The effects of auditing and reporting standards and country-level governance on money laundering: A cross-country analysis

Abstract

This study explores how strength auditing and reporting standards (SARS) and country-level governance interplay to reduce money laundering. The empirical study is based on a panel dataset of 109 countries, over the period 2012–2019. To test our hypotheses, relevant statistical techniques are used to enhance the robustness of the models. The empirical results reveal that the interaction between SARS and country-level governance affect significantly and negatively money laundering. Additionally, through dynamic analysis we found that SARS and country-level governance affect jointly Money laundering level, which confirm the complementarity between the two mechanisms. Money laundering is a worldwide phenomenon that threatens the stability of economies. Consequently, the regulatory bodies and international organization should improve auditing and reporting standards as well as governance practices at different levels (macro, micro, and mezzo).