Banks’ vulnerabilities to money laundering activities

Peter Yeoh

Journal of Money Laundering Control, 2020, vol. 23, issue 1, 122-135

Abstract: Purpose - This paper aims to provide insights as to why money laundering persists in banks and their weaknesses as gatekeepers. Design/methodology/approach - This paper contextualizes the design and proliferation of anti-money laundering (AML) measures; investigates the different manners of conceptualizing them; and provides insights pertaining to probable limitations of these measures. The paper relies on primary data from statutes and secondary data from published sources. Findings - The paper’s findings suggest that competitive pressures, shareholders return imperative, and lucrative misaligned incentives for management contributed to weaknesses in effective compliance in banks. Practical implications - Insights drawn from this paper reinforces the notion that banks need to seriously review their business approaches, as well as their roles as gatekeepers. Social implications - Given the slew of corporate scandals and other materially harmful misjudgments in money-laundering compliance, banks might need to seriously review their role and obligations in the economy. Originality/value - Much has been said about money-laundering activities enabled by the banking sector. This paper contributed to insights as to why they persist despite AML rules, and what measures could be further taken to enhance compliance effectiveness.

Keywords: Anti-money laundering; Bitcoin; Whistleblowing; Virtual currencies; European banks; Jurisdictional risk; Financial disruptions (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:jmlc-05-2019-0040

DOI: 10.1108/JMLC-05-2019-0040

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