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This paper aims to determine the preferable destinations of money laundered from Pakistan by using the Walker’s Gravity Model and to estimate the amount of money laundered through 156 countries. The research aims to facilitate policymakers and regulators to provide more efficient guidelines to counter the problem of money laundering.

This study uses a descriptive and quantitative approach. This study uses the Walker’s Gravity Model updated by Unger et al. (2006) to measure money laundering in Pakistan; Walker’s Gravity Model was first developed by John Walker in 1994.

The results indicate that Pakistani money launderers preferred countries having large financial sectors and political stability to hide their illegal money. In addition, the study estimates the amount of money laundered and shows that Pakistan has lost bulk of funds.

The major limitation is the non-availability of reliable data as the activity is hidden. Reliable data is either not available officially or scattered. Available data only reflect aspects that are reported. Non-availability of statistics for all years and countries resulted in the omission of some countries.

The study helps legislators and policymakers, including the Ministry of Finance, State Bank of Pakistan, Securities and Exchange Commission Pakistan, and other regulators, including law enforcement agencies and financial institutions, in formulating effective policies, regulations and internal control.

The study helps to identify the need of estimating the amount of money laundered to fight the problem effectively. Very few efforts have made to determine the size and the amount of money laundered, and this is the first study to determine the amount of money flowing out of Pakistan with the purpose of laundering.

This study examines the new venue of moving illegal wealth from Pakistan under the umbrella of China–Pakistan Economic Corridor (CPEC). The study first discussed the features of CPEC in short and how it may bring stability and a new phase of development in the region and also in Pakistan. The review of related literature has suggested that previous studies are more focused on the advantages of CPEC and are almost neglecting the cons of the said project. Later, the research puts light on the problem of money laundering from Pakistan through CPEC and related trade transactions; Walker’s Gravity model has been used to calculate the attractiveness of money laundering. It has highlighted that China’s attractiveness for moving illegal wealth from Pakistan is increased in recent years; the risk of an increase in the amount of money laundered is also analyzed through the Fan Chart technique. Attributes which are making China more attractive for Pakistani wrongdoers are also discussed. The study aims to conclude that if the problem of money laundering will be addressed properly, the CPEC will play a vital role in bringing stability in Pakistan.

This study uses a descriptive and quantitative approach. This study uses the Walker’s Gravity Model updated by Unger et al. (2006) to measure money laundering in Pakistan. A newly developed technique for forecasting that is Fan Chart has been used to predict the trend of China’s attractiveness for money laundering as a preferred destination from Pakistan.

The study finds out that China is already increasing its ranking as a favorite destination for money laundering from Pakistan. Fan Chart analysis suggests that the attractiveness score will be increased.

The study helps in highlighting the problem of increase in money laundering from Pakistan through China under the umbrella of CPEC.

To the best of the authors’ knowledge, there is no study found on the topic of the problem of money laundering linked with CPEC, and this is the first effort to point out the problem.

Money laundering (ML) has become a significant challenge all over the world today. Trade-based money laundering (TBML) is a type of ML that poses a hazard to any country. In recent years, developed and developing countries have pursued liberal policies for international financial markets. The Financial Action Task Force (FATF) defines TBML as the process of concealing criminal earnings and shifting value through trade transactions in an attempt to justify their illicit origins. As international financial markets have improved ML controls, criminals have turned to the trade sector as a new venue, raising trade risks. The purpose of this study is to highlight the danger posed by TBML and the initiatives that should be taken to prevent such.

A review of publicly available reports, case studies, secondary data and literature on TBML from a variety of Sri Lankan and international contexts comprised the methodology. However, due to the dearth of literature on TBML details/information in the Sri Lankan context, international case studies have been analyzed. More critically, there are no precise estimates of TBML or defined protocols for collecting and maintaining TBML data. As a result, the FATF potential TMBL typologies were analyzed, and typical TBML procedures were examined to identify viable treats for Sri Lanka.

The study found that TBML has a significant effect on the economy and, as a result, social conflicts. Sri Lanka has the potential for TBML, and ML through financial institutions was identified as a major risk. Literature, on the other hand, shows that a large quantity of money has been laundered using TBML in Sri Lanka. The geographical location entices criminals to wash their illicit gains, and so the country has potential danger from South Asian countries. However, because of the sociopolitical climate in Sri Lanka, criminals are constantly looking for ways to profit illegally. Relaxing rules to promote foreign investment may encourage launderers to use their illicit proceeds. The government needs to take great care when dealing with this particularly delicate issue.

Due to the complexity of financial crimes, this study had a number of limitations, as do many others. The data used for this study was sourced from publicly available information and the TBML has been clearly defined or understood due to the fact that the complexity of the methods used by criminals. As a result, the number of local instances reported on TMBL is quite small, hence this study relied on international case studies.

This research on TBML in Sri Lanka is original. It is anticipated that the findings and contribution of the study would help the stakeholders develop TBML prevention measures.

The purpose of this paper is to interrogate if the legal status of a cannabis affects money laundering activity. The legal status of cannabis continues to evolve globally; at the same time, its market remains enormous. Much of this market represents dirty money from criminal acts, which often requires laundering. In the context of changing cannabis regulations, legislation, and policies, the authors propose the possible implications such changes may have on the extent of money laundering.

This paper proposes the implications of the evolution of cannabis regulations on money laundering activities, using the theoretical underpinning of rational choice. Using Australia as a replicable critical case study, the paper, using the Walker gravity model and using United Nations Office on Drugs and Crime-reported prices of cannabis from 2003 to 2017 and Australian Criminal Intelligence Commission reports empirically validates the effects of cannabis regulations on the proceeds available for laundering.

This study finds support for the argument that prohibitive measures toward cannabis use contribute to increases in the need to launder generated proceeds.

The findings can be replicated in other countries and may contribute to novel propositions within the debate on the legalization of cannabis use, which has, thus, far primarily focused on the areas of health, crime, taxation and education.

To the best of the authors’ knowledge, no study has yet attempted to provide an economic analysis of the effects of cannabis policy changes on money laundering.

The purpose of this paper is to investigate how well countries comply with global anti-money laundering and counter-financing of terrorism (AML/CFT) regulations.

With the help of an AML/CFT compliance index composed by the author, this study is able to numerically quantify countries’ AML/CFT compliance levels. Countries were selected based on their membership with the Financial Action Task Force (FATF), precisely members who have gone through at least one round mutual evaluation and have duly submitted a report to the task force. The AML/CFT index was composed by assigning numeric values to the individual country ratings across all 49 FATF recommendations contained in their mutual evaluation reports (MER).

Some notable findings include the yearly global level of AML/CFT compliance between the period 2004 and 2016, as well as compliance levels across continents for the same period. Compliance levels for the seven components of the FATF recommendations were also reported to help assess which set of recommendations countries comply with the most and why they do. It was also found that countries’ lack of compliance was as a result of high cost of compliance with FATF recommendations.

The main limitation of this study was a lack of high-frequency AML data of countries, especially less-developed countries.

The uniqueness of this paper lies in the fact that the AML/CFT compliance index constructed and used in the study is the first of its kind.

Money laundering is an activity where illegal proceeds are hidden. This often leads to a reduction in government revenue and loss of government control of public funds. This study aims to identify the important sources of growing demand for money laundering in developing countries. Further, it identifies the factors that reduce the impact of sources of demand for money laundering.

This study used the panel approach of feasible generalized least square to investigate the growing demand for money laundering in 62 developing countries and provides a moderation-based solution for managing the demand factors.

The empirical results of this study indicate that there are two sources that increase the demand for money laundering in developing countries. This includes a high tax rate on profit linked with private firms and businesses and diversion of public funds related to government officials and politicians. The results indicate that profit tax and diversion of funds increase the demand for money laundering. The profit tax-based money laundering can be moderated by the quality of the education system and the diversion of public funds and money laundering can be moderated using bureaucracy quality.

This is one of the first studies to empirically estimate the impact of two important sources (i.e. diversion of public funds by government officials and politicians and a high tax rate) that create demand for money laundering in developing countries. The findings help developing countries’ governments formulate policies and curb the growing demand for money laundering.

The three volumes before us comprise the second title in the “Elgar Reference Collection” of Critical Ideas in Economics, a new series which, we learn from the book cover, aims to provide “an essential reference source for students, researchers and lecturers in economics.” Each volume in the series will bring together a collection of previously-published articles and book-chapters which “focuses on [a] concept widely used in economics,” and will thereby “improve access to important areas of literature which will not be available in the archives of many of the newer libraries.” No one can deny that Professor Walker’s topic is ideally suited to this stated intent; is there a concept more “widely used in economics” than that of equilibrium? A collection of previously-published items cannot, of course, be appraised in terms of the originality of its content. Such a work offers a different sort of contribution. In addition to the publisher’s stated aim of an improved access to those key articles which, either because of their age or the location of their publication, are not widely available, a work such as this can perform a function not unlike that which Weintraub (1991, pp. 129–130) ascribes to the survey article. The act of selection (and, hence, of exclusion) serves to delineate the field for the non-specialist, and the ordering of the items in the collection can reveal instructive lines of intellectual development – a “filiation of scientific ideas” to adopt Schumpeter’s (1954, p. 6) felicitous phrase – that otherwise might be obscured.

The purpose of this paper is to review studies focusing on the magnitude of money laundering and their effects on a country’s economy. The relevant concepts are identified on the basis of discussions in the literature by prominent scholars and policy makers. There are three main objectives in this review: first, to discuss the effects of money laundering on a country’s macro-economy; second, to seek measurements from other scholars; and finally, to seek previous findings about the magnitude and the flows of money laundering.

In the first part, this paper outlines the effects of money laundering on macroeconomic conditions of a country, and then the second part reviews the literature that measures the magnitude of money laundering from an economic perspective.

Money laundering affects a country’s economy by increasing shadow economy and criminal activities, illicit flows and impeding tax collection. To minimise these negative effects, it is necessary to quantify the magnitude of money laundering relative to economic conditions to identify the most vulnerable aspects of money laundering in a country. Two approaches are used in this study: the first is the capital flight approach, as money laundering will cause flows of money between countries; the second is the economic approach for measuring money laundering through economic variables (e.g. tax revenue, underground economy and income generated by criminals) separately from tax evasion.

The paper offers new insights for the measurement of money laundering, especially for developing countries. Most methods in quantifying money laundering have focused on developed countries, which are less applicable to developing countries.

This study aims to apply the modified Walker-Unger model to show the degree of attractiveness of a country for Mexican-based money launderers to send their illicit funds for the 2000–2015 time period.

The modified Walker-Unger model is used to conduct the analysis, as it combines several independent variables related to an illicit financial activity. These allow the researcher to investigate the attractiveness of a market to money launderers and the possible economic effects of money laundering. In total, 13 categories of indicators were used, namely, gross national product per capita; banking secrecy; government attitude; society for worldwide interbank financial telecommunication membership; financial deposits; conflict; corruption; Egmont group membership; language; trade; culture, colonial background; and physical distance.

Model results suggest the preferred destinations for Mexican-based money launderers from 2000 to 2015 were Bermuda (i.e. from 2000–2004), Canada (i.e. in 2005 and 2006) and Monaco (i.e. from 2007–2015).

Timing and availability of reliable data after 2015.

Aids in continuing to empirically validate the Walker-Unger model. There is little literature on models that quantify money laundering activity.

May aid policymakers in targeting anti-money laundering policy to more relevant countries.

The first empirical investigation that looks to quantify money launderer activity in Mexico. Contributes to the limited literature of quantitative investigations on money laundering.

Consistent with traditional internationalization theory, we argue that, when a firm chooses franchising to achieve market penetration, market propinquity/similarity matters. Using a modified gravity model, we examine six country characteristics believed to enhance the flow of franchise activity among 39 nations. Our findings support the notion that market propinquity facilitates the flow of franchises between nations. Franchise expansion is greatest when the home and host nations are similar in terms of geography, culture, media availability, and political risk. The management implications of these findings are discussed in detail.