An Economic Investigation of Confiscation as a Tool Against Money Laundering

Abstract

In this paper the eciency of the confiscation as a tool against organized crime is studied by using a general equilibrium model that considers the existence of a representative criminal organization that generates profits that need to be laundered. The main result of the paper shows that if on one hand confiscation diminishes the optimal amount of money laundered on the other it increases the fraction of resources allocated to the criminal activity. This result suggests that confiscation has to be connected to further repressive measures in other to be an ecient tool against organized crime.