The Impact of Anti-Money Laundering Regulations on Financial Performance in Kenyan Banks: A Case Study of Chase Bank

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dc.contributor.author Michugu, Tabitha Mugechi
dc.date.accessioned 2016-09-15T10:42:02Z
dc.date.available 2016-09-15T10:42:02Z
dc.date.issued 2016
dc.identifier.uri http://erepo.usiu.ac.ke/11732/2666
dc.description.abstract The purpose of this study was to examine the impact of anti-money laundering regulations on financial performance of Chase Bank. To achieve this, the study identified the research questions: What was the impact of Anti-Money laundering regulations on commercial banks? What were the costs of implementing the Anti-Money Laundering regulations? What were the benefits of compliance to the Anti-Money Laundering regulations on the bank’s financial performance? The study utilized a descriptive research design using Chase Bank as a case of the study. The population of the study was drawn from employees of Chase bank totaling 1,012 distributed across the branches and head office of the bank. Using a stratified random sampling technique, a sample size of 80 respondents was selected for inclusion in the study. Data collection was done in the months of October to December 2014 using a questionnaire that was self-administered by the researcher. Collected data was inspected, keyed and coded into SPSS vs. 20 for analysis using descriptive statistics. Analyzed data was presented using tables and figures for easy interpretation. The study found that AML regulations had an impact on the operations of Chase Bank. The positive impact of AML regulations were reduced levels of internal and external fraud, broadened regulatory framework, increased customer and investor confidence in the bank and improved efficiency in operations of the bank. However, there were increased frequency and number of reports submitted to the regulator and FRC by the bank which increased the reporting costs as well as increase in the screening of transactions for prevention of money laundering that increased transaction costs. Secondly, the study found that AML regulations had an effect on the total costs of banks. The cost of banks increased due to increased investment on staff training to detect and prevent fraud, increased transaction costs, increased monitoring and reporting costs and increased opportunity costs due to forgone investment opportunities by the bank. vi However, Chase Bank enjoyed various benefits as a result of AML regulations. This included, improved training of staff on fraud detection and prevention, enhanced due diligence during onboarding customers through centralized customer account opening and monitoring, documentation of AML policies and procedures, customer identification programs, employee awareness on SAR, allocation of resources for anti-money laundering, pro-activeness in identifying and preventing fraud, reduced noncompliance penalties and costs and identification of AML champions. This study concluded that the implementation of money laundering regulations has a positive and negative impact on the performance of commercial banks. Positive impacts enhanced the confidence in the bank as well as reduced risks and frauds. Negative impacts mostly revolved around increased costs for the bank. The study concluded that the total operating costs of the bank increased as a result of implementation of AML rules and regulations. Further, this study concluded that there were benefits of compliance to AML rules and regulations. The benefits incurred from compliance to AML rules and regulations include: increased investors confidence and increased staff awareness and knowledge on detection and prevention of money laundering hence reduced fraud cases. This study recommended that banks across the globe should implement and ensure full compliance to AML rules and regulations due to the apparent benefits of compliance to the AML rules and regulations. It further recommended that banks can leverage on modern information management technologies to reduce the costs of compliance and screening. Through the use of information management systems, the banks could be proactive at analysing high risk clients and report or flag down these clients’ transactions in compliance to the regulation. Finally, the study recommended that banks should invest in AML systems since the benefits outweighed the costs. en_US
dc.publisher United States International University - Africa en_US
dc.subject Money Laundering en_US
dc.title The Impact of Anti-Money Laundering Regulations on Financial Performance in Kenyan Banks: A Case Study of Chase Bank en_US
dc.type Thesis en_US

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