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Foreign exploration of immature markets and incidence of money laundering

Author

Listed:
  • Nadia Hanif
  • Anam Javaid
  • Noman Arshed
  • Abdul Rafay

Abstract

Purpose - Money laundering (ML) is the process used to convert the proceeds of crimes into lawful form. This global problem promotes social ills, corruption and organized crimes. Various instruments are used to counter individual illicit behavior. However, in low-income countries, these regulations are not common because of weak institutions, poor governance and a lack of awareness about the negative consequences of ML. In these countries, multinational corporations take advantage of poor law and order, lower environmental regulations and corruption and shift their domestic operations into foreign countries. Design/methodology/approach - This study uses a multiple mediator model to investigate the link between foreign direct investment (FDI), environmental degradation measured as CO2emissions (CE), exports and ML for 118 countries between 2008 to 2018. Findings - Results indicate that FDI promotes exports and CE, leading to illicit financial flows. Originality/value - Policymakers should enforce checks on foreign funds flow and adopt illicit flow mitigation measures to minimize ML globally.

Suggested Citation

  • Nadia Hanif & Anam Javaid & Noman Arshed & Abdul Rafay, 2023. "Foreign exploration of immature markets and incidence of money laundering," Journal of Money Laundering Control, Emerald Group Publishing Limited, vol. 26(6), pages 1117-1130, January.
    • Handle: RePEc:eme:jmlcpp:jmlc-10-2022-0153
    DOI: 10.1108/JMLC-10-2022-0153
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