Anti-Money Laundering Compliance and Performance of Commercial Banks in Ghana

Abstract

The advent of technological innovation in the global financial architecture has created upturn in uncertainties and financial risks; prompting stakeholders to re-engineer their financial systems to enhance stability and security. Even though effort in such regard is underway regarding anti-money laundering policies and regulations, the threats of money laundering continue to emerge in dynamic formats. To contribute to the growing scholarly works on anti-money laundering, this study formulates four objectives to principally to identify the various AML policies adopted by commercial banks, examine the challenges impeding implementation of anti-money laundering compliance, cost of ensuring anti-money laundering in commercial banks and the impact of anti-money laundering compliance on performance of commercial banks in Ghana. The study employed quantitative research methods, survey design, descriptive approach and simple random sampling technique to sample select 40 respondents from 10 commercial banks in Ghana. Self-administered questionnaire was used to collect data while descriptive and regression analysis was used to analyze the field data. The study result show that the banks surveyedin this study have adopted FATF recommendations, the FIC-BoG guidelines and the Anti-Money Laundering Act (Act 749) to prevent the money laundering. The study also found that, nature of fraud and cybercrimes, lack of support from the board of directors and lack of trained and skilled personnel are the factors impeding anti-money laundering implementation among commercial banks in Ghana. The study result also show that anti-money laundering compliance positively impact bank profitability, sustainability and customer retention. On average, commercial banks spend between GHS 100,000 and GHS 500,000 to ensure AML compliance yearly. The study therefore, recommends that Bank of Ghana must task external auditors to conduct periodic auditing of the budgetary allocations of all commercial banks operating in Ghana. The BOG must ensure every bank in Ghana create AML reporting officer. Government may acquire standardized AML software for banks at subsidized prices.