Loss Of Integrity In Financial Structures
Financial markets can become dependent on the revenue that illicit gains can provide, granting that it is a substantial amount of money being invested. If a bank does not maintain it’s integrity by providing sound financial policies, there can be decimating results.
Launderers mainly establish a web of complex financial interbank wire transfers, moving large sums of monies through multiple banks in short intervals. Meaning, a financial institution may receive an immense transfer into its accounts, and in short period of time it may be transferred to a completely separate establishment. The bank can accumulate fiscal issues, such as lending discrepancies, because of this movement of financial instruments (meaning, they think they have more financial assets to lend out then they actually hold). Bank failures are a common occurrence if money laundering is involved in the financial network of the banking structure, there has been many empirical examples of this in the past.
A popular example of a bank failure due to illegitimate transactions is the Barings Bank disintegration. Due to insider trading and the subsidizing of multiple smaller shell companies, the entire bank system at this institution crumbled.