Perceived effectiveness of anti-money laundering preventive measures in reducing incidences of money laundering through commercial banks in Kenya

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dc.contributor.authorOyoo, J.
dc.date.accessioned2024-07-25T08:17:13Z
dc.date.available2024-07-25T08:17:13Z
dc.date.issued2024
dc.descriptionFull - text thesis
dc.description.abstractMany legislative and institutional efforts have been directed at countering money laundering for over thirty years but there are several accounts of money laundering cases still being reported worldwide. Banks are important in combating money laundering. They have been heavily penalized for violating Anti-Money Laundering (AML) regulations and, in some instances, for their controls failing to prevent money laundering. The above raises the question of whether the underlying problem is just a violation of policies and regulations or whether the existing AML system is flawed. Given the above, the study assessed the perceived effectiveness of AML preventive measures as applied by commercial banks in Kenya to reduce the likelihood of money laundering. The specific objectives were to determine whether customer due diligence measures and the ongoing monitoring of transactions using digital systems by commercial banks as required by the applicable law are effective in reducing money laundering incidences. The study assessed how the corporate culture of commercial banks in Kenya affects compliance with the AML preventive measures which in turn affects the measures’ effectiveness in reducing incidences of money laundering. The theory of the crying wolf and the fraud diamond theory were applied in the study. The research philosophy adopted for the study was the positivist research philosophy. Questionnaires were administered to obtain primary data. The questionnaires were distributed to 76 respondents drawn from 38 commercial banks registered by the Central Bank of Kenya as of 31 December 2022. 64 responses were received translating to an 84% response rate. Two respondents which included account opening officers and compliance officers were selected from each bank. Descriptive and inferential statistics were applied to analyze the data. In addition, reliability and diagnostic tests were first conducted before inferential statistics analysis. Multiple regression analysis was used to analyze the data. The results showed that the AML preventive measures which comprised client due diligence and ongoing monitoring of transactions and corporate culture had a positive and statistically significant effect on the reduction of incidences of money laundering in commercial banks. From the findings of the study, it was noted that employees play a big role in the implementation and compliance with AML requirements. Therefore, commercial banks should continuously train and update their staff on money laundering trends to improve their efforts in reducing money laundering cases. Further, although CDD, ongoing monitoring and corporate culture are important individually, their applicability and assessment should be done holistically. Therefore, the study recommends the regulator and banks ensure that policies, resources, and efforts are directed at all three measures concurrently. Also, due to limitation of time, the study did not include the updates to the POCAMLA (2009) and POCAMLAR (2013) which were done during the study. Therefore, future studies should consider looking into the impact of the update on regulations in the implementation and effectiveness of AML measures.
dc.identifier.citationAyoo, J. (2024). Perceived effectiveness of anti-money laundering preventive measures in reducing incidences of money laundering through commercial banks in Kenya [Strathmore University]. http://hdl.handle.net/11071/15505
dc.identifier.citationOyoo, J. (2024). Perceived effectiveness of anti-money laundering preventive measures in reducing incidences of money laundering through commercial banks in Kenya [Strathmore University]. http://hdl.handle.net/11071/15505
dc.identifier.urihttp://hdl.handle.net/11071/15505
dc.language.isoen
dc.publisherStrathmore University
dc.titlePerceived effectiveness of anti-money laundering preventive measures in reducing incidences of money laundering through commercial banks in Kenya
dc.typeThesis
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