Monitoring Contrivances On Money Laundering Occurrences In Bank And Financial Institutions

Abstract

One of the stumbling blocks to maintain effectiveness of international financial systems is the money laundering activities. Money laundering is frequently connected to secretive economics and organized crimes and Malaysia has become highly exposed to money laundering. This study aims to examine the relationship between monitoring contrivances and money laundering occurrences (MLO) in 30 Malaysian east coast banks and financial institutions in Kuantan. Descriptive statistic, reliability test, normality test and correlation analysis by using Statistical Package for Social Science (SPSS) was employed to measure and analyse the data collected. This study found that there is significant positive relationship between monitoring contrivances that consist of internal control procedures (ICP), Anti Money Laundering Training and Awareness (AMLTA) programme, corporate governance (CG) and customer due diligence (CDD) and MLO. The significant positive relationship between monitoring contrivances and MLO may be explained weak ICP, technological advances or human intervention, the staff in the bank and financial institutions are not competent enough to control the occurrences of money laundering, and banks might potentially choose to implement only the minimum standards required in processing daily transactions. Thus, this study aligns with agency theory because the increase in the number of money laundering problems can lead to increase in agency cost.