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Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events.

Please check our website listings and Twitter feed @STICERD_LSE for updates.

Unless otherwise specified, in-person seminars are open to the public. Please ensure you have informed the event contact as early as possible.

Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.

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About this event

Organized crime groups (OCGs) invest substantial sums in legal economic activities worldwide. Evidence on these investments is limited due to data scarcity. We introduce a model differentiating contaminated (OCG benefits from connecting legal firm to illegal activities increasing the risk of detection) and pure investment (legal firm and OCG's illegal activities remain separate). The model clarifies how to distinguish these motives in the data and delivers predictions which we test using highly confidential records from the Bank of Italy's Financial Intelligence Unit. Among infiltrated firms, we distinguish born clean (that are later infiltrated) from born infiltrated. In born clean firms, infiltration is associated with a change in the sources of finance and increased liquidity, but no changes in operational outcomes, consistent with a pure investment motive. Born infiltrated firms, instead, present traits consistent with the contaminated motive. As born clean firms attract more OCG capital, our results suggest OCGs mainly use legal firms to invest in assets and acquire valuable connections.