Effectiveness criteria of suspicious transaction reporting for early detection of terrorist financing activities

Abstract

Purpose

This study aims to evaluate the suspicious transaction reporting (STR) as a financial intelligence tool to identify the potential strengths and limitations of STR and to come up with the criteria, which will make this tool an effective one in early detection of terrorist financing activities.

Design/methodology/approach

Considering the research aim, this research uses the funnelling method for identifying effectiveness criteria. Funnelling is a method of literature review that helps find pertinent literature by refining the search through filtering the available research (Ridley, 2008). Using this method, the researcher first applied the criteria of actionable intelligence to filter the financial intelligence tools to select the most promising and important tool (suspicious transaction reporting) for early detection of terrorist financing activities. The funnelling method was also applied to derive the effectiveness criteria from the operational features, and corresponding limitations, of the suspicious transaction reporting system. The funnelling method was also used to identify those operational features and limitations of suspicious transaction reporting that have the most direct relevance to the early detection problem of suspicious transaction reporting.

Findings

There are some operational features of STR that give rise to certain limitations that undermine its effectiveness in terms of early detection of terrorist financing activities. The limitations of STR necessitate a search for criteria that will make STR effective in early detection of terrorist financing activities. Based on the operational features and their corresponding limitations, effectiveness criteria for STR have been derived in this study. It is shown how these effectiveness criteria can remove the limitations of STR.

Research limitations/implications

The list of operational features and the corresponding limitations based on which the effectiveness criteria have been derived may not be exhaustive. There may have other operational features, and corresponding limitations that also make STR largely ineffective in the early detection of terrorist financing activities, and for which more effectiveness criteria should also be derived.

Practical implications

The limitations and the effectiveness criteria will pave the way for redesigning STR in such a way that will make it highly useful for detecting financing activities relating to imminent terrorist attacks.

Social implications

The society will experience fewer terrorist attacks that will make the society peaceful, happy and vibrant.

Originality/value

In this study, the effectiveness criteria of STR for early detection of terrorist financing activities have been derived in an innovative way by deducing them from the operational features of STR and the corresponding limitations.

Citation

Gowhor, H.S. (2023), "Effectiveness criteria of suspicious transaction reporting for early detection of terrorist financing activities", Journal of Financial Crime, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFC-10-2023-0254