Anti-money laundering practices in banks: customer’s awareness and acceptance in India

Publication Date04 Jul 2016
AuthorViritha B.,Mariappan V.
SubjectAccounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime
Anti-money laundering practices
in banks: customer’s awareness
and acceptance in India
Viritha B. and Mariappan V.
Department of Banking Technology, Pondicherry University,
Pondicherry, India
Purpose The aim of this study was to assess the level of awareness and acceptance of bank
customers regarding anti-money laundering (AML) practices of banks. The study also aimed to
understand their constraints in following the bank’s AML practice.
Design/methodology/approach – The target population was account holders of the banks above
the age of 18 years, residing in the Puducherry and Chennai regions in India. Convenience sampling was
adopted in selecting the sample from these states. The sample consisted of 416 customers of the public,
private and foreign banks in India. The responses were collected by administering the pre-tested
structured questionnaire. The data was collected during the period June–December 2014. Descriptive
and non-parametric tests were applied, and the signicance was considered at p0.5.
Findings – Respondents showed low level of awareness with regard to usage of banks as a channel for
money laundering (ML) and terrorism nancing (TF) activities (62.3 per cent), reporting function of the
banks (70.4 per cent), AML and combating nancing of terrorism (CFT) legislation (86.3 per cent) and
about the existence of Financial Intelligence Unit (FIU)-India and its function (96.9 per cent). The
customers were quite aware of ML (62.5 per cent) and customer identication requirements (95.2 per
cent). The participants exhibited neutral attitude towards acceptance of AML measures (3.11 1.31). The
descriptive analysis showed 97.4 per cent were ready to provide their identication documents to the bank;
however, 64.5 per cent of the participants were reluctant to update their Know Your Customer particulars
when it has not experienced any change, and about 68.3 per cent expressed that banks should not disclose the
details of their transactions to any third party including nancial intelligence units.
Research limitations/implications The sample constituted only few participants from the
foreign sector banks because of the difculty in identifying the foreign bank customers.
Social Implications – There is a necessity to undertake public awareness campaigns on the importance
of AML/CFT system either by the banks or FIU-India or both to increase the level of acceptance towards
AML measures. This will help the banks to strengthen the bank–customer relationship.
Originality/value An extensive review of literature could not nd any research study on the
assessment of awareness and acceptance of banking customers towards AML practices in India. Thus, this
paper attempts to understand the level of awareness and acceptance in the bank customers towards AML
Keywords India, Awareness, Money laundering, KYC, Terrorism nancing
Paper type Research paper
We sincerely thank the Indian Council of Social Science Research (ICSSR) for its nancial
assistance in conducting this research.
The current issue and full text archive of this journal is available on Emerald Insight at:
Journalof Money Laundering
Vol.19 No. 3, 2016
©Emerald Group Publishing Limited
DOI 10.1108/JMLC-03-2015-0009

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