Fighting Organized Crime by Targeting their Revenue: Screening, Mafias, and Public Funds.

This article examines the effectiveness of a non-repressive Italian policy, the Antimafia Information Law, designed to prevent mafia-linked firms from misappropriating public subsidies exceeding 150,000 Euros by screening applicants for organized crime connections. Using data on European Union co-financed subsidies from 2008 to 2015, the study finds that after the law’s 2013 strengthening, firms—particularly those in mafia-affected cities and sectors—strategically self-select to apply for subsidies just below the screening threshold to avoid investigation. These sorting firms exhibit characteristics consistent with mafia involvement, such as poorer project performance, recent establishment, and financial indicators linked to money laundering. The research also identifies alternative circumvention strategies, including the use of trusted figureheads to bypass controls for larger subsidies. The findings highlight the adaptive behavior of criminal organizations in response to non-repressive policies and underscore the importance of continuous and comprehensive monitoring to effectively reduce organized crime’s infiltration of public funds.