Predictors for compliance with anti-terrorist financing standards
| Date | 07 May 2019 |
| Pages | 257-269 |
| Published date | 07 May 2019 |
| DOI | https://doi.org/10.1108/JMLC-02-2018-0011 |
| Author | Erik Joosten,Marion Bogers,Robert Beeres,Robert Bertrand |
Predictors for compliance with
anti-terrorist financing standards
Erik Joosten
Royal Air Force, Breda, The Netherlands, and
Marion Bogers,Robert Beeres and Robert Bertrand
Netherlands Defence Academy, Breda, The Netherlands
Abstract
Purpose –The purpose of this paper is to identify and test predictors for countries to comply with the
FinancialAction Task Force’s (FATF) anti-money laundering and terroristfinancing recommendations.
Design/methodology/approach –The authors conduct a quantitative study to explore which factors
predictcompliance of countries. They include the compliancescores of 196 countries.
Findings –The results of a forward stepwise regression analysis show that a country’swealth,
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 understandwhy compliance occurs and why not.
Originality/value –The empirical resultsindicate that, in contrast to common belief, countries thatsuffer
more from terrorism are not more compliant.Moreover, the rate of democracy, a relative dominant financial
market anda strong tourism sector do not stimulate compliancewith anti-terrorist financing standards.
Keywords Compliance, Countering terrorist finance, Degree of compliance,
Economic consequences theory, FATF, International regime theory
Paper type Research paper
1. Introduction
Since September 2001, the Financial Action Task Force (FATF) coordinates an
international campaign against criminal money laundering and terrorist financing
(FATF, 2012). Transnational terrorism is an international problem and countering
terrorism is a responsibility of all countries in the world (Giraldo and Trinkunas, 2007).
Cutting of resources has proved to be an effective method in fighting terrorism (Clunan,
2006). The FATF made recommendations and standards for countries to make it harder
for terrorists to finance themselves. The effectiveness of countering terrorist financing
depends on the compliance of countries with these standards (Clunan, 2006;Jensen and
Png, 2011;Mugarura, 2013). Although the fierceness and collectiveness of the terrorist
threat is obvious, it remains a challenge to realize full cooperation of all states in
countering terrorist financing. The degree of compliance is studied by scholars like
Johnson (2008),Bogers and Beeres (2013) and institutions like the FATF. Their findings
show that both the absolute as the relative degree of compliance with FATF standards
differ between countries.
This study investigateswhat factors are associated with the complianceof governments.
Its main goal is to enlighten the understanding of the considerations of countries regarding
Predictors for
compliance
257
Journalof Money Laundering
Control
Vol.22 No. 2, 2019
pp. 257-269
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-02-2018-0011
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