Interaction effects of professional commitment, customer risk, independent pressure and money laundering risk judgment among bank analysts
| DOI | https://doi.org/10.1108/JMLC-05-2021-0046 |
| Published date | 09 August 2021 |
| Date | 09 August 2021 |
| Pages | 493-510 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Zuraidah Mohd-Sanusi,Yusarina Mat-Isa,Ahmad Haziq Ahmad-Bakhtiar,Yusri Huzaimi Mat-Jusoh,Tarjo Tarjo |
Interaction effects of professional
commitment, customer risk,
independent pressure and money
laundering risk judgment among
bank analysts
Zuraidah Mohd-Sanusi
Accounting Research Institute, Universiti Teknologi MARA,
Shah Alam, Malaysia
Yusarina Mat-Isa
Faculty of Accountancy, Universiti Teknologi MARA Cawangan Selangor,
Kampus Puncak Alam, Malaysia
Ahmad Haziq Ahmad-Bakhtiar
Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam, Malaysia
Yusri Huzaimi Mat-Jusoh
Faculty of Accountancy, Uiniversiti Teknologi MARA Cawangan Machang,
Malaysia, and
Tarjo Tarjo
Department of Accounting, Universitas Trunojoyo Madura, Bangkalan, Indonesia
Abstract
Purpose –This study aimsto examine the direct and indirect effects of professionalcommitment, customer
risk and independencepressure on money laundering risk judgmentamong bank analysts.
Design/methodology/approach –This study uses a within-subjectsexperimental research design and
collectsprimary data via a questionnaire distributed to bankanalysts in banking institutions in Malaysia.
Findings –Results show that professional commitment, customer risk and independence pressure significantly
influence money laundering risk judgment (i.e. customer due diligence and money laundering reporting). The results
also show significant interaction effects between customer risk and independence pressure in influencing money
laundering risk judgment.
Practical implications –Professionalcommitment and situational factors are crucial in putting pressure
on bank analysts responsible for performing a thorough check and due diligence to minimize money
launderingrisk to the bank.
Social implications –As money laundering is lifebloodof crimes, understanding the factors influencing
money laundering risk judgment would assist the affected institutions to manage the risk better and
contributetowards the fight against crimes.
Authors thank the Accounting Research Institute of Universiti Teknologi MARA for the research
grants (re: 600-RMC/ARI 5/3(028/2021 and 600-RMI/ARI_IRES 5/3(0025/2016) in providing financial
assistance for this study. Authors would also like to thank the Faculty of Accountancy of Universiti
Teknologi MARA for providing support for them to conduct this study.
Interaction
effects
493
Journalof Money Laundering
Control
Vol.25 No. 3, 2022
pp. 493-510
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-05-2021-0046
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
Originality/value –This study focuses on money laundering risk judgment. It contributes to understanding the
competency of the gatekeepers, such as bank analysts, in practicing professional commitment and dealing with
situational factors.
Keywords Money laundering, Professional commitment, Customer due diligence, Customer risk
assessment, Independence pressure
Paper type Research paper
1. Introduction
Money laundering is one of the main concerns of banking institutions. The United
Nations Convention on Transnational Crime Organized recognizes the scope of money
laundering to include financial crimes, such as bank fraud, credit card fraud, investment
fraud, prepayment fraud, bankruptcy, fraud and embezzlement, which are the most cited
sources of crime (Mugarura, 2014). The criminals have used banking institutions to
commit money laundering via banking products and services, explaining the need for a
more thorough and regular review of customer risk on financial crime and money
laundering (Pol, 2020).
The rationale behind the regulators’strict rules is to protect the country’s economic
stability from being abused and banking institutions from being used by criminals as a
money-laundering platform. In a recent report, penalties of US$10.4bn for compliance
breaches with anti-money laundering (AML) regulations have hit global financial
institutions (Finergo, 2020).For instance, the second-largest Australian bank, Westpac, was
charged with a record US$900m fine for failingto report cross-border transactions, and thus
breaching AML laws (Kyckr, 2021). These strict requirements ensure that the financial
system is not used as a channelto launder money and protect customers.
In Malaysia, local andforeign banks must comply with the guidelines and policiesissued
by Bank Negara Malaysia. Malaysia lost RM 1.3bn between January and August 2017 due
to financial crimes (Borneo Post Online,2018). The banking sector needs to be more alert to
financial crimes because banks conduct the first level identification of crimes in financial
institutions. Likewise, bank analysts from the head office and bank branches, including
staff, frontliners and everyone else in the bank, play an essential role in financial crime
detection and prevention. They need to ensure their clients’risk assessment, especially
involving customer due diligence (CDD) and reporting money laundering cases. Low
judgment in decision-making leads to an increasein the number of cases and subsequently
heightens the risk to the banks and the economy.
Although new guidelines have been applied, criminals can find various ways to
circumvent them. Banking institutions have faced difficulty dealing with all customers
when it comes to money laundering and risk assessment (Nasir, 2019). Research on
professional commitment, customer risk and independence pressure is limited. Most of the
three factors were conducted in different studies and under various fields or areas. Thus,
this study examines the effect between customerrisk and independence pressure on money
laundering risk judgmentamong bank analysts.
The findings of this study contribute to the extant literature on the determinants of
money laundering risk judgment amongbank analysts. Factors that may affect the money
laundering risk judgment could occur at the institutional (banks) and/or individual (bank
analysts) level. This study focuses on the individual (inner) level, work processes and
external factors by examining the factors affecting bank analysts’money laundering risk
judgment. The next sections discuss the literature review, research methodology, results,
discussion and conclusion.
JMLC
25,3
494
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