Financial crime as a threat to the wealth of nations: A cost-effectiveness approach

摘要

Purpose – The aim of this paper is to stimulate a reflection on some issues concerning the measurement of the magnitude of money laundering. Design/methodology/approach – A survey of various research works devoted to the measurement of the volume of laundered funds is presented. Focussing mainly on quantitative approaches based on statistical methodologies, the paper provides hints on the modelling techniques used to estimate money laundering. Specific attention is paid to the relationship between criminal proceeds, laundered funds and asset seizure, unifying in the same stream of thought the whole process that goes from the perpetration of an offence to the repression of crimes through AML and CTF measures. Findings – The paper takes the move from empirical considerations and findings, and develops wider reflections on the effectiveness of AML and CTF actions. Following a cost/benefit approach, the paper focuses on the possibility and meaning of testing and rating both the weight of laundered funds within the legal economy and the successfulness of AML/CTF measures in terms of frozen and seized assets. The relationship between the seriousness and intensity of a crime and the burden imposed on the society (in terms of compliance and limitations to freedom) is also questioned. Research limitations/implications – The paper tends to concentrate on the factors that may influence the estimation of laundered funds when quantitative measurement techniques are used. Reference is made to some sectors of economic and financial activity that might be more prone to criminal infiltration and considerations of qualitative character are also part of the author's speculations. Yet, purposely, the potential contributions from other disciplines (such as, criminology and economics) are only mentioned and not fully explored. Practical implications – The paper openly revives practical questions concerning the estimation of phenomena of financial crime and highlights clearly how the quantification of money laundering may be relevant in terms of the potential impact of the flow of illegal funds on the legal economy, the assessment of risk in the financial sector and the definition of effective and proportionate countermeasures. Originality/value – The paper addresses questions that have long attracted international attention and interest regarding the costs and benefits of the system of control of and fight against phenomena of money laundering and terrorism financing; as well as the need of revamping empirical research along new, more efficient, shared methodologies. The author underlines explicitly how quantitative estimations may influence the perception of the relevance of such phenomena, as well as the adoption of prevention and repression measures. An original argument is developed regarding either a risk of underestimating financial crime, with a consequent reduction of the effort devoted to its fight and prevention, or the risk of overestimating the phenomenon, which in turn might impose unnecessary burdens on the society.