Research On The Scale And The Economic Impacts Of Money Laundering In China

In 2012, the new "40 suggestions" on anti-money laundering and anti-terrorist financing of Financial Action Task Force (FATF) included the risk-based method as the primary principle, guiding the world's anti-money laundering and anti-terrorist financing. Meanwhile, in 2013, FATF published a risk assessment guideline of national money laundering and terrorist financing, in which money-laundering risk was defined as the function of three independent variables:the threat of money laundering, the impact of money laundering and the vulnerability of money laundering. China is one of the official members of FATF, so the research on the threat of money laundering and its economic impact, not only meets the objective needs of the Financial Action Task Force on sustained and healthy development of money laundering, but also is a realistic option for our country to effectively combat the rampant money laundering and terrorist financing activities. Therefore, this topic has significant theoretical and practical meaning, and its research results provide advices for making anti-money laundering policies.The first part is the research on the threat of money laundering. In 2013, FATF published a risk assessment guideline of the national money laundering and terrorist financing, the threat of money laundering was defined as four aspects, including the scale of money laundering that countries produced annually, its scale that flows to various countries of the world, the scale of money laundering at home and the scale that flow from various countries of the world. According to the definition of money laundering threat, first of all, Walker's scale of money laundering measure model and modified gravity model is used to measure the annual scale of 2000 to 2011 our countries money laundering and the scale that flows into the world's 183 countries and regions (including China). The study found that the scale of money laundering of our country, in 2000, was $3,715 billion, and in 2011, it rose up to $56.82 billion. China's total generating money laundering scale was $224,347 billion, an average annual production scale of $18,696 billion for money laundering in study period. In 2000 and 2011, the scale of outflow money laundering was $3,639 billion and $53,876 billion respectively. During the study, a total outflow of money laundering scale was $215,732 billion, an average annual outflow was $17,978 billion, and 67.18% of which flows into Macau, Taiwan, Japan, Luxembourg and other 25 countries and regions. Secondly, Walker's model is used to measure the annual scale of the world's money laundering annually and its scale of what flowing into china from 2000 to 2011. The study found that the scale of money laundering of the whole world was $6260.38 billionin in 2000, and $10705.96 billion in 2011. During the study, the accumulative number of the scale was $103571.97 billion, with an average of $863.1 billion per year. The scale of money laundering that flow into china in 2000, was $2.76 billion, and $15.75 billion in 2011. During the study period a total inflow of money laundering scale was $77.31 billion, with an average annual inflow of $6.44 billion. Specifically, among them more than 87.97% is from the United States, Germany, Britain, Brazil, Japan, Korea, France, Italy and other eight countries.The second part of the study is about economic impact of China's money laundering. The current study focuses more on literature about the impact of money laundering, however, most of the literature on the effects of money laundering are speculation which lack of solid empirical background. Firstly, this paper selects a specific financial sector-banking to do empirically research on the impact of money laundering on China's banking stability, using 2000-2013 data to measure the robustness of listed banks in China. At the same time, panel data model is used to analyze the impact of money laundering on the robustness of listed banks in China. The results showed that:China rising money laundering scale suppressed bank soundness, while inflows of foreign money-laundering also reduces bank soundness. Next, the most controversial areas of anti-money laundering research hotspot-the relationship between money laundering and economic growth is selected to do empirically research money laundering impact on China's economic growth, using 2005-2013 panel data model to analyze the impact of money laundering on China's economic growth. The results show that:money laundering suppressed China's economic growth.Finally, according to the above conclusions, some suggestions for making anti-money laundering policies are put forward.