Money Laundering as a Crime in the Financial Sector: A New Approach to Quantitative Assessment, with an Application to Italy

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From: Journal of Money, Credit & Banking(Vol. 46, Issue 8)
Publisher: Wiley Subscription Services, Inc.
Document Type: Author abstract; Report
Length: 221 words

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Byline: GUERINO ARDIZZI, CARMELO PETRAGLIA, MASSIMILIANO PIACENZA, FRIEDRICH SCHNEIDER, GILBERTO TURATI Keywords: G28; H26; K42; money laundering; enterprise syndicate; power syndicate; shadow economy; cash in-flows; banking regulation This study provides an answer to the question of how much cash deposited via a financial institution can be traced back to criminal activities, by developing a new approach to measure money laundering and proposing an application to Italy. We define a model of cash in-flows on current accounts considering, besides "dirty money" to be laundered, also the legal motivations to deposit cash and the role of the shadow economy. We find that the average amount of cash laundered in Italy is around 6% of GDP. These findings are coherent with estimates of the nonobserved economy obtained in previous studies. Article Note: We wish to thank the two anonymous referees, Robert De Young (the Editor), Mario Gara, Massimo Finocchiaro Castro, Elina Khachatryan, Ioana Petrescu, Eva St. Onge, and seminar participants at the 69th Congress of the International Institute of Public Finance (Taormina, August 2013), the 3rd International Conference on The Shadow Economy, Tax Evasion and Governance (Munster University, July 2013), the 2013 Meeting of the European Public Choice Society (ETH, Zurich), and the XXIV Conference of the Italian Public Economics Society (University of Pavia, September 2012) for their helpful comments. The usual disclaimers apply.

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Gale Document Number: GALE|A397774028