干净的钱，高成本？-2025.9

International Finance Discussion Papers ISSN 1073-2500 (Print)ISSN 2767-4509 (Online) Number 1422 September 2025 Clean Money, High Costs? Viktors Stebunovs NOTE: International Finance Discussion Papers (IFDPs) are preliminary materials circulated to stimu-late discussion and critical comment.The analysis and conclusions set forth are those of the authors anddo not indicate concurrence by other members of the research staff or the Board of Governors. Referencesin publications to the International Finance Discussion Papers Series (other than acknowledgement) shouldbe cleared with the author(s) to protect the tentative character of these papers. Recent IFDPs are availableon the Web at www.federalreserve.gov/pubs/ifdp/. This paper can be downloaded without charge from theSocial Science Research Network electronic library at www.ssrn.com. Clean Money, High Costs? September 23, 2025 Viktors Stebunovs‡ Abstract:A cornerstone of the law-and-finance literature is that stronger institutionsreduce financial intermediation costs.Using global data on cross-border payment costs, Ishow this relationship can reverse in heavily regulated sectors. Anti-money laundering riskshave larger cost effects in advanced economies with strong enforcement than in developingcountries with weak enforcement, despite the former having lower underlying risks.Thiscounterintuitive pattern reflects strong institutions operating through two channels: Directlyreducing costs through risk mitigation and forcing risk-based pricing that eliminates cross-subsidization. The net results demonstrate that traditional studies can miss heterogeneityby not controlling for risk levels: Strong institutions benefit low-risk jurisdictions but forcehigh-risk ones to pay higher costs for their risk profiles. Policy implications favor improvingenforcement and lowering risks rather than treating these as substitutes. The findings haveimplications for emerging payment rails, such as regulated payment stablecoins, which facesimilar AML requirements. Keywords: Cross-border payments, anti-money laundering, institutional quality, law en-forcement, compliance costs, competitive forces, risk-based pricing, regulated payment sta-blecoins. JEL Classifications: F20, F24, F30, G20, G21, G23, G28, G50. ‡Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW,Washington, DC 20551, U.S.A.; viktors.stebunovs@frb.gov. URL:http://www.federalreserve.gov/econresdata/viktors-stebunovs.htm.The views in this paper are solely the responsibility of the author and should not be interpreted asreflecting the views of the Board of Governors of the Federal Reserve System or the Federal ReserveSystem. 1Introduction The cornerstone of the law-and-finance literature is that stronger institutions—better legalsystems, more effective contract enforcement, stronger property rights—reduce financial interme-diation costs. Yet I show this relationship can reverse in heavily regulated sectors, with strongerinstitutions actually raising costs, especially for high-risk market participants. Using comprehen-sive data on cross-border payment costs faced by consumers, I find that anti-money laundering(AML) and related financial crime risks have significantly larger cost effects in advanced economieswith strong enforcement than in developing countries with weak enforcement—despite advancedeconomies having lower underlying risk levels. For high-risk jurisdictions, strong institutions canincrease financial intermediation costs rather than reduce them. This counterintuitive pattern reflects a limitation in existing research:The law-and-financeliterature typically does not separate the risk reduction effects of strong institutions from theirrisk pricing effects.For example, when Laeven and Majnoni (2005) find that judicial efficiencyreduces loan spreads, this could reflect lower actual default risks (institutions deter moral hazard),more accurate risk assessment (institutions enable better pricing), or both. Without explicit con-trols for underlying risk levels, studies can conflate these distinct mechanisms and miss importantheterogeneity in institutional effects. I address this counterintuitive pattern by explicitly separating risk reduction from risk pricingeffects using cross-border payments as a laboratory.This setting offers crucial advantages: Risklevels are measurable independently of cost outcomes through standardized AML risk indexes,enforcement intensity varies significantly across countries and time, costs are directly observable,and the regulatory frameworks have commonalities.1 My empirical strategy exploits variation in enforcement intensity across jurisdictions and time,interacting this with separately measured AML risk levels. I estimate multidimensional panel regres-sions with comprehensive fixed effects, explicitly modeling how enforcement affects both baselinecosts and the sensitivity of costs to risks. This approach cleanly separates institutio