The impact of blacklists on external deposits: one size does not fit all
| DOI | https://doi.org/10.1108/JMLC-12-2020-0136 |
| Published date | 05 May 2021 |
| Date | 05 May 2021 |
| Pages | 4-18 |
| Author | Michael Jonsson,Jan Pettersson,Christian Nils Larson,Nir Artzi |
The impact of blacklists on
external deposits: one
size does not fit all
Michael Jonsson
Swedish Defence Research Agency, Stockholm, Sweden
Jan Pettersson
Expert Group for Aid Studies (EBA), Stockholm, Sweden
Christian Nils Larson
Cadwalader, Wickersham and Taft LLP, Washington,
District of Columbia, USA, and
Nir Artzi
Georgetown University, Washington, District of Columbia, USA
Abstract
Purpose –This study aims to measure the impact of the Non-Cooperative Countries and Territories,
Organization for Economic Cooperation and Development and US PATRIOT Act Section 311 blacklists on
external depositsfrom blacklisted jurisdictions into BISreporting countries in 1996–2008, a period when anti-
money laundering-relatedactions were consistently less stringentthan post-2010, to see whether they had an
effect evenabsent the threat of sizable financialfines.
Design/methodology/approach –The study uses descriptivestatistics and bivariate and multivariate
regressions to analyze the probable impact from blacklists on non-bank external deposits. The country
sample is divided into offshorefinancial centers (OFCs) and non-OFCs and includes 158 non-listed countries.
The impact of the blacklistsis tested both jointly and individually for the respective blacklists.
Findings –The authors find mixed impactfrom jurisdictions being blacklisted on the growth rate of stocks
of deposits into BIS reportingcountries. Effects are often zero, negative in several cases and positivein some
cases. This is consistentwith the “stigma effect”and the “stigma paradox”inthe literature. An overall impact
from blacklisting is difficult to discern. Different blacklists had different effects, and the same blacklist
impacted countries differently, illustrating the importance of disaggregating the analysis by individual
countries.
Research limitations/implications –Interpretation of these data is limited by the absence of
comparabledata on non-resident deposits in blacklisted jurisdictions.
Practical implications –The impact of a blacklist depends in part on the structure of the listed
jurisdictions’economies,implying that country-specificsanctions may be more effective than blacklists.
Originality/value –This is one of the very few papersto date to rigorously test the impact of blacklists on
externaldeposits.
Keywords OECD, FATF, Money laundering, Blacklists, External deposits, Off-shore financial centers
Paper type Research paper
1. Introduction
This paper examines the impacts of two international blacklistsand one national sanctions
process during the period 1996–2008, all of which aim to increaseglobal financial integrity
JMLC
25,1
4
Journalof Money Laundering
Control
Vol.25 No. 1, 2022
pp. 4-18
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-12-2020-0136
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
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