Predictors for compliance with anti-terrorist financing standards

Erik Joosten, Marion Bogers, Robert Beeres and Robert Bertrand

Journal of Money Laundering Control, 2019, vol. 22, issue 2, 257-269

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.

Keywords: Compliance; Countering terrorist finance; Degree of compliance; Economic consequences theory; FATF; International regime theory (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:jmlc-02-2018-0011

DOI: 10.1108/JMLC-02-2018-0011

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