With the Great Crisis of 2008-2009 we have witnessed a relevant episode of macroeconomic vulnerability affecting many countries. To what extent such vulnerability has depended upon the design of light touch (LT) banking regulation? And to what extent other institutional factors, different from...

In 2005 the European Commission has adopted the so called Third Directive on Anti-Money Laundering (AML), which was to be implemented into the national laws at the latest in December 2007. The key feature that characterizes the Third Directive is the idea that the regulatory framework should be...

We empirically investigate whether central bank independence (CBI) and the monetary policy setting can jointly influence the likelihood that policymakers assign banking supervision to central banks. We find that, conditional on the government being a benevolent one, higher central bank...

We investigate the reasons that induce policymakers to assign banking supervision to central banks rather than involving authorities outside the banking sector. On the one hand, empirical results provide evidence that policymakers prefer that, conditional on several known features affecting...

Excessive and useless reporting, called “crying wolf effect”, is a crucial shortcoming that any anti-money laundering (AML) design aims to address and fix. For this reason, in these years the AML policy has switched both in the US and in Europe from a rule- to a risk-based approach. This...

This study investigates the efficiency of the suspicious transaction reporting (STR) activity to a Financial Intelligence Unit (FIU) as a means to deter money laundering (ML). Baseline and two-province theoretical models are used to frame the empirical analysis. The latter examines the...

In recent years we have witnessed a deep change in the design of all the institutions that are responsible for supervising banking and financial markets. The financial supervision scenario is going through a deep evolution on all fronts, and many countries have made important changes in the...

This paper examines the economy's vulnerability to money laundering in a given region. Assuming that criminals are rational investors who take into account risks and returns of both legal and illegal investments, we define vulnerability as a function of well-identified drivers. Proxies of these...