Impact of Corruption-Driven Vulnerabilities of an Emerging Economy in Achieving Economic Prosperity and Strengthening the Anti-Money Laundering Legal Framework

Abstract

This paper investigates the impact of corruption on economic growth. It discusses the corruption-driven vulnerabilities in achieving economic prosperity and preventing money laundering in emerging economies where corruption is prevalent. This paper employs a combination of quantitative and qualitative approaches, utilizing robust regression in the first phase to investigate the relationship between corruption and economic growth. The second phase employs qualitative analysis, in which 66 convictions are categorized and analyzed to provide micro-level evidence supporting the empirical findings on corruption and economic growth. The empirical results indicate that corruption is detrimental to economic growth, posing a significant challenge for emerging economies. The second-phase analysis reveals that widespread corruption is a significant barrier to implementing an effective regime to combat money laundering and terrorist financing in emerging countries with high levels of corruption. The corrupt policymaking, government administration, and management of resources, including lands, the education system, and law enforcement processes, hinder the effective implementation of the anti-money laundering (AML) regime due to higher human intervention. Therefore, this study proposes to develop a comprehensive payment ecosystem that reduces human intervention to improve the effectiveness of the AML regime and address many macroeconomic issues driven by the government's fiscal limitations. This paper provides only a conceptualized model based on the analysis of convictions related to bribery and corruption in the Sri Lankan context.

Received: 12 August 2025 | Revised: 21 January 2025 | Accepted: 28 February 2026

Conflicts of Interest

The author declares that he has no conflicts of interest to this work.

Data Availability Statement

The data that support the findings of this study are openly available in Transparency International at https://www.transparency.org/en/gcb and https://www.transparency.org/en/cpi/2024 and the World Bank at https://data.worldbank.org/indicator/GC.TAX.TOTL.GD.ZS and https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.

Author Contribution Statement

Sisira Dharmasri Jayasekara: Conceptualization, Methodology, Software, Validation, Formal analysis, Investigation, Resources, Data curation, Writing – original draft, Writing – review & editing, Visualization, Supervision, Project administration.