Abstract:

It is at times perplexing that with vigorous measures in place, banks are still knowingly and unknowingly absorbing money laundering risk into their institutions. Their nature of banking business could have led to some of the predicaments that have exposed them to such risk, but having been continuously exposed is unwarranted. Besides measures implemented by the banks, the regulators are also pursuing constant efforts to protect the banking industry, but the regulatory force is far from providing a total solution. This paper attempts to discuss some of the reasons that could have explained why banks are still exposed to money laundering risk despite continuous efforts in alleviating money launderers from using the banks as a conduit for illegal activities. The reasons stem from the micro and macro perspectives, looking at the institution-specific and industry-specific causes.