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Enforcement of the USA Patriot Act's anti-money laundering provisions: Have regulators followed a risk-based approach?

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  • Dolar, Burak
  • Shughart II, William F.

Abstract

In this paper, we test whether or not banking regulators have followed a risk-based approach in the enforcement of the USA Patriot Act's anti-money laundering (AML) provisions. In order to do so, we compare the financial performances of banking institutions operating branches inside and outside the boundaries of counties in the State of California designated as "high-risk money laundering and related financial crime areas". Our results indicate that regulatory enforcement under the Patriot Act cannot be explained on the basis of financial institutions' relative risks of being targeted by money launderers.

Suggested Citation

  • Dolar, Burak & Shughart II, William F., 2011. "Enforcement of the USA Patriot Act's anti-money laundering provisions: Have regulators followed a risk-based approach?," Global Finance Journal, Elsevier, vol. 22(1), pages 19-31.
    • Handle: RePEc:eee:glofin:v:22:y:2011:i:1:p:19-31
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    2. Diana W. Thomas & Michael D. Thomas, 2022. "George stigler’s theory of economic regulation at 50 - introduction to a special issue," Public Choice, Springer, vol. 193(1), pages 1-5, October.
    3. Kristin Wilson & Stan Veuger, 2017. "Information Frictions in Uncertain Regulatory Environments: Evidence from U.S. Commercial Banks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 79(2), pages 205-233, April.
    4. G. P. Manish & Colin O’Reilly, 2019. "Banking regulation, regulatory capture and inequality," Public Choice, Springer, vol. 180(1), pages 145-164, July.

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