Abstract: The main purpose of this paper is to explore the impact of money laundering phenomenon on economic growth level, respectively focusing on Republic of Kosovo and its trade partners’ economic growth. In order to achieve this objective, the authors used a dynamic panel generalised methods of moments (GMM) technique. This paper provides results about measure of effect of money laundering on economic growth and the objective is to provide reasonable evidence that money laundering empirically impacts the macroeconomic indicators, respectively the economic growth of the country. When compare with past literature, similar results are found about negative effect of money laundering on economic growth. Through this paper, it is concluded that reductions in annual growth rates were associated with increases of variables related with money laundering. The key contribution of the paper is that it provides clear results about the effect of this phenomenon on economic growth which is very important for academics, researchers and universities. Moreover, the study is original and unique because puts Republic of Kosovo to the centre which is not studied in the past. As conclusion, through this paper is proved the hypothesis that money laundering has a significant effect on economic growth and this effect is negative
