Explaining money laundering with rational choice theory

Abstract

This research aims to explore if rational choice theory can be applied to explain money laundering in Hong Kong by drawing on the characteristics of stooges and their motives for colluding in money laundering activities and the effectiveness of imprisonment or other forms of punishments as a means of deterrence. An actor has limited cognitive capacity, makes decisions based on incomplete information and his actions reflect personal optimal beliefs (Piquero and Tibbetts, 2002; Hindmoor, 2006). Findings from the seven in-depth interviews conducted as part of the research and documentary reviews of local court cases support that financial reward is the major reason “why” offenders engage in money laundering activities at both the individual and institutional level. The findings also show that, in addition to ignorant and vulnerable individuals being chosen as stooges, well-regarded individuals and charitable organizations are also possible candidates. The research highlights a luring process experienced by the stooges which supports the psychosocial dynamics of rational choice. The research findings also challenge one of the cornerstones of classical criminology that maximum penalty is an effective means of deterrence.