Prevention and control of money laundering crimes on know your customer principles application: empirical study of Indonesia banking sector
| Date | 02 November 2023 |
| Pages | 873-885 |
| DOI | https://doi.org/10.1108/JMLC-01-2023-0008 |
| Published date | 02 November 2023 |
| Author | Meiryani |
Prevention and control of money
laundering crimes on know your
customer principles application:
empirical study of Indonesia
banking sector
Meiryani
Accounting Department, School of Accounting, Binus University,
West Jakarta, Indonesia
Abstract
Purpose –The purpose of this paper is to find out the role and factors that lead to efforts by banking
institutionsto deal with money laundering by using the principle of knowingyour customer.
Design/methodology/approach –This research method uses a sociological juridical approach and
descriptiveanalysis in analyzing the data.
Findings –The resultsof the study found that the implementation of the principle playsa role in identifying
each transaction,and if there is a transaction that is considered suspicious,each bank is required to report the
transactionto the center for reporting and analysis of financial transactions.
Practical implications –Banks must reduce the risk of being used as a means of money laundering by
knowing customer identities, monitoring transactions, maintaining customer profiles and reporting suspicious
transactions made by parties using bankservices. The application of the know your customer principle (KYCP) is
based on the consideration that KYCP is not only important in the context of era dicating money laundering but also
in the context of implementingprudential banking to protect banks from various risks in dealing with customers.
Originality/value –To the best of the author’s knowledge, this is first empirical study of banking in
Indonesiathat conduct money laundering crimes through application of KYCPs.
Keywords Money laundering, Know your customer, Preventing, Control, Banking
Paper type Research paper
1. Introduction
Bank Indonesia has published money laundering regulations pertaining to the use of know your
customer principles (KYCPs) since 2001 as part of its attempts to prevent the entry of criminal
funds into the banking industry. Furthermore, these rules were improved in 2009 by
implementing Financial Action Task Force (FATF) recommendations with more extensive
international standards to prevent and remove money laundering and/or terrorist funding,
known as Recommendation 40þ9 FATF. FATF compiles standards, namely, the FATF 40
Recommendations and Procedures (policymaking), and promotes the effectiveness of their
This study is supported by BINUS University 2022 funding, as a part of Research Grant of Proyek
Inisiatif BINUS (BINUS Initiative Project) entitled “Publikasi International Bereputasi, Hak Kekayaan
Intelektual dan Multidisiplin Research Output dalam Integrated Catur Dharma Perguruan Tinggi”or
“Reputable International Publication, Intellectual Property Rights and Multidisciplinary Research
Output in Integrated Catur Dharma College”.
Control of
money
laundering
crimes
873
Journalof Money Laundering
Control
Vol.27 No. 5, 2024
pp. 873-885
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-01-2023-0008
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1368-5201.htm
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