The Role of Regulatory Technology & Bankers to Prevent Money Laundering in Bank
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Published:
Apr 26, 2023
Keywords:
Money laundering, regulatory technology, competency, awareness, bank
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Abstract
Bank is a financial institution that is most often used as a place for money laundering, as well as the most financial institution that sends suspicious transaction reports to the Indonesian Financial Transaction Reports and Analysis Center (PPATK). This study aims to illustrate the impact of adopting regulatory technology (regtech) and the role of AML officers in the Indonesian banking sector on money laundering prevention effectiveness. The primary data for this study was collected through a survey instrument distributed to 689 AML officers in Indonesia with the expertise in anti-money laundering (AML) compliance; there were 296 respondents that filled the questionnaire with a response rate of 42.9%. The results of multivariate analysis indicate that electronic know your customer (KYC) is not significant in money laundering prevention. Transactions monitoring (TM) of regtech and cost & time (CT) of regtech, drive money laundering prevention to a highly statistically positive & significant. Furthermore, there is a positive & significant relationship between bankers competency & awareness in money laundering prevention. Research related to regtech and AML officers in Indonesian banking sector money laundering prevention efforts is still very limited in Indonesia. This study contributes to the existing literature on anti-money laundering and the development of anti-money laundering technology.
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Copyright (c) 2023 Veranto Kurniawan
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Chen, T. H. (2020). Do you know your customer? Bank risk assessment based on machine learning. Applied Soft Computing Journal, 86, 105779. https://doi.org/10.1016/j.asoc.2019.105779
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Demetis, D. S., & Angell, I. O. (2006). AML‐related technologies: a systemic risk. Journal of Money Laundering Control, 9(2), 157–172. https://doi.org/10.1108/13685200610660970
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Magalla, A. (2017). Cyber Security in Tanzania as Described by the Cyber Crime Act, No.13 of 2015. 2.
Meiryani, M., Soepriyanto, G., & Audrelia, J. (2022). Effectiveness of regulatory technology implementation in Indonesian banking sector to prevent money laundering and terrorist financing. Journal of Money Laundering Control. https://doi.org/10.1108/jmlc-04-2022-0059
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Nobanee, H., & Ellili, N. (2018). Anti-money laundering disclosures and banks’ performance. Journal of Financial Crime, 25(1), 95–108. https://doi.org/10.1108/JFC-10-2016-0063
O. A., Z., A. A., V., & S. V., G. (2018). Regulatory Technologies in the AML/CFT. KnE Social Sciences, 3(2), 394. https://doi.org/10.18502/kss.v3i2.1569
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Raweh, B. A., Erbao, C., & Shihadeh, F. (2017). Review the Literature and Theories on Anti-Money Laundering. Asian Development Policy Review, 5(3), 140–147. https://doi.org/10.18488/journal.107.2017.53.140.147
Singh, C., Zhao, L., Lin, W., & Ye, Z. (2022). Can machine learning, as a RegTech compliance tool, lighten the regulatory burden for charitable organisations in the United Kingdom? Journal of Financial Crime, 29(1), 45–61. https://doi.org/10.1108/JFC-06-2021-0131
Subbotina, N. (2009). Challenges that Russian banks face implementing the AML regulations. Journal of Money Laundering Control, 12(1), 19–32. https://doi.org/10.1108/13685200910922624
Tennant, F. (2017). The future of RegTech: a skyrocketing industry? https://www.financierworldwide.com/the-future-of-regtech-a-skyrocketing-industry#.Yy7xaexBxQI
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Usman Kemal, M. (2014). Anti-money laundering regulations and its effectiveness. Journal of Money Laundering Control, 17(4), 416–427. https://doi.org/10.1108/JMLC-06-2013-0022
Vaithilingam, S., & Nair, M. (2007). Factors affecting money laundering: lesson for developing countries. Journal of Money Laundering Control, 10(3), 352–366. https://doi.org/10.1108/13685200710763506
Viritha, B., & Mariappan, V. (2017). Anti-Money Laundering Regulation in India: Awareness and Views of Bank Employees. International Journal of Money, Banking and Finance, 6(December 2017), 46–54.
Y, L., & I, B. (2017). From Fintech to Regtech : The possible use of Blockchain for KYC. https://static1.squarespace.com/static/567bb0614bf118911ff0bedb/t/5915784ef7e0abd89c297f3d/1494579283238/From_Fintech_to_regtech.pdf
Zakaria, N. B., Mohamed, N., & Marzukai, N. (2022). Determinant of Compliance Perceptions among Bank Officers towards Anti-Money Laundering. Universal Journal of Accounting and Finance, 10(2), 457–464. https://doi.org/10.13189/ujaf.2022.100210
Ahmad Tarmizi, M., Ibrahim, M., Omar, N., & Hasnan, S. (2022). Competency of Professional Accountant in Malaysia as Attributes towards Compliance of AMLA 2001. International Journal of Academic Research in Accounting, Finance and Management Sciences, 12(1), 78–87. https://doi.org/10.6007/ijarafms/v12-i1/11180
Ahmad Tarmizi, M., Zolkaflil, S., Omar, N., Hasnan, S., & Syed Mustapha Nazri, S. N. F. (2022). Compliance determinants of anti-money laundering regime among professional accountants in Malaysia. Journal of Money Laundering Control. https://doi.org/10.1108/JMLC-01-2022-0003
Anagnostopoulos, I. (2018). Fintech and regtech: Impact on regulators and banks. Journal of Economics and Business, 100, 7–25. https://doi.org/10.1016/j.jeconbus.2018.07.003
Anggraeni, R. (2022, August 10). Jumlah Transaksi BRImo (BBRI) Tembus 726,4 Juta per Juni 2022. Www.Bisnis.Com. https://finansial.bisnis.com/read/20220810/90/1565157/jumlah-transaksi-brimo-bbri-tembus-7264-juta-per-juni-2022
Bahrin, N. L., Yusuf, S. N. S., Muhammad, K., & Ghani, E. K. (2022). Determinants of Anti-Money Laundering Program Effectiveness Among Banks. International Journal of Management and Sustainability, 11(1), 21–30. https://doi.org/10.18488/11.v11i1.2939
Butler, T., & O’Brien, L. (2019). Understanding RegTech for Digital Regulatory Compliance. In The New Stock Market. https://doi.org/10.7312/fox-18196-006
Carden, J., Jones, R. J., & Passmore, J. (2022). Defining Self-Awareness in the Context of Adult Development: A Systematic Literature Review. Journal of Management Education, 46(1), 140–177. https://doi.org/10.1177/1052562921990065
Chen, T. H. (2020). Do you know your customer? Bank risk assessment based on machine learning. Applied Soft Computing Journal, 86, 105779. https://doi.org/10.1016/j.asoc.2019.105779
Chukwuemerie, A. I. (2006). Nigeria’s Money Laundering (Prohibition) Act 2004: a tighter noose. Journal of Money Laundering Control, 9(2), 173–190. https://doi.org/10.1108/13685200610660989
Cooper, D. R., & Schindler, P. S. (2013). Business Research Methods (Twelfth Ed). McGraw-Hill Companies.
Demetis, D. S., & Angell, I. O. (2006). AML‐related technologies: a systemic risk. Journal of Money Laundering Control, 9(2), 157–172. https://doi.org/10.1108/13685200610660970
Djamba, Y. K., & Neuman, W. L. (2014). Social Research Methods: Qualitative and Quantitative Approaches. In Person Education Limited (Vol. 30, Issue 3). https://doi.org/10.2307/3211488
Dujovski, N., & Mojsoska, S. (2019). The role of the police in anti-money laundering. Journal of Money Laundering Control, 22(1), 145–157. https://doi.org/10.1108/JMLC-01-2018-0008
Duncan, P., Murphy, M., Man, M. S., Chaplin, K., Gaunt, D., & Salisbury, C. (2018). Development and validation of the Multimorbidity Treatment Burden Questionnaire (MTBQ). BMJ Open, 8(4). https://doi.org/10.1136/bmjopen-2017-019413
Dusabe, F. (2016). Rwanda: Assessing the effectiveness of legal and policy responses to fight Money Laundering. Journal of Money Laundering Control, 19(1), 21–31. https://doi.org/10.1108/JMLC-03-2015-0007
Hair, J., Black, W., Babin, B., & Anderson, R. (2018). on Multivariate Data Analysis Joseph F . Hair Jr . William C . Black Eight Edition.
Hamin, Z., Rosalili Wan Rosli, W., Omar, N., & Armadajaya Pengiran Awang Mahmud, A. (2014). Configuring criminal proceeds in money laundering cases in the UK. Journal of Money Laundering Control, 17(4), 374–384. https://doi.org/10.1108/JMLC-11-2013-0047
Hutauruk, D. M. (2022). Bank Mandiri Catatkan 118 Juta Transaksi Menggunakan BI-Fast hingga Juli. Www.Kontan.Co.Id.
Isa, Y. M., Sanusi, Z. M., Haniff, M. N., & Barnes, P. A. (2015). Money Laundering Risk: From the Bankers’ and Regulators Perspectives. Procedia Economics and Finance, 28(April), 7–13. https://doi.org/10.1016/s2212-5671(15)01075-8
Juntunen, J., & Teittinen, H. (2022). Accountability in anti-money laundering – findings from the banking sector in Finland. Journal of Money Laundering Control. https://doi.org/10.1108/JMLC-12-2021-0140
Karsha, S. A., & Abufara, Y. (2020). The New Era of Financial Technology in Banking Industry. Journal of Southwest Jiaotong University, 55.
Magalla, A. (2017). Cyber Security in Tanzania as Described by the Cyber Crime Act, No.13 of 2015. 2.
Meiryani, M., Soepriyanto, G., & Audrelia, J. (2022). Effectiveness of regulatory technology implementation in Indonesian banking sector to prevent money laundering and terrorist financing. Journal of Money Laundering Control. https://doi.org/10.1108/jmlc-04-2022-0059
Mohamad Abdul Latif, A., & Abdul-Rahman, A. (2018). Combating Money Laundering in Malaysia: Current Practice, Challenges and Suggestions. Asian Journal of Accounting and Governance, 10, 123–134. https://doi.org/10.17576/ajag-2018-10-11
Nobanee, H., & Ellili, N. (2018). Anti-money laundering disclosures and banks’ performance. Journal of Financial Crime, 25(1), 95–108. https://doi.org/10.1108/JFC-10-2016-0063
O. A., Z., A. A., V., & S. V., G. (2018). Regulatory Technologies in the AML/CFT. KnE Social Sciences, 3(2), 394. https://doi.org/10.18502/kss.v3i2.1569
Ofoeda, I., Agbloyor, E. K., Abor, J. Y., & Osei, K. A. (2020). Anti-money laundering regulations and financial sector development. International Journal of Finance and Economics, December. https://doi.org/10.1002/ijfe.2360
Pusat Pelaporan dan Analisis Transaksi Keuangan. (2018). Jelang Pemilu, PPATK Awasi Transaksi Keuangan Mencurigakan. Www.Ppatk.Go.Id. https://www.ppatk.go.id/siaran_pers/read/832/jelang-pemilu-ppatk-awasi-transaksi-keuangan-mencurigakan.html
Rastika, I. (2014). Transaksi Tunai Meningkat Jelang Pemilu. Www.Kompas.Com. https://nasional.kompas.com/read/2014/03/27/2206457/Transaksi.Tunai.Meningkat.Jelang.Pemilu
Raweh, B. A., Erbao, C., & Shihadeh, F. (2017). Review the Literature and Theories on Anti-Money Laundering. Asian Development Policy Review, 5(3), 140–147. https://doi.org/10.18488/journal.107.2017.53.140.147
Singh, C., Zhao, L., Lin, W., & Ye, Z. (2022). Can machine learning, as a RegTech compliance tool, lighten the regulatory burden for charitable organisations in the United Kingdom? Journal of Financial Crime, 29(1), 45–61. https://doi.org/10.1108/JFC-06-2021-0131
Subbotina, N. (2009). Challenges that Russian banks face implementing the AML regulations. Journal of Money Laundering Control, 12(1), 19–32. https://doi.org/10.1108/13685200910922624
Tennant, F. (2017). The future of RegTech: a skyrocketing industry? https://www.financierworldwide.com/the-future-of-regtech-a-skyrocketing-industry#.Yy7xaexBxQI
Turki, M., Hamdan, A., Cummings, R. T., Sarea, A., Karolak, M., & Anasweh, M. (2020). The regulatory technology “RegTech” and money laundering prevention in Islamic and conventional banking industry. Heliyon, 6(10), e04949. https://doi.org/10.1016/j.heliyon.2020.e04949
UNODC. (2022). Money Laundering Overview. Www.Unodc.Org. https://www.unodc.org/unodc/en/money-laundering/overview.html
Usman Kemal, M. (2014). Anti-money laundering regulations and its effectiveness. Journal of Money Laundering Control, 17(4), 416–427. https://doi.org/10.1108/JMLC-06-2013-0022
Vaithilingam, S., & Nair, M. (2007). Factors affecting money laundering: lesson for developing countries. Journal of Money Laundering Control, 10(3), 352–366. https://doi.org/10.1108/13685200710763506
Viritha, B., & Mariappan, V. (2017). Anti-Money Laundering Regulation in India: Awareness and Views of Bank Employees. International Journal of Money, Banking and Finance, 6(December 2017), 46–54.
Y, L., & I, B. (2017). From Fintech to Regtech : The possible use of Blockchain for KYC. https://static1.squarespace.com/static/567bb0614bf118911ff0bedb/t/5915784ef7e0abd89c297f3d/1494579283238/From_Fintech_to_regtech.pdf
Zakaria, N. B., Mohamed, N., & Marzukai, N. (2022). Determinant of Compliance Perceptions among Bank Officers towards Anti-Money Laundering. Universal Journal of Accounting and Finance, 10(2), 457–464. https://doi.org/10.13189/ujaf.2022.100210