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The paper shows how excessive reporting, called "crying wolf", can dilute the information value of reports. Excessive reporting is investigated by undertaking the first formal analysis of money laundering enforcement. Banks monitor transactions and report suspicious activity to government agencies, which use these reports to identify investigation targets. Banks face fines should they fail to report money laundering. However, excessive fines force banks to report transactions which are less suspicious. The empirical evidence is shown to be consistent with the model's predictions. The model is used to suggest implementable corrective policy measures, such as decreasing fines and introducing reporting fees.

Business. --- Capital movements. --- Money laundering. --- Banks and Banking --- Public Finance --- Taxation --- Criminology --- Illegal Behavior and the Enforcement of Law --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Taxation, Subsidies, and Revenue: General --- Auditing --- Corporate crime --- white-collar crime --- Banking --- Public finance & taxation --- Management accounting & bookkeeping --- Money laundering --- Tax incentives --- Legal support in revenue administration --- Banks and banking --- Revenue --- United States --- Money laundering investigation --- Econometric models. --- White-collar crime