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To review the reported compliance levels of third round mutual evaluations with a view to determining any change or differences in compliance levels for Financial Action Task Force (FATF) member countries following the updating of FATF's Forty Recommendations in 2003 and the introduction of the Nine Special Recommendations relating to the financing of terrorism.

A comparison of pre‐ and post‐2003 compliance with the FATF's Forty Recommendations and Nine Special Recommendations is made using both self‐assessment and mutual assessment data.

There are significant differences in compliance levels pre and post 2003. Since, the FATF updated their Forty Recommendations in 2003 compliance with those Recommendations has declined. With regard to the Nine Special Recommendations which have not changed since their introduction there is a significant difference between self‐assessment compliance levels in 2003 and compliance determined using independent mutual evaluations, casting doubt on the value of self assessment.

In using an analytical approach it has been necessary to put numerical values on compliance levels used by the FATF. Given that these are very broad, substituting a single value for each compliance level will provide only a crude measure of compliance for comparisons to be made. The results should therefore be used as a guide to the ranking and compliance of countries rather than some exact measurement of compliance.

The value of self assessment by FATF members should be re‐evaluated.

Publication of the third round of FATF mutual evaluations provides an opportunity, not previously available, to analyse the compliance levels amongst FATF members.

To gauge the extent to which the global financial system is anti‐money laundering (AML)/countering the financing of terrorism (CFT) prepared by analysing and comparing the AML/CFT systems of Financial Action Task Force (FATF) members with countries belonging to regional AML organisations.

Mutual evaluation data of 16 FATF members and 21 non‐FATF countries is analysed and compared using Kruskal‐Wallis and paired‐t tests to determine similarities and differences across the two groups of countries.

AML/CFT systems of FATF members and non‐FATF countries are poor. The lack of compliance with global AML/CFT standards leaves so many holes in these countries' regulatory, financial, and legal systems that money laundering with or without any relationship to the financing of terrorism, would be relatively easy to achieve.

In using an analytical approach it has been necessary to put numerical values on compliance levels used by the FATF. Given that these are very broad, substituting a single value for each compliance level will provide only a crude measure of compliance for comparisons to be made. The results should therefore be used as a guide to the ranking and compliance of countries rather than some exact measurement of compliance.

There will need to be follow‐up visits to this round of mutual evaluations to evaluate country responses to their poor assessments.

Publication of mutual evaluations by the FATF and a number of regional bodies has enabled a comparison of AML/CFT systems from countries around the world. Lack of data has not enabled this to be done before.

The purpose of this paper is to investigate how well countries comply with global anti-money laundering and counter-financing of terrorism (AML/CFT) regulations.

With the help of an AML/CFT compliance index composed by the author, this study is able to numerically quantify countries’ AML/CFT compliance levels. Countries were selected based on their membership with the Financial Action Task Force (FATF), precisely members who have gone through at least one round mutual evaluation and have duly submitted a report to the task force. The AML/CFT index was composed by assigning numeric values to the individual country ratings across all 49 FATF recommendations contained in their mutual evaluation reports (MER).

Some notable findings include the yearly global level of AML/CFT compliance between the period 2004 and 2016, as well as compliance levels across continents for the same period. Compliance levels for the seven components of the FATF recommendations were also reported to help assess which set of recommendations countries comply with the most and why they do. It was also found that countries’ lack of compliance was as a result of high cost of compliance with FATF recommendations.

The main limitation of this study was a lack of high-frequency AML data of countries, especially less-developed countries.

The uniqueness of this paper lies in the fact that the AML/CFT compliance index constructed and used in the study is the first of its kind.

This paper aims to empirically investigate the relationship between the level of compliance with the German Corporate Governance Code’s (GCGC) recommendations and the implied cost of equity capital (ICC). German listed companies are required by law to annually disclose their compliance with the recommendations of the GCGC. Whether the GCGC achieves its aim to promote the trust of stakeholders in the management and supervision is still an open question.

ICC is regressed on a score that captures compliance with the GCGC and several control variables. The dataset covers the period of 2003-2012 with declarations of compliance from 447 companies. ICC is chosen as an outcome variable, as it captures general investment risk as well as risk arising from asymmetric information and mistrust of investors in management.

The results of the empirical analysis demonstrate that a higher level of GCGC compliance is associated with lower ICC.

It is expected that the results of this study will strengthen acceptance of the GCGC and empirically support the work of the government commission that is responsible for it. It has not been analyzed yet whether the firms cite good reasons why they do not adhere to certain items.

This empirical analysis is the first to provide statistically reliable evidence on how compliance with the GCGC affects ICC and whether the work of the government commission reflects good corporate governance as perceived by capital markets.

Purpose of article – Board of Directors are characterized as essential elements in the structure of corporate governance. Hence, this study aimed at identifying the governance practices of Latin-American companies in relation to the fifth principle – “Responsibilities of the Board” – recommended by the Organization for Economic Cooperation and Development (OECD) for this region (Brazil, Argentina, Mexico, and Chile).

Design/methodology/approach – To that end, the legislation and corporate practices of companies in the four countries were studied so as to identify legal provisions on the subject and additional procedures adopted by such companies comparatively to OECD recommendations.

Findings – The results showed that Mexico was the country with the highest level of full compliance with OECD recommendations, followed by Argentina, Brazil, and lastly by Chile. They also showed that a lot of improvement still needs to be made so as to ensure the responsibilities of the board in terms of integrity, efficacy remuneration dissemination, and technical competence.

Research limitations/implications – This study was restricted to only four countries in Latin America: Brazil, Argentina, Mexico, and Chile. This procedure is justifiable by the fact that OECD designed its recommendations based on these four countries. It is also important to point out that this study has focused only on Principle V of OECD (2004), concerning the Responsibilities of the Board of Directors.

Originality/Value of article – This study is justified by the need to understand and disseminate Latin-American practices in face of the region-specific governance recommendations designed by OECD, notably on the behavior of the Board of Directors. This region has developing countries with an active stock market. The region presents great potential for economic development, hence the need for these types of studies.

Designated non-financial businesses and professions (DNFBPs) are important actors both in the formal and informal sectors owing to the nature of services they offer. The DNFBPs are key players in financial and economic development and thus are highly vulnerable to money laundering (ML) and terrorist financing (TF) risks. Globally, and indeed, within the West African region, typologies studies have indicated several instances of misuse of DNFBPs for the laundering of proceeds of crime and to a lesser extent, TF. Factors that make DNFBPs vulnerable to ML and TF in the region, include limited understanding of ML/TF risk and anti-money laundering and combating the financing of terrorism (AML/CFT) obligations, and poor implementation of AML/CFT measures by the sector. As reporting institutions, DNFBPs are required to implement appropriate measures to mitigate the ML/TF risk facing them. Mutual evaluation reports (MERs) of countries in the region noted weak implementation of AML/CFT measures by DNFBPs compares to financial institutions. These coupled with the general poor monitoring and supervision of DNFBPs for compliance, make them a weak link in member states’ AML/CFT regime. This study examined how Economic Community of West African States member states can plug the loopholes in the DNFBPs to strengthen their AML/CFT regime and thus improve their performance during mutual evaluation. This study reviewed data from the publications of Inter-Governmental Action Group against Money Laundering in West Africa (GIABA), Financial Action Task Force (FATF) and other credible sources.

This study is more of desk-review based on secondary data, including information obtained from GIABA, and FATF publications, and websites as well as information obtained from reliable sources on the internet. The authors reviewed the MERs of GIABA member states that have been assessed under the second round, especially that of Ghana, Senegal, Cape Verde, Mali and Burkina Faso, with particular focus on sections of the reports relating to preventive measures and supervision. In general, this paper adopts a policy approach with a view to explaining the importance and benefits of implementing AML/CFT preventive measures by reporting entities, especially the DNFBPs.

This study found that there is a general lack of information on the exact size of DNFBPs across member states, the risk of ML/TF associated with DNFBPs is generally identified as high across member states (albeit at different levels), the extent and level of monitoring/supervision of DNFBPs for AML/CFT compliance trails what is obtainable in financial institutions; the institutional and operational frameworks for regulating, supervising and monitoring DNFBPs are either weak or poorly defined in many member states; and the focus of AML/CFT technical assistance has been more on financial institutions than DNFBPs. Although the number of MERs reviewed for this work may be few, the findings and conclusions in the concluded MERs reflect regional peculiarities, including high informality of the economies, preponderance use of cash in transactions, diversity of DNFBPs and the general weak application of AML/CFT preventive measures by these entities, and the weak AML/CFT supervision or monitoring of DNFBPs which cut across all GIABA member states. Although efforts to address the weaknesses in the DNFBPs, including training and supervision, have commenced, in most member states, these are still at rudimentary levels.

However, this study is limited by the fact that it was desk-based review without direct inputs of industry players (DNFBPs and their supervisors).

In general, this paper adopts a policy approach with a view to explaining the importance and benefits of implementing AML/CFT preventive measures by reporting entities, especially the DNFBPs. It aims to bring to the fore the weaknesses of the DNFBPs in the implementation of AML/CFT preventive measures and therefore will be useful to national authorities who are striving toward strengthening their national AML/CT regimes and to DNFBPs who wish to protect the integrity and stability of their system.

It is imperative to mention that the weak compliance by DNFBPs, and indeed other challenges inhibiting effective implementation of preventive measures, is not peculiar to West Africa. A review of MERs of 17 African countries (eight countries in the Eastern and Southern Africa Anti Money Laundering Group region, five in GIABA region and three in the Middle East and North Africa region assessed under the current round as on October 2020, show a similar pattern of weak ratings under Immediate Outcome 4.

This paper aims to explore the potential for disclosure recommendations given by authoritative supervisory bodies to reduce information asymmetry between the management and shareholders.

There is only meagre existing evidence concerning firms' responses to disclosure recommendations. This paper uses descriptive statistics and OLS regression analysis to test if firms behave more similarly to voluntary or to mandatory disclosure when they follow the Committee of European Securities Regulators disclosure recommendation for International Financial Reporting Standards transition. Second, it analyses the determinants of and incentives for recommended transition disclosure.

Recommended disclosure is documented to have more mandatory characteristics than purely voluntary disclosure. Moreover, the certain disclosure incentives for managers and corporate governance factors prove to have an impact on recommended disclosure. Firm size, growth prospects, and independent board members associate positively with recommended disclosure whereas there is a negative relationship between financial leverage and recommended disclosure.

The paper does not provide evidence on the cost differences between disclosure laws and authoritative disclosure recommendations. This could be examined by future research.

Authoritative disclosure recommendations reduce information asymmetry. In some cases they may be a faster and more cost‐efficient way to achieve disclosure enhancements than regulation.

This paper is the first to explore the efficiency of authoritative disclosure recommendations in situations where urgent disclosure improvements are needed. The results have implications for regulatory bodies evaluating different strategies to reduce asymmetric information in these situations.

Under scrutiny in light of the growing threat of international terrorism, Qatar faces pressure and accusations that it is not doing enough to counter terror financing and clamp down money laundering. The issue is not that Qatar is avoiding positive action, but that by the time measures are implemented, they become outdated because the international community has by then tightened its regulatory requirements. Qatar’s slow pace has led to a case of cat-and-mouse chase with respect to updating its standards, with a revised set of rules being required by the time Qatar implements the last set of international standards. This study aims to draw on lessons from the past to help Qatar avoid findings of it falling below international standards in the upcoming 2017 mutual evaluation.

The primary purpose of this article is to catalogue Qatar’s efforts to comply with international anti-money laundering (AML) and anti-terror finance standards. It demonstrates the real legislative progress post-2008 recorded by Qatar to minimize money laundering and terrorist financing. The paper also contests the view that Qatari law is insufficient.

The paper explains Qatar’s efforts to comply with the recommendations made by each evaluation by the Financial Action Task Force (FATF). It also highlights the potential for Qatar to be caught out again by the evolution of international expectations in an upcoming review, which, it is understood, is likely to take place in 2017.

No article exists specifically on this research field. As Qatar prepares for its 2017 FATF evaluation, it should be reminded of the need to comply with all new standards.

The legal profession is vulnerable to abuse for the purposes of money laundering and terrorist financing. According to the Financial Action Task Force (FATF), that vulnerability justified updated global recommendations that urge countries to require lawyers, notaries and other independent legal professionals – including sole practitioners, partners and employed professionals within law firms – to identify, assess and manage the money laundering and terrorist financing risks associated with their services and to ensure that they have appropriate mechanisms in place to provide risk assessment information to competent authorities. Those recommendations proved contentious, with concerns raised by both legal academics and legal professional bodies about the implications of certain aspects of the requirements for the principle of lawyer–client confidentiality. Despite those concerns, many countries have introduced or amended regulatory regimes to extend their application to the legal sector to comply with the FATF’s standards. The purpose of this paper is to contribute to the debate surrounding the extension of AML/CTF obligations to the legal profession.

This paper considers three jurisdictions – the UK, Israel and Australia – at different stages in their journey towards compliance with the FATF’s anti-money laundering (AML) and counter-terrorist financing (CTF) standards for the legal profession. While the UK has a long-established and well-embedded AML regulatory framework for legal professionals, Australia remains non-compliant with the FATF standards. Israel occupies a position between these two ends of the spectrum: following criticism of the omission of lawyers from its AML/CTF regime, Israel implemented due diligence rules for the profession. In 2018, Israel was found to be partially compliant with the relevant FATF recommendations.

It argues that although there are challenges involved, there are also important benefits. Therefore, Australia should act to implement its proposed changes sooner rather than later. Its persistent failure to appropriately address globally recognised areas of vulnerability leaves Australia open to integrity abuse. In addition, if the government delays addressing this issue until pressure from the FATF (such as deadlines for compliance and, if necessary, a finding of non-compliance) forces it to comply, this may tarnish Australia’s reputation, threaten its access to international financial markets and adversely affect the legitimacy and effectiveness of its AML/CTF regime.

Originality in this context refers to the distinctiveness and uniqueness of a paper’s content and approach. In this case, the originality lies in the fact that there is no other existing paper that addresses the topic of three common-law jurisdictions at various stages of their progression towards aligning with the FATF AML/CTF standards, specifically within the context of the legal profession. Furthermore, the timeliness of this paper is underscored by the fact that multiple jurisdictions are currently deliberating their positions on the focus of this paper. This adds to its originality and relevance, as it addresses a gap in the literature while also contributing to the ongoing discourse surrounding compliance with FATF’s standards.

The purpose of the current study is to examine the applicability of general strain and procedural justice theories to retail banking deviance in an effort to improve compliance programs.

This objective is achieved through a qualitative case study of active members of the retail banking industry guided by three research questions. First, how do participants view their companies' current compliance programs? Second, what types of crime or deviance are present in the data in which general strain and procedural justice theories are indicated? Third, what ethics and compliance recommendations can be made from the identified deviance and underlying theories?

Results indicate that current ethics and compliance programs are viewed as having serious flaws. Results also show the presence of a large amount of fraud based deviance in which both general strain and procedural justice theories seem to be implicated. Specific compliance enhancements are proposed in light of these findings.

The current study is one of the first to examine white collar crime deviance and ethics and compliance programs in the retail banking industry. Conducting research in specific industries is key as findings from a study in a particular industry may not extrapolate to another. Further, the current study uses a qualitative approach, which allows a deeper understanding of underlying mechanisms, with participants who have committed some form of deviance and are active members in their industry. Because of this fact, this study has the potential to provide new and different insights than a study conducted using students or other such participants and hypothetical scenarios.