The impact of anti-money laundering regulations on asset recovery performance : a study of underlying reasons for countries’ asset recovery efforts

Abstract

Asset recovery (AR) is an important tool in combating corruption since it ensures that criminals are not allowed to keep the proceeds of their crime. The fact that criminals use financial institutions in foreign jurisdiction to hide their stolen assets suggests a relationship between money laundering (ML) and AR. This thesis aims to analyze the impact countries’ anti-money laundering (AML) regulations have on the amount of assets recovered. This is done by determining crucial factors in AR cases and assessing whether there is an empirical relationship between those factors and the amount of assets which has actually been recovered as well. This thesis finds that several factors correlate positively with countries’ AR performance, which is defined as the amount of assets which a country has recovered. The correlations between different proxies for AML performance and AR performance as well as AR efforts support the hypothesis that AML performance has an impact on the amount of assets that is actually recovered. However, these findings have to be interpreted with caution since correlation does not equal causality. Further results of this thesis imply that having a variety of AR mechanisms, including the recognition of non-conviction based proceedings and civil law actions, as well as encouraging international cooperation and having a specialized AR unit all have a positive relationship with AR performance. The findings of this thesis show on the one hand, that adherence to AML regulations and AR performance are indeed positively correlated, and on the other hand, that future research is needed in order to find causal effects as well.