Administrative model of financial intelligence units: an analysis of effectiveness of the AML/CFT regime
Journal of Money Laundering Control
ISSN: 1368-5201
Article publication date: 6 August 2021
Issue publication date: 8 June 2022
Abstract
Purpose
The purpose of this paper is to study the impact of the model of an financial intelligence unit (FIU) and the availability of resources of an FIU on the strength of the anti-money laundering and countering the financing of terrorism (AML/CFT) legal framework and the overall effectiveness of the AML/CFT regime.
Design/methodology/approach
The authors use FIU specific characteristics to measure the impact on the developed AML/CFT Compliance Index (Jayasekara, 2020a) and AML/CFT Effectiveness Index (Jayasekara, 2020b) in measuring the overall effectiveness of an AML/CFT regime. In addition, the impact of an AML/CFT regime on the cost to exports and gross domestic product are modeled.
Findings
The empirical results suggest that the model of an FIU is an important determinant of an effective AML/CFT regime. The administrative model of FIU shows a negative relationship with the overall effectiveness of the AML/CFT regime. The availability of resources which was measured in terms of human resources at FIUs shows a significant positive relationship with the effectiveness. However, the model of an FIU and the availability of resources of an FIU are not significant determinants of a sound AML/CFT legal framework. The results further reveal that effective AML/CFT regimes promote economic growth and also international trade by reducing the cost of exports. Therefore, policymakers are required to reassess the administrative model FIU of the country and have to adopt a suitable model which has been assigned more power to implement the regime.
Practical implications
This study was initially designed to capture more FIU specific variables using a questionnaire to widen the scope of the study. However, the low response rate to the questionnaire forced us to rely on publicly available data on FIU characteristics. Therefore, appropriate FIU specific variables may be developed in future research based on this foundation.
Originality/value
This paper is an original work done by the author that discusses the FIU specific characteristics on the overall strength and effectiveness of AML/CFT regimes and further extends the use of originally designed AML/CFT Compliance Index and AML/CFT Effectiveness Index.
Keywords
Citation
Jayasekara, S.D. (2022), "Administrative model of financial intelligence units: an analysis of effectiveness of the AML/CFT regime", Journal of Money Laundering Control, Vol. 25 No. 3, pp. 511-525. https://doi.org/10.1108/JMLC-05-2021-0048
Publisher
:Emerald Publishing Limited
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