Detecting the Fifty Shades of Grey: Local Crime, Suspicious Transaction Reporting and Anti-Money Laundering Regulation

22 Pages Posted: 15 Nov 2018 Last revised: 23 Mar 2020

See all articles by Lucia Dalla Pellegrina

Lucia Dalla Pellegrina

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Giorgio Di Maio

University of Insubria - Department of Economics

Donato Masciandaro

Bocconi University - Department of Economics

Margherita Saraceno

University of Pavia - Department of Law

Date Written: March 2020

Abstract

This study investigates the efficiency of the suspicious transaction reporting (STR) activity to a Financial Intelligence Unit (FIU) as a means to deter money laundering (ML). Baseline and two-province theoretical models are used to frame the empirical analysis. The latter examines the relationship between STR and the vulnerability of Italian provinces to ML from 2009 to 2013. Instrumental variables and spatial analysis are exploited to identify the role of STR on vulnerability. The results provide a positive assessment of the risk-based mechanism of reporting suspicious operations to the FIU, although “congestion” problems from overreporting are observed.

Keywords: Money laundering; Suspicious transaction reporting; Vulnerability

JEL Classification: K14; K20; K42

Suggested Citation

Dalla Pellegrina, Lucia and Di Maio, Giorgio and Masciandaro, Donato and Saraceno, Margherita, Detecting the Fifty Shades of Grey: Local Crime, Suspicious Transaction Reporting and Anti-Money Laundering Regulation (March 2020). BAFFI CAREFIN Centre Research Paper No. 2018-93, Available at SSRN: https://ssrn.com/abstract=3280307 or http://dx.doi.org/10.2139/ssrn.3280307

Lucia Dalla Pellegrina

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

Giorgio Di Maio

University of Insubria - Department of Economics ( email )

Via Monte Generoso 71
Varese, 21 100
Italy

Donato Masciandaro (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Margherita Saraceno

University of Pavia - Department of Law ( email )

Pavia, I-27100

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