A Composite Indicator to Measure Money Laundering Risk at Regional Level

• In Event: IASOC Presents: Money Laundering Risk Assessment: Research Challenges and Implications for Practitioners

Abstract

This paper, building on the results of EU co-funded project IARM (www.transcrime.it/iarm), proposes the development of a composite indicator to measure the risk of money laundering (ML) across regions at sub-national level, with an application across Italian provinces. For each identified ML risk-factor, it identifies a range of proxies, and it combines them into a composite indicator using principal component analysis. The validity of the indicator is then tested against other indirect measures of money laundering such as STRs - suspicious transaction reports and ML offences reported to the police. Finally, the paper provides suggestions on how these measures could be translated into prevention tools for public bodies and obliged private entities (e.g. banks and auditors).

Authors

• Michele Riccardi, Università Cattolica - Transcrime

• Riccardo Milani, Università Cattolica - Transcrime

• Ernesto Ugo Savona, Università Cattolica - Transcrime