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The impact of Switzerland's money laundering law on capital flows through abnormal pricing in international trade

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  • Maria de Boyrie
  • Simon Pak
  • John Zdanowicz

Abstract

The objective of this research is to determine the impact of Switzerland's money laundering law on the movement of money through false invoicing in international trade. This study evaluates every reported import and export transaction between the USA and Switzerland during the period 1995-2000. The study indicates that there were significant changes in the degree of abnormal international trade pricing subsequent to the enactment of Switzerland's antimoney laundering law. The study supports the view that individuals and companies will find substitute techniques and channels to launder money when central banking authorities enact legislation that only focuses on financial institutions.

Suggested Citation

  • Maria de Boyrie & Simon Pak & John Zdanowicz, 2005. "The impact of Switzerland's money laundering law on capital flows through abnormal pricing in international trade," Applied Financial Economics, Taylor & Francis Journals, vol. 15(4), pages 217-230.
    • Handle: RePEc:taf:apfiec:v:15:y:2005:i:4:p:217-230
    DOI: 10.1080/0960310042000313200
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    References listed on IDEAS

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    Cited by:

    1. Eulaiwi, Baban & Khalaf, Nihad Shareef & Al-Hadi, Ahmed & Duong, Lien & Taylor, Grantley, 2024. "Money laundering governance and income shifting: Evidence from Australian financial institutions," Economic Modelling, Elsevier, vol. 132(C).
    2. Lourenço S. Paz, 2022. "Measuring illicit financial flows: A gravity model approach to estimate international trade misinvoicing," WIDER Working Paper Series wp-2022-24, World Institute for Development Economic Research (UNU-WIDER).
    3. Nitsch, Volker, 2011. "Trade Mispricing and Illicit Flows," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 54540, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    4. Mianshan Lai & Jia Hou, 2023. "Let us misinvoice more? The effect of de jure capital controls on trade misinvoicing," The World Economy, Wiley Blackwell, vol. 46(7), pages 2157-2186, July.
    5. Alex Cobham & Petr Janský & Alex Prats, 2014. "Estimating Illicit Flows of Capital via Trade Mispricing: A Forensic Analysis of Data on Switzerland - Working Paper 350," Working Papers 350, Center for Global Development.
    6. Carton, Christine & Slim, Sadri, 2018. "Trade misinvoicing in OECD countries: what can we learn from bilateral trade intensity indices?," MPRA Paper 85703, University Library of Munich, Germany.
    7. Mehrotra, Rahul & Carbonnier, Gilles, 2021. "Abnormal pricing in international commodity trade: Empirical evidence from Switzerland," Resources Policy, Elsevier, vol. 74(C).
    8. Unger Brigitte, 2009. "Money Laundering - A Newly Emerging Topic on the International Agenda," Review of Law & Economics, De Gruyter, vol. 5(2), pages 807-819, December.
    9. Slim, Sadri, 2015. "Un modelo Mundell-Fleming con economía ilegal y lavado de dinero [Modeling illegal economy and money laundering: a Mundell-Fleming framework]," MPRA Paper 64675, University Library of Munich, Germany.

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