Template-type: ReDIF-Paper 1.0
Author-Name: Raffaella Barone
Author-Name: Donato Masciandaro
Author-Name: Friedrich Schneider
Title:MONEY LAUNDERING AND CORRUPTION: BIRDS OF A FEATHER FLOCK TOGETHER
Abstract: This paper is the first to analyse the three-way relationship among money laundering, anti-money-laundering efforts and corruption. On the one hand, if we assume that the goal of criminals involved in corruption is to minimize the probability of being detected, then corruption represents a demand for money laundering (trigger effect), while money laundering can serve as an effective way to clean the revenue from corruption for re-investment (multiplier effect). On the other hand, criminals can try to maximize the likelihood that anti-money-laundering activities will be ineffective. Corruption can be an effective device for maximizing this likelihood, as organized crime may corrupt financial institutions – both regulators and regulated firms – in order to prevent crime detection (accelerator effect). The paper proposes a novel theoretical framework for these interconnections, which is then used to simulate the three effects in 101 countries for the period 1990 to 2040.
Classification-JEL:D73, K14, K20, K42
Keywords:Money laundering, corruption, calibration
Length: 20
Number: 19112
Creation-Date: 2019
File-URL: https://repec.unibocconi.it/baffic/baf/papers/cbafwp19112.pdf
File-Format: application/pdf
File-Size: 589
Handle: RePEc:baf:cbafwp:cbafwp19112