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Analysis on the significance and effectiveness of anti-money laundering policies and regulations of Financial Institutions (Investment Banks) in India

Vasudeva Murthy, Shwetha (2022) Analysis on the significance and effectiveness of anti-money laundering policies and regulations of Financial Institutions (Investment Banks) in India. Masters thesis, Dublin, National College of Ireland.

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The main purpose of Anti-money laundering policies in the financial institutions are to identify the different means by which money can be laundered and prevent it. In order to prevent money laundering activities, it is very important for the investment banks to follow the policies and procedures that are in line with the regulators and to complete the know your customer (KYC) of the clients on timely basis. By performing KYC on the clients, one can identify if the client is having any suspicious activities and to access the level of risk the Investment Bank must undergo. Reserve Bank of India (RBI) has taken many measures to ensure that all the financial institutions adhere to regulatory requirements. Though RBI has taken massive measures the financial institutions are not taking the money laundering activity seriously. Hence the below study has been taken to find out the gaps and areas for improvements.

This research mainly focusses on the Anti-money laundering policies implementation in the investment banks in India. For which we first start by analyzing and assess the bank employee’s knowledge regarding the level of understanding about Money laundering, Anti-money laundering and KYC procedures of the clients. The research also aims in identifying the challenges faced by the bank employees while following the Anti-money laundering policies and procedures.

The main basis of this study is made by collecting the primary data from the bank employees who are working in Bangalore, Karnataka, India. These employees are working in the private and international banks such as Kotak Bank, HSBC, Societe Generale, Commonwealth Bank and Deutsche Bank. The information is collected in the form of questionnaire which is intended for bank employees wherein the data is collected by at least 100 employees.

The results demonstrate that Bangalore bank employees only have a limited grasp of money laundering threats and preventative actions. The inadequate AML training provided has emerged as a major impediment to AML implementation in banks. Additionally, bank employees are not completely aware of the significance of following AML requirements. Employees' confidence in the AML statute as a tool to stop money laundering is low, as indicated by the survey. It inevitably causes resistance to strictly adhere to AML procedures, even though it is mandated by law. The financial institutions were found to be only sporadically in compliance with anti-money laundering laws. Numerous disagreed with the statement with how AML protocols are actually implemented, indicating that institutions might not be rigidly implementing AML compliance at every one of their locations. Clients are willing to identify their identity and place of residence, but they are reluctant to divulge details about their yearly income, asset value, other banking details, or their sources of income. Customers are also reluctant to follow the banks' requirements for updating their KYC information and reporting transactions.

Bank officials are far more knowledgeable about money laundering threat and AML requirements. Since employees have access to training, circulars, and other information, it is expected that they are more informed. Additionally, there is also a significant difference in how employees and consumers view "customer service for bank KYC data transparency laws. Additionally, the most of bank employees think that financial institutions' compliance with reporting requirements does not result in the loss of customers, while a sizeable portion of customers say they want their accounts closed with the bank that notified their activity. As a consequence, when it comes to the topic of account closure owing to monitoring duties, there is a significant difference in viewpoint among both bank personnel and account holders.

The researcher is of the opinion that putting into practice the suggestions presented in this dissertation based on the report's findings will assist the Indian banking sector in creating a system to combat money laundering that is more successful.

Item Type: Thesis (Masters)
Subjects: D History General and Old World > DS Asia
H Social Sciences > HG Finance
H Social Sciences > HV Social pathology. Social and public welfare > Criminology > Crimes and Offences > Money Laundering
Divisions: School of Business > Master of Science in Finance
Depositing User: Clara Chan
Date Deposited: 26 Oct 2022 12:10
Last Modified: 26 Oct 2022 12:10

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