Money laundering and corrupt officials: a dynamic model

The purpose of this paper is to develop a theoretical model to study the impact of corruption on money laundering.

The relationship between corruption and money laundering has been modelled by using differential games.

The authors' model suggests that corruption increases the quantity of dirty money laundered in the formal economy. It was also found that, jointly with the anti‐laundry regulations, the government should create a better salary policy, as a way to control corruption of federal officials.

To best of the authors' knowledge, this is the first theoretical paper that studies the link between money laundering and corruption.