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Behind the curtain: an empirical analysis of corporate opacity across countries and sectors worldwide to assess money laundering risk

Thu, September 7, 12:30 to 1:45pm, Educatorio Fuligno, Floor: ground floor / cloister entrance, Fuligno 5

Abstract

Anti-money laundering (AML) regulations and investigations suggest that the level of opacity of a company ownership structure can be seen as a risk indicator of potential money laundering practices. Similarly, at aggregate level, countries with high prevalence of opaque firms could be identified as high-risk jurisdictions in the AML domain. However, despite some institutions (e.g. FATF) periodically publish black/grey lists of high-risk countries, a world-wide empirical analysis measuring the opacity of corporate ownership at country level is lacking. The present paper, based on the research activity of EU-funded Project DATACROS II, addresses this gap. It measures the opacity of corporate ownership through a set of risk indicators drawn from relevant AML principles and guidelines at international level, and calculates these indicators on a sample of about 100+ million companies registered in more than 100 countries worldwide. Indicators are then aggregated at macro level (by country, region and business sector) and then compared with socio-economic contextual variables, FATF/EU black and grey lists and other available AML risk scores and metrics. Results highlight that the opacity of corporate ownership is not evenly distributed, but tends to concentrate in particular areas and sectors, not always represented in official blacklists and statements. These findings endow institutions with a solid, ground-breaking analysis to conduct effective data-driven policy decision making to contrast AML activities worldwide.

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