Money Laundering and its Regulation

46 Pages Posted: 13 Feb 2015

See all articles by Alberto Chong

Alberto Chong

University of Ottawa

Florencio Lopez de Silanes

SKEMA Business School; National Bureau of Economic Research (NBER)

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Date Written: March 2015

Abstract

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

Chong, Alberto and Lopez de Silanes, Florencio, Money Laundering and its Regulation (March 2015). Economics & Politics, Vol. 27, Issue 1, pp. 78-123, 2015, Available at SSRN: https://ssrn.com/abstract=2564354 or http://dx.doi.org/10.1111/ecpo.12051

Alberto Chong (Contact Author)

University of Ottawa ( email )

2292 Edwin Crescent
Ottawa, Ontario K2C 1H7
Canada

Florencio Lopez de Silanes

SKEMA Business School ( email )

Avenue Willy Brandt, Euralille
Lille, 59777
France

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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