Anti-money laundering regulations and its effectiveness
| Date | 07 October 2014 |
| Pages | 416-427 |
| Published date | 07 October 2014 |
| DOI | https://doi.org/10.1108/JMLC-06-2013-0022 |
| Author | Muhammad Usman Kemal |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation |
Anti-money laundering
regulations and its effectiveness
Muhammad Usman Kemal
Management Sciences Department, SZABIST, Islamabad, Pakistan
Abstract
Purpose – The purpose of this study is to check the effectiveness of anti-money laundering (AML)
regulations in Pakistan. The study investigates and analyses some key variables that may be
inuencing the effectiveness of anti-money regulations in Pakistan. Money laundering is most
prevalent in the banking sector, as banks deals with the money’s deposition, withdrawal and transfer,
therefore, it is necessary to evaluate the effectiveness of anti-money regulations on subjective
judgments. It is an exploratory study in which I have tried to nd the relationship and impact of three
regulations, which are customer record keeping, employee training and suspicious transaction
reporting on money laundering.
Design/methodology/approach – A sample of hundred responses has been collected from
employees working in different banks located in Rawalpindi and Lahore through questionnaire.
Questionnaire has been developed on the basis of different dimensions of the research variables.
Findings – It has been found that that there is an impact of employee training on money laundering in
banking system. A moderate inverse relationship between employee training and money laundering
and anti-money laundering regulation of customer record keeping has weak impact on money
laundering in developing countries.
Research limitations/implications – The research is limited to Pakistan only, and to apply the
same concept in other countries, researchers need to check the nancial institutions of that country as
well.
Originality/value – It has been suggested that to stop money laundry, special budget should be
allocated for the capacity building of employees through training. Timely guidance and assistance of
foreign-trained instructors or experts in combating money laundering should be taken. Implementation
of anti-money laundering regulations should be transparent, consistent and timely.
Keywords Anti-money laundry, Employee training, Record keeping, Suspicious transaction
Paper type Research paper
Introduction
According to Fanta and Mohsin (2010), money is classied into two types, i.e. dirty and
clean. Working legally ends up earning clean money or legal money and illegal working
ends up earning dirty money or illegal money. They had suggested that the increase in
labor wages can help in decrease in illegal activities, and so illegal money cannot easily
be earned. Money Laundering is a type of dirty money and the broad purpose of money
laundering crime is to convert dirty money into clean money for hiding wealth, avoiding
prosecution and taxes, increasing prots and becoming legitimate. Evaluation of
anti-money laundering programs effectiveness to identify criminal customers and
suspicious transactions is achieving more importance in nancial institutions for their
sound running and efciency. Evaluation of the anti-money laundering
recommendations for combating money laundering can be used to determine whether
these regulations achieve their objectives. Evaluation can also access that whether
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
JMLC
17,4
416
Journal of Money Laundering Control
Vol. 17 No. 4, 2014
pp. 416-427
© Emerald Group Publishing Limited
1368-5201
DOI 10.1108/JMLC-06-2013-0022
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