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Money Laundering and Its Regulation

Author

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  • Alberto Chong
  • Florencio Lopez-De-Silanes

Abstract

type="main" xml:id="ecpo12051-abs-0001"> The recent wave of terrorist attacks has increased the attention to money laundering activities, and the role played by the regulatory frameworks controlling feeder activities. We investigate empirically the determinants of money laundering and its regulation in close to 100 countries. We use various methodologies to put together a cross-country dataset on proxies for money laundering and construct specific money laundering regulation indices based on specific laws and their enforcement. Results show that tougher money laundering regulation, particularly those that criminalize feeding activities and improve disclosure, are linked to lower levels of money laundering across countries. The relevance of historical factors in explaining the variation of money laundering regulation across countries sheds light on the theories of institutions and provides room for further action, particularly in the areas of the law that reduce the burden of proof, increase the liability of intermediaries and improve disclosure.

Suggested Citation

  • Alberto Chong & Florencio Lopez-De-Silanes, 2015. "Money Laundering and Its Regulation," Economics and Politics, Wiley Blackwell, vol. 27(1), pages 78-123, March.
  • Handle: RePEc:bla:ecopol:v:27:y:2015:i:1:p:78-123
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    File URL: http://hdl.handle.net/10.1111/ecpo.2015.27.issue-1
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    References listed on IDEAS

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    Cited by:

    1. Fanta, F & Mohsin, H, 2010. "Anti-Money Laundry regulation and Crime: A two-period model of money-in-the-utility-function," MPRA Paper 25773, University Library of Munich, Germany.
    2. Raffaella Barone & Donato Masciandaro, 2011. "Organized crime, money laundering and legal economy: theory and simulations," European Journal of Law and Economics, Springer, vol. 32(1), pages 115-142, August.
    3. repec:eee:matsoc:v:87:y:2017:i:c:p:64-71 is not listed on IDEAS

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