There's probably as much legit money going through the laundry as there is drug or terrorist money.

message 3: by Jim (new)

Jim Frank W. Abagnale's The Art of the Steal: How to Protect Yourself and Your Business from Fraud, America's #1 Crime touches on this, but mostly from the opposite perspective, as you'll gather from the title. It's pretty amazing how easily people are suckered into short-lived schemes that can clean an amazing amount of money. It's a relatively old book though from 2001. It's an area where much changes quickly, yet seems to remain basically the same.

Moisés Naím wrote another older book (2005?) that's pretty scary, Illicit: How Smugglers, Traffickers, and Copycats are Hijacking the Global Economy. It concentrates on the international angle & how fraud fuels terrorism. It's been too long since I read it for me to remember many details, but he might be a good author to check out.

Lance Charnes Thanks for the tips. I've had my eye on Illicit for a while.

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