Perceptions on jurisdiction risk: a cross-country analysis
| Date | 04 July 2023 |
| Pages | 548-558 |
| DOI | https://doi.org/10.1108/JMLC-05-2023-0089 |
| Published date | 04 July 2023 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Mete Feridun |
Perceptions on jurisdiction risk:
a cross-country analysis
Mete Feridun
Faculty of Economics and Business, Eastern Mediterranean University,
Famagusta, Turkey
Abstract
Purpose –The purpose of this article is to make a contribution to the existing knowledge by using the
unique cross-jurisdiction data drawn from the FCA’s REP-CRIM submissions to explore dynamics behind
firms’perceptionson financial crime. Capturing firm’s sentiment is notoriouslychallenging, and any relevant
regulatory datais usually not available in the public domain. A recent exceptionis the UK Financial Conduct
Authority’s (FCA’s) financial crime data return (REP-CRIM) submissions which include the cross-country
regulatory data on the UK financial institutions’perceptions of jurisdiction risk. Despite a broad literature
with respectto financial crime, there exists an important gap in the existing knowledgewith respect to factors
that are associated with the perceptions of firms with respect to jurisdiction risk, which this article aims
to close.
Design/methodology/approach –Using cross-countryregulatory data on the UK financial institutions’
perceptions of jurisdiction risk, this study empirically determines that perceptions of jurisdiction risk is
significantly andpositively associated with anti-money launderingand countering the financing of terrorism
(AML/CFT) framework,as well as with tax burden on business and institutionaland legal risk in the case of
165 jurisdictions.
Findings –The findings lend support to the propositionthat unsystematic efforts and too much publicity
may ascertain the high-riskimage of a jurisdiction, deterring cross-border business.Policy implications that
emerge from the study also add tothe case for strengthening institutional and legal frameworks,as well as
relievingthe tax burden on doing business.
Research limitations/implications –Findings ofthe present study should be interpreted withcaution,
as the dependent variable usedin the present study reflects UK firms’perceptions of jurisdiction risk, which
may depend on various factors such as different risk appetites and the countries in which firmscarry out
business, and not necessarily the actual level of risks based on financial crime statistics. For example, a
jurisdiction which may indeed be consideredhigh risk, would not necessarily be ranking high on the FCA’s
list of UK firms’jurisdictionrisk perceptions due to few firms operating in that particularcountry. As a result,
the list could differ from the Financial Action Task Force’s black and grey lists. Findings based on the
regulatory data on the UK financial institutions’perceptions of jurisdiction risk should be considered
preliminary in nature, giventhat they are based on a single year cross sectional data. As global and country-
level AML/CFTefforts continue to intensify and as more regulatorydata becomes publicly available, it would
be imperative to bring further empirical evidence to bear on the question of whether financial crime
perceptions are likely to bemore pronounced for jurisdictions where AML/CFT effortsare more intensified.
Likewise, from a policy standpoint,it would be equally important to explore further the role that institutional
and legal risk, as well as tax burden on businesses,play in shaping firms’perceptions of jurisdiction risk.
Practical implications –Findings lend support to the proposition that unsystematic effortsand too much
publicity may ascertain the high-risk image of a jurisdiction, deterring cross-border business. Therefore, rather
than waiting for more data to be made available by other financial regulators, which could lead to a more
conclusive evidence in the future, on balance, the findings of this study add to the case for carefullydesigning and
systematically implementing AML/CFT measures in a less publicized manner. Findings lend support to the
theoretical postulation that disorderly efforts and undue publicity regarding AML/CFT efforts serve to ascertain
the high-risk image of a jurisdiction, which could deter cross-border business and could be detrimental to how
firms undertake due diligence. They also suggest that disorderly implementation of AML/CFT measures may
JEL classification –C33, E43, G21, O33
JMLC
27,3
548
Journalof Money Laundering
Control
Vol.27 No. 3, 2024
pp. 548-558
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-05-2023-0089
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
Get this document and AI-powered insights with a free trial of vLex and Vincent AI
Get Started for FreeStart Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
Start Your Free Trial of vLex and Vincent AI, Your Precision-Engineered Legal Assistant
-
Access comprehensive legal content with no limitations across vLex's unparalleled global legal database
-
Build stronger arguments with verified citations and CERT citator that tracks case history and precedential strength
-
Transform your legal research from hours to minutes with Vincent AI's intelligent search and analysis capabilities
-
Elevate your practice by focusing your expertise where it matters most while Vincent handles the heavy lifting
