17 research outputs found
Analysis of individual, contextual and organizational factors on money laundering risk in banking institutions: a behavioural judgement approach / Yusarina Mat Isa
No full textIn recent years, various incidences of money laundering cases involving banking institutions as a conduit have surfaced even more concern over money laundering risk judgement. Despite the increased attention on money laundering risk, there are limited studies that look at the behavioural perspective of the money laundering risk judgement. Based on behavioural decision theory, Bonners’ judgement and decision making framework and modified Simon’s model for money laundering risk assessment, this study aims to address the above gap by examining the behavioural factors (which are classified into three dimensions – individual, contextual and organisational factors) that could influence money laundering risk judgement. To provide a holistic viewpoint on money laundering risk judgement, this study is designed into two sub-studies, denoted as Study One and Study Two which utilizes survey and between-within-subjects experimental method respectively. The combination of these two sub-studies is designed in such a way to provide robust findings to answer the questions of to what extent do the individual, contextual and organisational factors affect money laundering risk judgement and how do these individual, contextual and organisational factors intervene and interact, given the circumstances surrounding money laundering risk judgement. Drawing upon 165 and 185 cleaned responses for Study One and Study Two respectively, the data were analysed using Partial Least Squares of Structural Equation Modelling. For Study One, examination on the antecedent factors that could influence money laundering risk judgement reveals that individual factor (i.e. competency) as the anchor element within a person, is significant in influencing money laundering risk judgement either in its direct or indirect capacity. Study One also demonstrates that contextual factor (i.e. risk consciousness) mediates some of the relationships between competency and money laundering risk judgement. For the organisational factor (i.e. internal controls), Study One provides evidence of moderation effect on the relationship between competency and money laundering risk judgement. Study Two, which experimentally examine the factors influencing money laundering risk judgement in a controlled setting, corroborates the findings of Study One in confirming the indirect effect of individual factor (i.e. competency) on money laundering risk judgement. Study Two also provide further evidence that show the existence of mediation effect of contextual factor (i.e. CDD task intensity) and moderation effect of organisational factor (i.e. regulatory supervision) on the relationship between competency and money laundering risk judgement. For a less explored area in the study of behavioural judgement, this thesis provides significant contributions in confirming the theoretical foundations underlying behavioural judgement as well as adds value to the existing body of knowledge on money laundering risk judgement. Extending the study on behavioural judgement to a vastly different landscape in the context of money laundering risk in the banking institutions is hoped to set a new branch of research in the related areas. The theoretical foundation framed by this study could provide inputs for future studies by the academicians. Practically, the findings could offer a solid framework for the banking institutions and relevant regulators in improving money laundering risk management with enhanced understanding on the behaviours of the bank officers. The added knowldege on money laundering risk provided by this thesis could also benefit other stakeholders such as potential inventors, shareholders and auditors in advancing their understanding towards the conduct of the banking institutions in managing money laundering risk
Analysis of individual, contextual and organisational factors on money laundering risk in banking institutions: a behavioural judgement approach / Yusarina Mat Isa
No full textIn recent years, various incidences of money laundering cases involving banking institutions as a conduit have surfaced even more concern over money laundering risk judgement. Despite the increased attention on money laundering risk, there are limited studies that look at the behavioural perspective of the money laundering risk judgement. Based on behavioural decision theory, Bonners' judgement and decision making framework and modified Simon's model for money laundering risk assessment, this study aims to address the above gap by examining the behavioural factors (which are classified into three dimensions - individual, contextual and organisational factors) that could influence money laundering risk judgement. To provide a holistic viewpoint on money laundering risk judgement, this study is designed into two sub-studies, denoted as Study One and Study Two which utilizes survey and between-within-subjects experimental method respectively. The combination of these two sub-studies is designed in such a way to provide robust findings to answer the questions of to what extent do the individual, contextual and organisational factors affect money laundering risk judgement and how do these individual, contextual and organisational factors intervene and interact, given the circumstances surrounding money laundering risk judgement. Drawing upon 165 and 185 cleaned responses for Study One and Study Two respectively, the data were analysed using Partial Least Squares of Structural Equation Modelling. For Study One, examination on the antecedent factors that could influence money laundering risk judgement reveals that individual factor (i.e. competency) as the anchor element within a person, is significant in influencing money laundering risk judgement either in its direct or indirect capacity. Study One also demonstrates that contextual factor (i.e. risk consciousness) mediates some of the relationships between competency and money laundering risk judgement. For the organisational factor (i.e. internal controls), Study One provides evidence of moderation effect on the relationship between competency and money laundering risk judgement. Study Two, which experimentally examine the factors influencing money laundering risk judgement in a controlled setting, corroborates the findings of Study One in confirming the indirect effect of individual factor (i.e. competency) on money laundering risk judgement. Study Two also provide further evidence that show the existence of mediation effect of contextual factor (i.e. CDD task intensity) and moderation effect of organisational factor (i.e. regulatory supervision) on the relationship between competency and money laundering risk judgement. For a less explored area in the study of behavioural judgement, this thesis provides significant contributions in confirming the theoretical foundations underlying behavioural judgement as well as adds value to the existing body of knowledge on money laundering risk judgement. Extending the study on behavioural judgement to a vastly different landscape in the context of money laundering risk in the banking institutions is hoped to set a new branch of research in the related areas. The theoretical foundation framed by this study could provide inputs for future studies by the academicians. Practically, the findings could offer a solid framework for the banking institutions and relevant regulators in improving money laundering risk management with enhanced understanding on the behaviours of the bank officers. The added knowldege on money laundering risk provided by this thesis could also benefit other stakeholders such as potential inventors, shareholders and auditors in advancing their understanding towards the conduct of the banking institutions in managing money laundering risk
A study on bank officers’ judgement in filtering money laundering risk: an experimental approach / Yusarina Mat Isa, Zuraidah Mohd Sanusi and Mohd Nizal Haniff
No full textExposure to money laundering risk is inherently alarming for the banks. Bank officers, who are the first line of defence in dealing with the customers, are undeniably facing difficulty to distinguish money launderers from other legitimate customers of the banks. Despite the existence of evaluation tools, bank officers’ judgement is pinnacle in assessing the exposure of money laundering risk. Based on behavioural decision theory, bank officers’ judgement is reckoned to be influenced by individual, contextual and organizational factors. This study aims to examine the influences of these behavioural factors on bank officers’ judgement through the operationalization of between-within-subjects experimental approach. Drawing upon 185 responses from bank officers in three banking institutions in Malaysia, the data were analyzed using Partial Least Squares of Structural Equation Modelling. By examining the factors in a controlled setting, it was found that individual factor (i.e. competency) acts as the anchor determinant in influencing bank officers’ judgement. Apart from the direct effect shown between competency and bank officers’ judgement, the study also provides evidence for the mediation effect of contextual factor (i.e. CDD task intensity) and moderation effect of organizational factor (i.e. regulatory supervision) on the relationship between competency and bank officers’ judgement. For a less explored area in the study of behavioural judgement, this study contributes in confirming the theoretical foundations underlying this research as well as adds value to the existing body of knowledge on money laundering risk. Practically, these findings are important in identifying the factors that matter for bank officers in assessing money laundering risk, as failure to correctly assess the risk implicates not only the banks but also the officers as gazetted in the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Act 2001. In this regard, understanding the behavioural factors influencing bank officers’ judgement is crucial in relieving bank officers from such liability
Fraud Schemes in the Banking Institutions: Prevention Measures to Avoid Severe Financial Loss
No full textAbstractThe main incentive for fraudsters is in yielding the monetary gain – of which making banking institutions more fraud-fragile as these are where bulk of the money are kept. Banking institutions are becoming more and more susceptible to fraud over the years although various control measures have been put in place. Fraudsters are now more versatile in designing their modus operandi to circumvent the controls. The fraudsters could originate from both internal (employees) and external sources (customers, supplier, contractor, and lawyer). As banking institutions engage in wide range of activities, fraud could potentially affect many parties, including the shareholders, the depositors, the borrowers, the staff as well as the banking institution itself. A study was conducted among management levels in banking institutions in Malaysia, with focus on branch managers and assistant managers that handle the mortgage loan and hire purchase loan, to examine the types and extent of fraud occurrences in the portfolio of mortgage loans and hire purchase loans. Results show that in general, the most common fraud cases in branches that handled mortgage was money laundering, whereas for branches that handle hire purchase loan which were a common fraud occurrence in the banking sector of Malaysia. This paper will also showcase various attempted frauds and fraud cases for both internal and external fraud scheme in the banking institutions. This paper is geared towards providing valuable learning points for staff of banking institutions who handle daily banking operations in order to assist them in detecting and preventing similar occurrence of fraud cases
Predicting fraudulent financial statement using cash flow shenanigans
No full textDetection of fraudulent financial stewardship in the cash flow section is an exciting thing and is rarely studied. This research empirically tests the discovery of fraudulent financial statements based on basic cash flow shenanigans. The sample of this study amounted to 470 data mining companies in Indonesia, Malaysia, China, and Japan. The analysis method used is a positive approach. The results show that all ratios used can predict fraudulent financial statements. Three ratios of cash flow shenanigans, namely change in receivable to cash flow operations, days payable outstanding, and change in inventory to cash flow operations, significantly affect the F-Score. Meanwhile, the six cash flow shenanigans ratios, namely cash flow operations to current liability, operating cash flow ratio, free cash flow, cash flow operations to total liability, days payable outstanding, and change in inventory to cash flow operations, have a significant effect on the M-Score
Money Laundering Risk: From the Bankers’ and Regulators Perspectives
No full textAbstractWith the vulnerability of banking institutions in terms of exposure to money laundering, satisfactory money laundering risk assessment is vital. In banking institutions, the frontline officers who are dealing with customers for banking activities such as opening an account, savings, withdrawal and remittance are the frontline of defense responsible to undertake money laundering risk assessment. A series of interviews conducted with compliance officers who supervise the assessment of money laundering risk and a central banker who supervise the regulation on anti-money laundering are analyzed in order to understand how frontline officers discharge their duties in assessing money laundering risk in Malaysian banking institutions. Interview findings suggest that money laundering risk is a real risk in the banking institutions, and the frontline officers should be adequately competent in discharging their duties. Even if the banking institutions are equipped with automated risk management solutions, manual (human expertise) is indispensable in assessing money laundering risk. Support provided by the compliance department is seen as complementary for the roles played by the frontline officers and monitoring ensued by the regulatory authority should have enhanced the compliance intensity in the banking institutions
Mitigation of money laundering risk in Malaysia: a Maqasid al-Shari‘Ah perspective / Muhammad Nazmul Hoque ... [et al.]
No full textThis study aimed to explore the role of maqasid al-Shari‘ah towards mitigating money laundering risk in Malaysia. This study adopted a qualitative approach to fulfil its objective. The data were collected through document analysis and semi-structured interviews with the experts. This study revealed that money laundering goes against the principles of Shariah as it leads to consuming other’s property illegally and disregarding justice and welfare among the people. Maqasid al-Shari‘ah plays a vital role in preventing money laundering through several ways, which includes the condition of (1) circulation (rawaj) of wealth among people, (2) transparency (wuduh) in transaction, and (3) justice (‘adl) among transacting parties. To mitigate money laundering, maqasid al-Shariah suggests the reporting of suspicious transactions and proper documentation to be practised among bankers. The outcome of this study may help motivate bankers and their clients to be more aware of the role of maqasid al-Shari‘ah in combating money laundering. Moreover, it may help policymakers and financial institutions look for alternative ways to mitigate money laundering risks
Integrated anti-money laundering initiatives in the Malaysian banking industry towards FATF full-compliant status
No full textThis study aims to demonstrate the integrated anti-money laundering (AML) initiatives in the Malaysian banking industry, focusing on achieving the Financial Action Task Force (FATF) full-compliant status. It reviews and analyzes secondary data from relevant literature and documents about money laundering risk in the Malaysian banking industry. The review reveals that the integrated AML initiatives combine domestic and international efforts, which the Malaysian Central Bank and FATF anchor. Malaysia has proactively abided by the FATF requirements, and affirmative progression can be seen from the improved FATF-compliant status throughout the years. This study adds new knowledge to the literature by integrating domestic and international AML efforts. With the current integrated AML initiatives in place, Malaysia can achieve a full compliance status with the FATF, and this forms a strong pillar that could protect the Malaysian banking industry from money laundering risk.
Keywords: Money laundering, AML, risk, banking industry, Malaysia
Examining The Effect of Digital Skills, Computer and Smartphone Usage Hours on The Digital Impact Among Students in A Malaysian Public University
No full textThe objective of this study is to examine the digital impact among undergraduate students in a Malaysian public university that focus on how digital skills, computer and smartphone usage hours influence students perceived digital impact. This study involves a quantitative methodology, sampling 204 undergraduate students from a Malaysian public university. The use of an online questionnaire format facilitated widespread distribution, made completion more convenient for respondents, and facilitated the accumulation and management of responses. The results demonstrate a strong sense of digital citizenship among the respondents. Variables such as hours spent on the computer (COMPHOUR), digital skills (DIGSKILL), and hours spent on the smartphone (HPHOUR) have varying degrees of impact on the dependent variable, the perceived digital impact (DIGIMPACT). DIGSKILL appears to have a significant relationship with DIGIMPACT but not the HPHOUR and COMPHOUR. The findings underscore the importance of digital skills and call for the development of comprehensive digital literacy programs to equip students with the necessary skills for responsible and meaningful engagement with digital technology. This study added to the literature by analyzing digital skills, computer and smartphone usage hours on the digital impact among university students in Malaysia
