Money laundering has social and economic impacts, especially within developing countries.

Money laundering negatively affects economic stability by discouraging investment, distorting markets, and eroding public trust.

Option A (Correct):A financial system tainted by money laundering loses credibility, leading to reduced investor and consumer confidence.

Option D (Correct):Foreign investors avoid jurisdictions with weak AML controls due to the risk of sanctions and reputational damage.

Option B (Incorrect):While tax evasion is linked to money laundering, it does not directly affect the decision to implement tax incentives.

Option C (Incorrect):Unemployment may result from economic instability, but money laundering does not directly cause job losses.

Option E (Incorrect):Money laundering often increases volatility in financial markets, not reduces it.