The Risk-Based Approach in the New European Anti-Money Laundering Legislation: A Law and Economics View
-
Lucia Dalla Pellegrina
Abstract
In 2005 the European Commission adopted the Third Directive on Anti-Money Laundering (AML), which was to be implemented into national laws at the latest by December 2007. The key feature that characterizes the Third Directive is the idea that the regulatory framework should be risk-based (RBA). The aim of this regulation is to elicit a high level of outcome in terms of AML effectiveness from self-interested financial institutions (FIs) who hold private information. In this paper we study how to increase the effectiveness of AML rules, using a principal-agent framework to describe the regulatory setting in which an RBA is applied. We focus on incentive problems arising in a three-layer hierarchy, which includes public authorities (policymakers), financial institutions, and supervisors.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
Articles in the same Issue
- Article
- Money Laundering - A Newly Emerging Topic on the International Agenda
- Measuring Global Money Laundering: "The Walker Gravity Model"
- Trade-Based Money Laundering and Terrorist Financing
- Money Laundering in a Microfounded Dynamic Model: Simulations for the U.S. and the EU-15 Economies
- The Economics of Crime and Money Laundering: Does Anti-Money Laundering Policy Reduce Crime?
- The Risk-Based Approach in the New European Anti-Money Laundering Legislation: A Law and Economics View
- How to Dodge Drowning in Data? Rule- and Risk-Based Anti Money Laundering Policies Compared
Articles in the same Issue
- Article
- Money Laundering - A Newly Emerging Topic on the International Agenda
- Measuring Global Money Laundering: "The Walker Gravity Model"
- Trade-Based Money Laundering and Terrorist Financing
- Money Laundering in a Microfounded Dynamic Model: Simulations for the U.S. and the EU-15 Economies
- The Economics of Crime and Money Laundering: Does Anti-Money Laundering Policy Reduce Crime?
- The Risk-Based Approach in the New European Anti-Money Laundering Legislation: A Law and Economics View
- How to Dodge Drowning in Data? Rule- and Risk-Based Anti Money Laundering Policies Compared
