Assessing the competency of compliance officer knowledge in mitigating terrorism financing risks: Malaysian perspective

• Published in: JOURNAL OF MONEY LAUNDERING CONTROL
• Main Authors: Ismail, Noor Haslina; Nazri, Sharifah Nazatul Faiza Syed Mustapha; Zolkaflil, Salwa
• Format: Article; Early Access
• Language: English
• Published: EMERALD GROUP PUBLISHING LTD 2025
• Subjects: Criminology & Penology
• Online Access: https://www-webofscience-com.uitm.idm.oclc.org/wos/woscc/full-record/WOS:001391019300001
• ISSN: 1758-7808; 1368-5201
• DOI: 10.1108/JMLC-03-2024-0049

PurposeTerrorism had a profound impact on the global economy, society and security. Malaysia encountered a comparable scenario in the Movida attack. The availability of funds is a crucial determinant for successful terrorist activities. Hence, a guideline was introduced to deal with terrorism financing. As reporting institutions, the compliance officers are the gatekeepers to report any suspicious transaction related to money laundering and terrorism financing. However, lack of study has looked into the role of the compliance officer in reporting potential terrorism financing activities. Hence, this study aims to examine the factors that influence terrorism financing reporting, focusing on terrorism financing policy, terrorism financing red flags and the integrity of the officers.Design/methodology/approachA total of 120 responses were collected among the compliance officers and 91 responses were analyzed using multiple regression analysis.FindingsFindings show that only terrorism financing policy and terrorism financing red flags influence suspicious transaction reporting among the compliance officers. Hence, there is a need to focus on officer's competency, by enhancing the training module, especially on the latest terrorism financing trends and red flags.Practical implicationsThis will help the compliance officers to be more competent in fulfilling their role as the reporting entity because their roles are vital in preventing terrorism financing.Originality/valueThis study focuses on terrorism financing risk assessment, which is different from prior literature that focuses on money laundering risk assessment. Owing to lack of prior studies, the questionnaire developed in the study was made based on guidelines provided by the authority and regulator.