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Impact Factor : 8.14

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Paper Title: Analysis of money laundering control practices on financial performances of commercial banks in Kenya
Authors Name: Oman Isaak , Ruthwinnie Munene
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IJRTI_188112
Published Paper Id: IJRTI2309063
Published In: Volume 8 Issue 9, September-2023
DOI:
Abstract: ABSTRACT Money laundering is a widespread problem in commercial banks, causing substantial financial losses and eroding customer confidence. This criminal activity encompasses a wide range of activities including misappropriation, embezzlement, fraud, theft, and irregularities. To combat money laundering, Kenya introduced prudent guidelines under the Banking Act of 2006. Despite these efforts, the problem persists, making it hard to find the offenders, stop them, and bring them to justice. The aim of this study was to examine the factors that impact the effectiveness of money laundering control practices and their effect on the financial performance of commercial banks in Kenya. The study explored the relationship between money laundry control practices focusing on bank reports, operation costs, and cost of monitoring with financial performance. A survey design was used targeting 38 licensed commercial banks. The study used census technique with a total of 104 respondents comprising of account opening manager, risk manager and anti-money laundry manager from each commercial bank. Primary data was collected through structured questionnaires and secondary data obtained from the central bank fraud prevention unit. Both quantitative and qualitative research methods were employed. The research finding quantitative was analyzed using SPSS for both descriptive and inferential statistics. Data was presented in form of tables, bar graphs, tables, figures and pie charts. Descriptive statistics involved mean and standard deviation computations for all the variables. Inferential statistics data was analyzed using multiple regression models to measure the correlation between the money laundry control practices and financial performance. The study findings will provide insight into the money laundry control practices and their impact on the financial performance of commercial banks in Kenya. The results showed a show a positive and critical connection between bank reports money laundry control practice and financial performance as upheld by a beta coefficient of 0.589 and p estimation of 0.003. The results also showed a positive relationship between operational cost money laundry control practice on financial performance as shown by a beta coefficient of 0.427 and p estimation of 0.035.Further, results showed a positive connection between cost of monitoring transactions money control practice and financial performance of 0.792 and p estimation of 0.000.Further, the four independent variables were significant predictors of combating money laundering in Kenya. Therefore the findings conclude that money laundry control practices have a positive effect on financial performance of commercial banks. Recommendations were that commercial Banks should ensure bank reports are updated frequently to influence the level money laundry control practice compliance thus affecting the financial performance of commercial banks. On cost of operational, banks should be able to source for highly competent experts to be in charge of the systems. Commercial banks should also put into consideration reducing the number of staff by automating most of the bank operations. Monitoring of transaction was also found to have a significant influence on money laundry control practice. Commercial Banks should find ways of reducing the number of monitoring staff as a way of cutting money laundry control monitoring cost thus improving the financial performance. The central bank of Kenya as the commercial banks regulator needs to enhance its supervisory role to ensure anti money laundry compliance, and therefore impose heavy punitive penalties to non-compliant commercial banks in Kenya.
Keywords: Key words: Money Laundry, control practices, financial performance.
Cite Article: "Analysis of money laundering control practices on financial performances of commercial banks in Kenya", International Journal of Science & Engineering Development Research (www.ijrti.org), ISSN:2455-2631, Vol.8, Issue 9, page no.472 - 477, September-2023, Available :http://www.ijrti.org/papers/IJRTI2309063.pdf
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ISSN: 2456-3315 | IMPACT FACTOR: 8.14 Calculated By Google Scholar| ESTD YEAR: 2016
An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 8.14 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator
Publication Details: Published Paper ID: IJRTI2309063
Registration ID:188112
Published In: Volume 8 Issue 9, September-2023
DOI (Digital Object Identifier):
Page No: 472 - 477
Country: Mandera, Mandera, Kenya
Research Area: Management
Publisher : IJ Publication
Published Paper URL : https://www.ijrti.org/viewpaperforall?paper=IJRTI2309063
Published Paper PDF: https://www.ijrti.org/papers/IJRTI2309063
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ISSN: 2456-3315
Impact Factor: 8.14 and ISSN APPROVED, Journal Starting Year (ESTD) : 2016

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