How to Dodge Drowning in Data? Rule- and Risk-Based Anti Money Laundering Policies Compared
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Brigitte Unger
Abstract
In the past decade, anti-money laundering policy has switched both in the US and in Europe from a rule- to a risk-based reporting system in order to avoid over-reporting by the private sector. However, reporting instead increased in most countries, while the quality of information decreased. Governments were drowned in data because private agents feared sanctions for not reporting. However, unlike in other countries, this “crying wolf problem” (Takats, 2007) did not happen in the Netherlands, where the number of reports diminished, but information quality improved. The reasons for this can be found in differences in legal institutions and legal culture, notably the contrast between US adversarial legalism and Dutch cooperative informalism. The established legal systems also provide for resistance to change. Thus, lowering sanctions in order to reduce over-reporting may not be a realistic option in a legal system which traditionally uses deterrence by fierce criminal and private legal sanctions. Furthermore, a risk-based approach may not be sustainable in the long run, as litigation may eventually replace a risk-based approach again by a rule-based one, now with precise rules set by the courts.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- 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
