Money Laundering as a Financial Sector Crime. A New Approach to Measurement, with an Application to Italy

Guerino Ardizzi (), Carmelo Petraglia, Massimiliano Piacenza, Friedrich Schneider () and Gilberto Turati ()

No 18, Working papers from Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino

Abstract: Anti-money laundering regulations have been centred on the 'Know-Your-Customer' rule so far, overlooking the fact that criminal proceedings that need to be laundered are usually represented by cash. This is the first study aimed at providing an answer to the question of how much of cash deposited via an official financial institution can be traced back to criminal activities. The paper develops a new approach to measure money laundering and then proposes an application to Italy, a country where cash is still widely used in transactions and criminal activities generate significant proceeds to be laundered. In particular, we define a model of cash in-flows on current accounts and proxy money laundering with two indicators for the diffusion of criminal activities related to both illegal trafficking and extortion, controlling also for structural (legal) motivations to deposit cash, as well as the need to conceal proceeds from tax evasion. Using a panel of 91 Italian provinces observed over the period 2005-2008, we find that the amount of cash laundered is sizable, around 7% of GDP, 3/4 of which is due to illegal trafficking, while 1/4 is attributable to extortions. Furthermore, the incidence of 'dirty money' coming from illegal trafficking is higher in the Centre-North than in the South, while the inverse is true for extortions. Results are useful to discuss policy initiatives to combat money laundering.

Keywords: Money laundering; Shadow economy; Banking regulation (search for similar items in EconPapers)
JEL-codes: G28 H26 K42 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2013-03
New Economics Papers: this item is included in nep-ban, nep-iue and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.bemservizi.unito.it/repec/tur/wpapnw/m18.pdf First version, 2013 (application/pdf)

Related works:
Working Paper: Money Laundering as a Financial Sector Crime - A New Approach to Measurement, with an Application to Italy (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tur:wpapnw:018

Access Statistics for this paper

More papers in Working papers from Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino Contact information at EDIRC.
Bibliographic data for series maintained by Daniele Pennesi ().