Is remittance cost a driver of trade misinvoicing? A case study of Vietnam

Quang Phu Tran

Journal of Economics and Development, 2024, vol. 26, issue 4, 362-382

Abstract: Purpose - This study aims to investigate the impact of remittance costs on trade-based money laundering (TBML) and provide insights into the relationship between remittance costs and TBML, particularly focusing on import over-invoicing and low-income trade partners. Design/methodology/approach - Utilizing an extended gravity model for TBML, bilateral data from Vietnam spanning 2011 to 2019 are analyzed to examine the correlation between remittance costs and TBML. Findings - The study reveals a positive association between remittance costs and TBML, highlighting the significance of reducing remittance costs to curb TBML. Research limitations/implications - The research is limited by the availability of data and focuses solely on Vietnam, implying potential variations in other contexts. Practical implications - Policymakers should consider reducing remittance costs as a strategy to combat TBML effectively. Social implications - Lowering remittance costs could contribute to the prevention of illicit financial activities, fostering economic stability and social development. Originality/value - This study provides novel insights into the relationship between remittance costs and TBML, offering valuable implications for policy formulation and anti-money laundering (ML) efforts.

Keywords: Capital flight; Remittance cost policy; Trade misinvoicing; Vietnam; F13; F14; F21; O53 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jedpps:jed-04-2024-0158

DOI: 10.1108/JED-04-2024-0158

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