Governance of Money Laundering: An Application of the Principal-agent Model

Shah, Syed Azhar Hussain and Shah, Akhter Hussain and Khan, Sajawal (2006): Governance of Money Laundering: An Application of the Principal-agent Model. Published in: The Pakistan Development Review , Vol. 45, No. 4 (2006): pp. 1117-1133.

Abstract

In this model we evaluate the strategy of principal (international financial regime) and affectivity of the network of money transaction to minimize transaction of money through money laundering by making laws and procedure and get these implemented by agents. With the application of present value method of cost and returns to agents and clients payoff matrix is developed. The present strategy of principal seems suboptimal to involve informal agents and clients in anti- money laundering measures and it needs revision to involve them through incentives.

• Item Type: MPRA Paper
• Language: English
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E50 - General

References

United Nations (1988) United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (Vienna Convention). United Nations. US Interagency Efforts to Combat Terrorist Financing—Bureau of Economic and Business Affairs (2003) Wayne E. Anthony (2005) Money Laundering and Terrorist Financing in the Middle East and South Asia. http://www.state.gov/e/eeb/rls/rm/2005/49564.htm World Bank (2003) The World Bank in the Global Fight Against Money Laundering and Terrorist Financing. USA.