| dc.description.abstract | Money laundering has been a problem for governments ever since it began 4000 years ago in
China. In recent years though, the problem seems to be spiraling out of control. When HSBC
was sanctioned for money laundering in 2010, the amount they laundered, roughly $7 billion,
seemed like a huge amount. In the years since, however, this sum has been eclipsed by greater
sums allegedly laundered by Deutsche Bank and Danske Bank.
Despite the best efforts of national and international regulators, money laundering continues
to occur, and in doing so feeds a vicious cycle of organized crime and corruption. It is all the
more surprising then that there has been no research into which types of economies are most
vulnerable to money laundering: those with large banking sectors or those with small ones.
Using three different estimates of money laundering, this thesis presents an empirical study
of the relationship between the size of a country’s banking sector and the amount of money
laundering estimated to be going on in that country. Additionally presented is an analysis of
whether Financial Intelligence Units become more effective with higher funding levels.
Results found that as the size of a country’s banking sector relative to GDP increases,
estimated money laundering will, in turn, increase. However, when compared to absolute size,
the link is much more tenuous. This signifies that countries more dependent on banking or
financial services can expect more money laundering, and thus that the relevant authorities
should place more of an emphasis on money laundering prevention and on enforcement of
existing anti-money laundering regulations. The reason for this link could be due to
connections between politicians and firms, or due to the systemic importance of financial
services in countries whose GDP and employment figures rely on that sector.
Regarding Financial Intelligence Units, it was found that no link exists between funding levels
and efficiency, apart from efficiency as measured by Suspicious Transaction Reports. This
could be due to the high development levels of the countries observed, as there exists a point
of funding after which marginal returns will drop off. | nb_NO |
