Money laundering in selected emerging economies: is there a role for banks?
| DOI | https://doi.org/10.1108/JMLC-12-2019-0096 |
| Published date | 04 June 2020 |
| Date | 04 June 2020 |
| Pages | 102-110 |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Sulaiman Abdullah Saif Alnasser Mohammed |
Money laundering in selected
emerging economies: is there
a role for banks?
Sulaiman Abdullah Saif Alnasser Mohammed
Department of Economic and Finance, College of Business Administrative,
University of Hail, Hail, Saudi Arabia
Abstract
Purpose –Understanding money launderingplays an important role in understanding economic growth
(EG). Extensive research is conductedabout that, previous research lacks answers about the relationshipof
anti-money laundering (AML) and EG by investigatingthe roles of the performance of Islamic banks, legal
environment,financial crisis (FC) and bank size. Therefore, the purposeof this paper is to cover that gap.
Design/methodology/approach –SmartPLS 3.0 was used and 33 Islamic banks were selected from
developingcountries between 2007 and 2010.
Findings –Note that AML, Islamic bank performance, legal environment,and FC are significantly related
to EG.
Research limitations/implications –The research would be of importance to those seeking to
understand the determinantsof EG; it is also beneficial for thosewriting books about money laundering and
Islamic banks in developing countries. The limitationof the study is the low number of Islamic banks that
have completedata. Thus, this could be future research contribution.
Originality/value –To the best knowledge of the author, research on money laundering and Islamic
banks in developingcountries are not extensive, we have found an ample room to discuss the said variables.
Keywords Developing countries, Financial crisis, Economic growth, Money laundering,
Shadow economy, Bank performance
Paper type Viewpoint
1. Introduction
Laundering of money is a constant headache to many officials in many countries and is an
international issue that has caused political instability and a reduction in economic growth
(EG). A country such as Jordon is said to lose 2 percent of its gross domestic product because of
money being laundered out of the official system. Other countries have shown abnormal
numbers as well. The laundering of money is not only about the loss of funds from the official
system but it is also about where this money goes. Indeed, research has shown evidence of a
linkage between money laundering and crimes, drugs and other illegal matters. Therefore,
international communities have formed guidelines and protocols to tackle or minimize money
laundering; however, the actual impacts of these activities often lack quantification
To fill this knowledge gap, this paper addresses the relationship between anti-money
laundering (AML) and EG in selected emerging countries. Indeed, this research seeks to
answer whether AML activities and EG are related. In doing so , this research is different
from previous papers for four noteworthy reasons. First, the paper selects selecting
Islamic banks in developing countries as an indicator of bank performance (BP), which
many have ignored. Second, this paper considers differences in legal origin (LO), which
previous papers have not done. Third, the study uses partial least squares (PLS) rather
JMLC
24,1
102
Journalof Money Laundering
Control
Vol.24 No. 1, 2021
pp. 102-110
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-12-2019-0096
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