Determinants of money laundering: evidence from Italian regions
| Date | 02 July 2018 |
| Pages | 402-413 |
| DOI | https://doi.org/10.1108/JMLC-09-2017-0052 |
| Published date | 02 July 2018 |
| Author | Filippo Reganati,Maria Oliva |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Determinants of money
laundering: evidence
from Italian regions
Filippo Reganati and Maria Oliva
Università degli Studi di Roma La Sapienza, Rome, Italy
Abstract
Purpose –The main purpose of this paper is to analyze the determinants of money laundering in Italy.
Given the high heterogeneity in terms of economic, social and institutional characteristics, Italy is a
compellingcase study.
Design/methodology/approach –By using annual data over the period 2008 to 2013, the authors
estimate a balanced panel data linear model using feasible generalized least squares. Following the main
literature on the economics of crime, the authors regress the crimerate in each region-year against a set of
determinantsthat include socio-economic, enforcement and crime-specificfactors.
Findings –The authors’findings reveal that, in most Italian regions, enforcement activities do exert
significant deterrence on criminal behaviors: and a negative relationship between enforcement and money
launderingcan be identified only when there are high levels ofenforcement efforts. Moreover, the authorsfind
that the major determinants influencing the rate of money laundering differ between northern, central and
southern regions, confirming the existenceof regional dualism. In particular, the crime rate in the northern
and central area is positively related to the level of corruption and the incidence of mafia-type crimes and
negatively relatedto educational attainment, whereas in the southernregions, money laundering is positively
related tothe size of the gaming and gambling sector.
Originality/value –The present paper contributes to the extantliterature on the economics of crime in
several ways.First, it explicitly analyzes a specific type of financial crime,which presents the higher degree of
sanctioning regime in the Italian legislation. Second, Italy offers an important country study becauseof the
forcefulpresence of mafia clans and organized crime systems operating in the illegal market.
Keywords Italy, Money laundering, Law enforcement, Crime determinants
Paper type Research paper
Introduction
Money laundering is the process of taking the proceeds generated by criminal activity
and giving such proceeds an appearance of legality[1]. Money laundering not only allows
criminals to move their money through society freely, without attracting attention to the
underlying activity or people involved, but also prevents the funds from being
confiscated by the judiciary authority[2]. The International Monetary Fund (IMF)
estimates that the amount of money laundered globally in one year is between 2 and 5 per
cent of global GDP, or roughly US$1-2tn (annually). According to the United Nations
Office on Drugs and Crime (UNODC), in 2009, criminals laundered around US$1.6tn,
which corresponds to 2.7 per cent of global GDP.
Traditionally,money laundering has been described as a process that takes place in three
distinct stages. In the initial –or placement–stage, money launderers introduce their illegal
proceeds into the financial system through deposits, wire transfers or other means. In the
second –or layering –stage, money launderers move such funds around the world to
separate them from their original source. Finally, in the third –integration –stage, money
JMLC
21,3
402
Journalof Money Laundering
Control
Vol.21 No. 3, 2018
pp. 402-413
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-09-2017-0052
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm
To continue reading
Request your trial