Anti Money Laundering Mechanism: An Application of Principal-Agent Model for Pakistan
AbstractIn this paper anti money laundering policy of the international financial regime is analyzed in principal agent model perspective. The strategy of the principal for formal agents is deliberated for global financial stability. This strategy encompasses incentive and dis-incentive for cooperation of formal agent. Formal agent by cooperating with principal may induce dis-incentive for informal agent. All the integrating stake holders make decision on the basis of comparison of present value of marginal cost of non-cooperation and present value of returns from cooperation. As the desired objective of the principal is to minimize transaction of money through informal channels therefore it has to include informal agents and clients in the strategy. The successful anti money laundering strategy can only be evolved by the cooperation of all the stakeholders.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 7436.
Date of creation: 2007
Date of revision:
Publication status: Published in International Journal of Human Development 1.3(2007): pp. 61-82
International Financial Regime; Principal Agent model and Money Laundering;
Find related papers by JEL classification:
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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- Tanzi, Vito, 1999. "Uses and Abuses of Estimates of the Underground Economy," Economic Journal, Royal Economic Society, vol. 109(456), pages F338-47, June.
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