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Geographical Risk Of Money Laundering In The European Banking System

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  • Patrycja Chodnicka

    (Univeristy of Warsaw)

Abstract

The issue of risk of money laundering in the European banking system was presented in the article. It describes two approaches used by regulators to prevent the mentioned phenomenon: the rule-based approach and the risk-based approach. The author also identified strategies which are used by banks as entities functioning to maximize profit in the conditions of having full and incomplete information by the FIU. Then, the European countries were analyzed with respect to participating reports on suspicious transactions in the total number of reports, which are sent by all the obligated entities to the national financial intelligence units. We also verified the value of two indicators: the value of above-threshold transactions and the value of financial penalties, which are imposed on banks for failure to comply with the rules on anti-money laundering. Some hypotheses were examined. With the increase in GDP per capita grows the maximum value of the mentioned financial penalties grows. There is a negative correlation between the share of banks in the total of reported suspicious transactions and GDP per capita, which is an effect of extending the list of the obligated entities and the lack of the differentiation of sanctions in the various categories of such entities. In connection with the applying of transitional period for implementing the directive by the banks, there is an inverse relationship between the amount of the penalty, and the number of suspicious transactions reports.

Suggested Citation

  • Patrycja Chodnicka, 2012. "Geographical Risk Of Money Laundering In The European Banking System," Oeconomia Copernicana, Institute of Economic Research, vol. 3(3), pages 103-123, September.
  • Handle: RePEc:pes:ieroec:v:3:y:2012:i:3:p:103-123
    DOI: 10.12775/OeC.2012.017
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    References listed on IDEAS

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    1. Ferwerda Joras, 2009. "The Economics of Crime and Money Laundering: Does Anti-Money Laundering Policy Reduce Crime?," Review of Law & Economics, De Gruyter, vol. 5(2), pages 903-929, December.
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    3. Edwin M. Truman & Peter Reuter, 2004. "Chasing Dirty Money: The Fight Against Anti-Money Laundering," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 381, October.
    4. Luiz Humberto Cavalcante Veiga & Joaquim Pinto de Andrade & André Luiz Rossi de Oliveira, 2006. "Money Laundering, Corruption And Growth: An Empirical Rationale For A Global Convergence On Anti-Money Laundering Regulation," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 72, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    5. Stefano Costa, 2008. "Implementing the new anti-money laundering directive in Europe: legal and enforcement issues; the Italian case," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 10(3), pages 284-308.
    6. repec:aei:rpbook:51416 is not listed on IDEAS
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    More about this item

    Keywords

    money laundering; geographical risk; suspicious transactions; risk based approach; rule based approach;
    All these keywords.

    JEL classification:

    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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