Challenges Of Implementing Effective Anti-Money Laundering Strategies In Kenyan Commercial Banks
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Date
2019Author
Nafula, Wafula Anna Mercy
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The aim of this study was to establish the challenges of implementing effective antimoney
laundering strategies (AML) in Kenyan Commercial Banks. Descriptive
design was adopted in this study. The population under study consisted of all licensed
Commercial banks that were operating in Kenya as at 31 July 2019. The study was a
census survey, covering 42 banks and 1 mortgage finance institution. Primary data
was obtained through questionnaires. Data analysis was done using both descriptive
statistics and inferential statistics in form of Factor Analysis. The study found that
challenges of implementing effective AML strategies in Kenyan commercial banks
include organisation cultures that did not prioritize compliance, inadequate focus on
AML by senior executives and limited participation by relevant stakeholders in
formulation and implementation of the AML strategies. Further, the study found that
AML functions were not sufficiently resourced amidst rising costs of AML
compliance. Another finding was that there is need to deploy intelligent technology
for client identification and transaction monitoring was a challenge as technology
changes happen rapidly and criminals often use the best technology for money
laundering purposes. As banks have multiple products, processes, procedures and
systems which are uniformly applied across segments, extensive AML risk
interpretations, assessments, vigilance and expertise are necessary. Additionally,
AML processes like periodic and adhoc review of client information are demanding
given the number of customers, products and situations that bank customers may be
in, hence, posing a challenge in effective implementation of the AML strategies. The
study also found that globalization and innovations in the banking industry are a
challenge as these allow for rapid movement of funds and trade within and across
nations, providing fertile grounds for criminals to place, layer and integrate illegally
acquired funds faster. Further, outdated client information and limited co-operation
from clients in provision of KYC information poses a challenge in transaction
monitoring and subsequently on effectiveness of AML strategies for banks. In
addition, banks spend considerable amount of time, resources and effort to train
employees, to keep up with changing regulations local and international regulations
and ensure consistency in application of due diligence checks across the organization.
The study recommends more involvement of senior executives on AML activities, use
of updated intelligent systems and technologies that effectively monitor client
activities from an AML perspective, employment and retaining of personnel with
adequate knowledge and skills as well as more support and involvement by the
government and Regulators in assisting banks to effectively implement their AML
strategies.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
- School of Business [1556]
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