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Strategies to avoid blacklisting: The case of statistics on money laundering.


ABSTRACT: Financial and legal entities (e.g. banks, casinos, notaries etc.) have to report money laundering suspicions. Countries' engagement in fighting money laundering is evaluated-among others-with statistics on how often these suspicions are reported. Lack of compliance can result in economically harmful blacklisting. Nevertheless, these blacklists repeatedly become empty-in what is known as the emptying blacklist paradox. We develop a principal-agent model with intermediate agents and show that non-harmonized statistics can lead to strategic reporting to avoid blacklisting, and explain the emptying blacklist paradox. We recommend the harmonization of the standards to report suspicion of money laundering.

SUBMITTER: Ferwerda J 

PROVIDER: S-EPMC6594610 | biostudies-literature | 2019

REPOSITORIES: biostudies-literature

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Strategies to avoid blacklisting: The case of statistics on money laundering.

Ferwerda Joras J   Deleanu Ioana Sorina IS   Unger Brigitte B  

PloS one 20190626 6


Financial and legal entities (e.g. banks, casinos, notaries etc.) have to report money laundering suspicions. Countries' engagement in fighting money laundering is evaluated-among others-with statistics on how often these suspicions are reported. Lack of compliance can result in economically harmful blacklisting. Nevertheless, these blacklists repeatedly become empty-in what is known as the emptying blacklist paradox. We develop a principal-agent model with intermediate agents and show that non-  ...[more]

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