Economic Consequences of Anti-money Laundering Regulations: Investigating the Impact on GDP Per Capita across Global Economies

Badar un Nisa, Waqas Shair, Ameera Muzammal and Rizwan ul Hassan
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Badar un Nisa: Research supervisor, COTHM College, Lahore, Pakistan
Waqas Shair: Senior Lecturer, Minhaj University Lahore, Pakistan
Ameera Muzammal: Research Supervisor, COTHM College, Lahore, Pakistan
Rizwan ul Hassan: Lecturer, The Lahore ALMA, Lahore, Pakistan

Bulletin of Business and Economics (BBE), 2025, vol. 13, issue 3, 667-676

Abstract: Money laundering is a financial crime that undermines the performance and integrity of financial markets. It is a process through which offenders conceal the origin and control of proceeds derived from criminal activities. The International Monetary Fund (IMF) has established initiatives to combat money laundering and terrorism financing. The Basel AML score provides a quantitative assessment of the effectiveness of measures taken to address money laundering and terrorism financing. This study examines the impact of anti-money laundering (AML) efforts on GDP per capita. The analysis spans the period from 2012 to 2020 and includes 110 countries categorized as low-income, lower-middle-income, upper-middle-income, and high-income economies. The research findings confirm a negative relationship between AML performance and GDP per capita across all economic groups. An increase in the Basel AML (Anti-Money Laundering) score typically signals a heightened risk of non-compliance with AML regulations or greater exposure to money laundering and terrorist financing. Higher Basel AML scores are associated with lower levels of GDP per capita. Poor AML performance undermines investor confidence, as such countries are perceived as high-risk environments, deterring foreign investment. Moreover, high AML risks indicate vulnerabilities in the financial sector, limiting access to international financial markets and restricting capital flows. The findings of this study underscore the importance of targeted policies to enhance transparency and financial sector resilience, thereby mitigating the adverse effects of poor AML performance on economic development.

Keywords: Anti-money laundering Regulations; GDP per capita; Economic Growth; Macroeconomic instability (search for similar items in EconPapers)
Date: 2025
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