Last modified: 2018-11-22
Abstract
Following the INTERPOL's definition, money laundering is: "any act or attempted act to conceal or disguise the identity of illegally obtained proceeds so that they appear to have originated from legitimate sources". Illegally obtained funds are laundered and moved around the world using and abusing shell companies, intermediaries and money transmitters. In this way, the illegal funds remain hidden and are integrated into legal business and into the legal economy. Such type of crime compromises financial institutions’ and jurisdictions’ reputation, undermine investors’ trust in them, and therefore weaken the financial system.
By using annual data for the Italian regions (NUTS-2) over the period 2008 to 2013, this work aims to investigate the determinants of money laundering in Italy. Given the high heterogeneity in terms of economic and institutional characteristics, as well as for the activity of organized crime in financial-related management activities, Italy is a compelling case study.
Our main findings reveal that in most of the Italian regions enforcement activities do exert significant deterrence on criminal behaviors. Moreover, we find that the money laundering is positively and significantly related to income per capita and negatively to the education attainment at the regional level. Finally, the estimates indicate that this type of financial crime is higher the higher the corruption rate, the share of underground economy, the mafia penetration and the number of betting shops