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Drivers of Suspicious Transaction Reporting Levels: Evidence from a Legal and Economic Perspective

Braun, Julia and Kasper, Matthias and Majdanska, Alicja and Somare, Maryte (2016) Drivers of Suspicious Transaction Reporting Levels: Evidence from a Legal and Economic Perspective. Journal of Tax Administration, 2 (1). pp. 1-31. ISSN 2059 - 190X

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Abstract

Suspicious transaction reporting (STR) is a cornerstone of the international Anti-Money Laundering/Combatting the Financing of Terrorism (AML/CFT) framework. The evaluation of AML/CFT regimes is challenging, however, as the quality of STRs varies substantially between countries and little is known about the factors that drive STR. In combining legal and economic analyses, this article evaluates various factors that potentially explain STR levels. The analysis of the AML/CFT legislation in nine jurisdictions reveals that well-established legal and institutional structures promote the effectiveness of STR systems. In particular, the legal analysis shows that the scope of predicate offenses in national criminal law, as well as a penalty regime for non-compliance with the obligations under national AML/CFT legislation, seem to increase the quantity of STRs. Overly strict penalty regimes and insufficient training of entities with reporting obligations, on the other hand, likely stimulate over-reporting. Based on these findings, we econometrically investigate potential determinants of STR levels for 54 countries from 2006 to 2012. We find that high STR numbers indicate high levels of illegal activities such as terrorism and organized crime. Moreover, mutual evaluations of countries' AML/CFT frameworks entail a short-term increase in the number of STRs. (authors' abstract)

Item Type: Article
Additional Information: The authors wish to thank Michael Lang, Jeffrey Owens, Rick McDonell, Sergej Teterukov, Selvan Lehmann, Juan Sebastian Castano Gardeazabal, Olena Dudar Mustafa Yeter, Zareh Asatrayan, Chris Heady and two anonymous referees, and participants at the Shadow Economy, Tax Evasion and Fiscal Intermediaries Conference at TARC, University of Exeter, and at the WU Conference Tax and Good Governance in Africa for helpful discussions and comments. Julia Braun and Matthias Kasper gratefully acknowledge financial support by the Austrian Science Fund (FWF) W 1235-G16. Matthias Kasper gratefully acknowledges financial support by the Austrian National Bank (OeNB) 16042. The views expressed in this paper as well as all remaining inaccuracies and errors are, of course, solely our own.
Divisions: Departments > Öffentliches Recht und Steuerrecht > Österr. und Internat. Steuerrecht > Lang
Version of the Document: Published
Depositing User: ePub Administrator
Date Deposited: 27 Jun 2016 11:18
Last Modified: 29 Jun 2016 10:02
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/75171/
URI: http://epub.wu.ac.at/id/eprint/5066

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