While much is made of the risks associated with money laundering, little in-depth work has been undertaken to understand the true extent of the problem. Money laundering is difficult to measure. However, there is the implicit assumption among the regulatory authorities that amounts involved are huge; posing a significant threat to the integrity of the financial system and the reputation of domestic financial institutions. This paper draws attention to problems that the author believes arise from the current focus of money laundering legislation on financial sector compliance, by examining the validity of “second best” indicators of effectiveness. A preliminary attempt is also made to evaluate the association between money laundering and reputation looking for evidence of a “virtuous circle of compliance”. It draws from a pilot questionnaire and interviews carried out with financial institutions as well as from statistical data made available to the author by the U.K. Home Office.