Publication

Dancing with the devil: Country size and the incentive to tolerate money laundering

Gnutzmann, H., McCarthy, K. J. & Unger, B., Sep-2010, In : International Review of Law and Economics. 30, 3, p. 244-252 9 p.

Research output: Contribution to journalArticleAcademicpeer-review

APA

Gnutzmann, H., McCarthy, K. J., & Unger, B. (2010). Dancing with the devil: Country size and the incentive to tolerate money laundering. International Review of Law and Economics, 30(3), 244-252. https://doi.org/10.1016/j.irle.2010.04.004

Author

Gnutzmann, Hinnerk ; McCarthy, Killian J. ; Unger, Brigitte. / Dancing with the devil : Country size and the incentive to tolerate money laundering. In: International Review of Law and Economics. 2010 ; Vol. 30, No. 3. pp. 244-252.

Harvard

Gnutzmann, H, McCarthy, KJ & Unger, B 2010, 'Dancing with the devil: Country size and the incentive to tolerate money laundering', International Review of Law and Economics, vol. 30, no. 3, pp. 244-252. https://doi.org/10.1016/j.irle.2010.04.004

Standard

Dancing with the devil : Country size and the incentive to tolerate money laundering. / Gnutzmann, Hinnerk; McCarthy, Killian J.; Unger, Brigitte.

In: International Review of Law and Economics, Vol. 30, No. 3, 09.2010, p. 244-252.

Research output: Contribution to journalArticleAcademicpeer-review

Vancouver

Gnutzmann H, McCarthy KJ, Unger B. Dancing with the devil: Country size and the incentive to tolerate money laundering. International Review of Law and Economics. 2010 Sep;30(3):244-252. https://doi.org/10.1016/j.irle.2010.04.004


BibTeX

@article{ce6ff6e3ee7149ddb366fc6dd295356a,
title = "Dancing with the devil: Country size and the incentive to tolerate money laundering",
abstract = "The incidence of money laundering, and the zeal with which international anti-money laundering (AML) policy is pursued, varies significantly from country to country, region to region. There are, however, quite substantial social costs associated with a policy of toleration, and this begs the question as to why such a variance should exist. In this paper we claim that, due to the globalisation of crime, if a single country should break the {"}chain of accountability{"}, then it will provide a safe haven for criminals and attract the total financial proceeds of crime. Because smaller economies are best able to insulate themselves from the costs of crime, we argue that smaller countries bear only a tiny share of the total costs relative to the potential benefits of investment that money laundering offers, and so have a higher incentive to tolerate the practice compared to their larger neighbours. As such, we claim that the existence of a money laundering market is due to a policy of AML 'defection', and that the degree of 'defection' depends largely on the size of the country. We present a simple model of policy competition which formalises this intuition, and conclude by exploring a number of policy recommendations which flow from this. (C) 2010 Elsevier Inc. All rights reserved.",
keywords = "Money laundering, Policy competition, Systems competition",
author = "Hinnerk Gnutzmann and McCarthy, {Killian J.} and Brigitte Unger",
year = "2010",
month = sep,
doi = "10.1016/j.irle.2010.04.004",
language = "English",
volume = "30",
pages = "244--252",
journal = "International Review of Law and Economics",
issn = "0144-8188",
number = "3",

}

RIS

TY - JOUR

T1 - Dancing with the devil

T2 - Country size and the incentive to tolerate money laundering

AU - Gnutzmann, Hinnerk

AU - McCarthy, Killian J.

AU - Unger, Brigitte

PY - 2010/9

Y1 - 2010/9

N2 - The incidence of money laundering, and the zeal with which international anti-money laundering (AML) policy is pursued, varies significantly from country to country, region to region. There are, however, quite substantial social costs associated with a policy of toleration, and this begs the question as to why such a variance should exist. In this paper we claim that, due to the globalisation of crime, if a single country should break the "chain of accountability", then it will provide a safe haven for criminals and attract the total financial proceeds of crime. Because smaller economies are best able to insulate themselves from the costs of crime, we argue that smaller countries bear only a tiny share of the total costs relative to the potential benefits of investment that money laundering offers, and so have a higher incentive to tolerate the practice compared to their larger neighbours. As such, we claim that the existence of a money laundering market is due to a policy of AML 'defection', and that the degree of 'defection' depends largely on the size of the country. We present a simple model of policy competition which formalises this intuition, and conclude by exploring a number of policy recommendations which flow from this. (C) 2010 Elsevier Inc. All rights reserved.

AB - The incidence of money laundering, and the zeal with which international anti-money laundering (AML) policy is pursued, varies significantly from country to country, region to region. There are, however, quite substantial social costs associated with a policy of toleration, and this begs the question as to why such a variance should exist. In this paper we claim that, due to the globalisation of crime, if a single country should break the "chain of accountability", then it will provide a safe haven for criminals and attract the total financial proceeds of crime. Because smaller economies are best able to insulate themselves from the costs of crime, we argue that smaller countries bear only a tiny share of the total costs relative to the potential benefits of investment that money laundering offers, and so have a higher incentive to tolerate the practice compared to their larger neighbours. As such, we claim that the existence of a money laundering market is due to a policy of AML 'defection', and that the degree of 'defection' depends largely on the size of the country. We present a simple model of policy competition which formalises this intuition, and conclude by exploring a number of policy recommendations which flow from this. (C) 2010 Elsevier Inc. All rights reserved.

KW - Money laundering

KW - Policy competition

KW - Systems competition

U2 - 10.1016/j.irle.2010.04.004

DO - 10.1016/j.irle.2010.04.004

M3 - Article

VL - 30

SP - 244

EP - 252

JO - International Review of Law and Economics

JF - International Review of Law and Economics

SN - 0144-8188

IS - 3

ER -

ID: 5185442