A Theory of “Crying Wolf” : The Economics of Money Laundering Enforcement / Elöd Takáts.

Format:

Book

Government document

Author/Creator:

Takáts, Elöd.

Contributor:

International Monetary Fund. Western Hemisphere Department.

Series:

IMF Working Papers; Working Paper ; No. 2007/081

IMF Working Papers

Language:

English

Subjects (All):

Money laundering--United States.

Money laundering.

Money laundering investigation--United States--Econometric models.

Money laundering investigation.

Physical Description:

1 online resource (56 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2007.

Language Note:

English

Summary:

The paper shows how excessive reporting, called "crying wolf", can dilute the information value of reports. Excessive reporting is investigated by undertaking the first formal analysis of money laundering enforcement. Banks monitor transactions and report suspicious activity to government agencies, which use these reports to identify investigation targets. Banks face fines should they fail to report money laundering. However, excessive fines force banks to report transactions which are less suspicious. The empirical evidence is shown to be consistent with the model's predictions. The model is used to suggest implementable corrective policy measures, such as decreasing fines and introducing reporting fees.

Contents:

Contents; I. Introduction; II. Money Laundering Enforcement; III. Model Setup; A. Economy and Players; Text Figures; 1. Model Scheme; B. Timing; C. Signal Structure; D. Action Set; E. Final Assumptions; IV. Solving the Model; A. Equivalent Problem; B. First Best Benchmark; C. Second Best; D. Second Best with Exogenous Fines; V. Comparative Statics; A. First Best Investigation: I * o and I * o; 2. Information Laffer curve; B. Minimal Optimal Fine: F*; C. Maximal Optimal Fine: F**; VI. Empirical Evidence; Text Tables; 1. Comparative Statics; A. Money Laundering Volumes

3. Criminal Earnings in the United StatesB. Fines, Harm, Reporting and Prosecution; 4. Reporting; 5. Filed Prosecution Cases; 6. Convicted Prosecution Cases; VII. Discussion; A. Implementable Policy Implications; B. Market Closure; C. Application in Other Context; VIII. Conclusion; IX. Appendix; A. Exogenous Fine Equilibria with F* > F**; B. Further Discussions; C. Formal Extensions; 7. Continuous Model; D. Proofs; Reference

Notes:

"April 2007".

Includes bibliographical references.

Description based on print version record.

ISBN:

9786613823830

9781462313457

1462313450

9781452711782

145271178X

9781283511384

128351138X

9781451910988

1451910983