Influence Of Organizational Culture On Financial Crime Prevention At The Standard Chartered Bank In Kenya

Abstract

Financial crimes have major implication on a country economy including aiding social ills such as terrorism, drug and human trafficking, and corruption. For individual banks, financial crime can damage the company reputation and subject the company to penalties and litigations. This study sought to investigate how organizational culture influence financial crime prevention at the Standard Chartered Bank in Kenya. Organizational culture shapes and guides the behaviours and attitude of employees and the organization. Despite its significance, few studies have examined the influence of organizational culture on financial crime prevention in the Kenyan banking context. Three component of organizational culture were assessed namely: espoused values, underlying assumptions, and rules and procedures. The current study utilized the descriptive survey design where 212 employees of the Standard Chartered Bank head office were targeted. From this population, a sample 68 respondents were selected using the stratified random sampling technique. Data was collected using structured questionnaires and analysed using both descriptive and inferential statistics. Results revealed that Standard Chartered Bank had espoused values, underlying assumptions, and rules and procedures that support the prevention of financial crime. The three organizational culture variables jointly explained 50.6% of the variances in financial crime prevention. However, when considered independently, espoused values (β=0.03, p<0.781) and underlying assumptions (β= 0.158) had not statistically significant influence on financial crime prevention. Only rules and procedures (β=0.425, p<0.001) was found to have a statistically significant and positive influence on financial crime prevention. Additional analyses showed that the regression model comprising of rules and procedures as the only independent variable had an r-square of 0.413 while the model comprising of all the three component of organizational culture had an r-square of 0.506. This implies that espoused value and underlying assumption are not completely irrelevant as their inclusion in the model increases its explanatory power by 0.093 or 9.3%. The findings led to the conclusion that organizational culture as measured in terms of espoused values, underlying assumptions, and rules and procedures has a positive and significant influence on financial crime prevention. Based on this conclusion, the study recommends that to enhance their capacity to prevent financial crime, banks should develop and reinforce rules and procedures that support financial crime prevention efforts. Banks should also promote positive values such as future orientation, ethical decision-making and employee involvement. They should also foster positive expectations and assumptions such as being proactive.