Worldwide Anti-Money Laundering Regulation: Estimating Costs and Benefits

23 Pages Posted: 23 May 2008

See all articles by Donato Masciandaro

Donato Masciandaro

Bocconi University - Department of Economics

Raffaella Barone

University of Salento - Department of Law

Date Written: May 2008

Abstract

The aim of this article is to offer a simple framework for estimating the benefits and costs of anti-money laundering regulation, based on a prudent estimation of the economic value of the worldwide money laundering. Using the multiplier model of the relationship between criminal markets revenues and money laundering activities and data for 2004, the value of money laundering is equal to US$ 1.2 trillions (2.7%of the world GDP), while the maximum theoretical benefit in combating money laundering using financial regulation - in steady state - is equal to S$ 280 billion (0.6% of the world GDP). If the aggregate figures keep to the previous more conservative estimates, the methodology is the crucial innovation. The estimates are the product of a explicit macro framework, and they can be replicated, improved using more consistent data, or contrasted implementing alternative models.

Keywords: money laundering, financial markets, economics of regulation, costs and benefits analysis

JEL Classification: G28, F30, F33, F42, K14, K23

Suggested Citation

Masciandaro, Donato and Barone, Raffaella, Worldwide Anti-Money Laundering Regulation: Estimating Costs and Benefits (May 2008). Paolo Baffi Centre Research Paper No. 2008-12. Available at SSRN: https://ssrn.com/abstract=1136107 or http://dx.doi.org/10.2139/ssrn.1136107

Donato Masciandaro (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Raffaella Barone

University of Salento - Department of Law ( email )

Campus Universitario - Via Li Tufi
LECCE, LE 73020
Italy

Register to save articles to
your library

Register

Paper statistics

Downloads
1,377
rank
12,977
Abstract Views
6,376
PlumX Metrics