The Impact of Gray-Listing on Capital Flows: An Analysis Using Machine Learning
  • 1 https://isni.org/isni/0000000404811396, International Monetary Fund
The Financial Action Task Force’s gray list publicly identifies countries with strategic deficiencies in their AML/CFT regimes (i.e., in their policies to prevent money laundering and the financing of terrorism). How much gray-listing affects a country’s capital flows is of interest to policy makers, investors, and the Fund. This paper estimates the magnitude of the effect using an inferential machine learning technique. It finds that gray-listing results in a large and statistically significant reduction in capital inflows.
IMF Working Papers

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