Predictors for compliance with anti-terrorist financing standards

Erik Joosten, Marion Bogers, Robert Beeres*, Robert Bertrand

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

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
Original languageEnglish
Pages (from-to)257-269
Number of pages13
JournalJournal of Money Laundering Control
Volume22
Issue number2
DOIs
Publication statusPublished - 7 May 2019

Keywords

  • FATF
  • compliance
  • countering terrorist finance
  • degree of compliance
  • economic consequences theory
  • international regime theory
  • Countering terrorist finance
  • International regime theory
  • Compliance
  • Economic consequences theory
  • FIGHT
  • Degree of compliance

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