Results and Analysis
Descriptive Results
Table 3 provides information on the results of numerical features for money laundering transactions. The average amount of money transferred was $159,000—about $76,000, or 50% of total laundered transactions, made up most of the transfers. The highest amount laundered was $10 million. The average initial balance before the transaction was $875,000, while the average new balance after the transaction was $895,000. Note also that the maximum initial balance before the transfer and the new balance after the transfer was $38 million. The average initial balance of the recipient before the transaction was $978,000, while the average new balance after the transaction was higher at $1.1 million. Once again, it is worth noting that the maximum initial balance and the new balance of the recipient after the transfer was over $40 million. These findings suggest that money laundering is a significant problem, with large sums of money being transferred illegally 11,40.
The findings of this study have implications for both the government and the public. First, the findings indicate that much illegal activity is not being detected or stopped 40. Second, large amounts of money are not being taxed, which means the government is losing a lot of revenue 53. Third, the findings prove that an underground economy operates outside the legal system53,54. A large underground economy can have several negative consequences, such as making it more difficult for law-abiding businesses to compete and increase the chances of crime and corruption55. Regulators need to take action to address the problem of the underground economy or risk people being doubtful of the government’s ability to regulate the financial system.
Table 3: Summary Statistics