A theory of "Crying wolf" : the economics of money laundering enforcement
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
eBook, English, ©2007
International Monetary Fund, [Washington, D.C.], ©2007
IMF working paper, WP/07/81
1 online resource (54 pages) : illustrations
9781283511384, 9781451910988, 128351138X, 1451910983
648381747
Electronic reproduction, [Place of publication not identified], HathiTrust Digital Library, 2010
elibrary.imf.org IMF eLibrary (Restricted to University of Ottawa)