Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/295718 
Year of Publication: 
2024
Series/Report no.: 
RF Berlin - CReAM Discussion Paper Series No. 03/24
Publisher: 
Rockwool Foundation Berlin (RF Berlin) and Centre for Research & Analysis of Migration (CReAM), Berlin and London
Abstract: 
Tighter money-laundering regulations in offshore financial havens may inadvertently spur incentives to launder money domestically. Our study exploits regulations targeting financially based money laundering in Caribbean jurisdictions to uncover the creation of front companies in the United States. We find that counties exposed via offshore financial links to these jurisdictions experienced an increase in business activities after the tightening of anti-money-laundering regulations. The effect is more pronounced among small firms, in sectors at high risk of money laundering, and in regions with high intensities of drug trafficking. Our work provides the first empirical evidence of the real effects of policy-induced money-laundering leakage.
Subjects: 
Money laundering
money-laundering leakage
business establishments
offshore leaks
regulatory reforms
monopolistic competition
JEL: 
F30
K40
G28
H00
D58
Document Type: 
Working Paper

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