The determinants of anti-money laundering compliance among the Financial Action Task Force (FATF) member states
Loading...
Date
2018-07
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Financial Regulation and Compliance
Abstract
Purpose
This paper aims to compute a measure for anti-money laundering/counter-financing of terrorism (AML/CFT) compliance and investigate its determinants.
Design/methodology/approach
Using the Financial Action Task Force (FATF) recommendations and assigning weights to them, the study computes a measure for AML compliance. Further, the determinants of AML compliance were investigated using ordinary least squares (OLS) data of 155 countries between 2004 and 2016.
Findings
The findings suggest that AML compliance have slightly improved over the years. Further, the OLS regression results show that technology, regulatory quality, bank concentration, trade openness and financial intelligence center significantly determined and improved AML compliance.
Practical implications
From the findings, it is evident that countries that wish to improve the AML compliance should focus more on technology, regulatory quality, structure of the banking sector, size of the economy and institution of financial intelligence center so as to enhance AML compliance.
Originality/value
To the best of the author’s knowledge, this paper reveals a first AML/CFT compliance index that measures the cross-country level of AML/CFT compliance from the year 2004 to 2016. Subsequently, this paper adopted an OLS econometric model to identify the key determinants of AML/CFT compliance among member states of FATF.
Description
Keywords
Anti-money laundering, Money laundering, Terrorist financing, Financial Action Task Force
Citation
Emmanuel Senanu Mekpor, Anthony Aboagye, Jonathan Welbeck, (2018) "The determinants of anti-money laundering compliance among the Financial Action Task Force (FATF) member states", Journal of Financial Regulation and Compliance, Vol. 26 Issue: 3, pp.442-459, https://doi.org/10.1108/JFRC-11-2017-0103