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. © 2009 by bepress.

DALLA PELLEGRINA, L., Masciandaro, D. (2009). The risk based approach in the new European Anti-Money Laundering Legislation: a Law and Economics View. REVIEW OF LAW & ECONOMICS, 5(2), 931-952 [10.2202/1555-5879.1422].

The risk based approach in the new European Anti-Money Laundering Legislation: a Law and Economics View

DALLA PELLEGRINA, LUCIA;
2009

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. © 2009 by bepress.
Articolo in rivista - Articolo scientifico
Money Laundering, Regulation, Risk Based Approach
English
2009
931
952
22
Also in: Combating Money Laundering and Terrorism Finance: Past and Current Challenges, a cura di Navin Beekarry, Edward Elgar Publishing, 2013.
DALLA PELLEGRINA, L., Masciandaro, D. (2009). The risk based approach in the new European Anti-Money Laundering Legislation: a Law and Economics View. REVIEW OF LAW & ECONOMICS, 5(2), 931-952 [10.2202/1555-5879.1422].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/9850
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