EU Money Laundering Regulation Limit the Use of Tax Havens

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Abstract

Purpose
Recent research shows that financial institutions in the European Union (EU) close branches, offices and correspondent connections to jurisdictions with less transparency due to possible sanctions related to the increase in EU money laundering regulation. This tendency is called de-risking and the purpose of this paper is to analyze whether the recent regulatory approach towards money laundering in the EU limits the incentive to have operations in tax havens.

Design/methodology/approach
This paper follows a functional approach to law and economics.

Findings
The paper finds that recent EU money laundering regulation increase an incentive for financial institutions to limit any connection to jurisdictions known as tax havens, where transparency is at minimum. Thereby, it can be discussed whether the spillover effect from money laundering regulation in to the fight of tax avoidance could support further regulatory interference.

Originality/value
The recent trend of de-risking in light of money laundering regulation is scarcely covered by present research. Furthermore, there has been no linking of this de-risking tendency and the effects or relation to the use of tax havens/low tax jurisdictions.
Original languageEnglish
JournalJournal of Financial Crime
Number of pages13
ISSN1359-0790
DOIs
Publication statusPublished - 18 May 2021

Bibliographical note

Epub ahead of print. Published online: 18 May 2021.

Keywords

  • Money laudering
  • Compliance
  • Tax avoidance
  • Financial crime
  • Tax havens

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