Predictors for compliance with anti-terrorist financing standards. Issue 2 (7th May 2019)

• Record Type: Journal Article
• Authors: Joosten, Erik; Bogers, Marion; Beeres, Robert; Bertrand, Robert
• Is Part Of: Journal of money laundering control. Volume 22:Issue 2(2019)
• Page Start: 257
• Page End: 269
• Publication Date: 2019-05-07
• Subjects: Compliance -- Countering terrorist finance -- Degree of compliance -- Economic consequences theory -- FATF -- International regime theory; Money laundering -- Periodicals; Money laundering investigation -- Periodicals; 364.168
• DOI: 10.1108/JMLC-02-2018-0011
• Languages: English
• ISSNs: 1368-5201

Abstract

Abstract : Purpose: The purpose of this paper is to identify and test predictors for countries to comply with the Financial Action Task Force's (FATF) anti-money laundering and terrorist financing recommendations. Design/methodology/approach: The authors conduct a quantitative study to explore which factors predict compliance of countries. They include the compliance scores of 196 countries. Findings: The results of a forward stepwise regression analysis show that a country's wealth, measured as gross domestic product (GDP) per capita, is the most important predictor for compliance. This result supports earlier academic work about predictors for compliance (Simmons, 1998; Giraldo and Trinkunas, 2007; Whitaker, 2010). The other factors identified suffering from terrorist attacks, relative financial market dominance, tourism sector and the degree of democracy do not explain additional variance in compliance. Practical implications: This research sheds light on compliance as a concept. For policymakers, accountants, companies and governments, it is important to understand why compliance occurs and why not. Originality/value: The empirical results indicate that, in contrast to common belief, countries that suffer more from terrorism are not more compliant. Moreover, the rate of democracy, a relative dominant financial market and a strong tourism sector do not stimulate compliance with anti-terrorist financing standards.