Navigating Anti-Money Laundering: Integration of Knowledge Management and Ethical Culture in Banking Operations

Abstract

As illicit financial activities become increasingly sophisticated, understanding, and addressing the multifaceted challenges posed by money laundering cases have become paramount to preserving the integrity and stability of economies on a global scale. In the realm of financial crime prevention, the effectiveness of anti-money laundering (AML) measures hinges on the judgement and proficiency of bank officers as the first line defence of money laundering threat.This study investigates the interplay between knowledge sharing management, ethical culture and the judgment levels of bank officers when assessing money laundering cases.The data collected through 5-point Likert scale vignette-style questionnaire survey from 110 banking offices of various banking institutions in Malaysia. Moreover, we extend our inquiry to examine the moderating effect of ethical culture on this relationship. Our findings reveal that a strong ethical value amplifies the influence of knowledge sharing management on judgment levels, emphasizing the pivotal role of ethical considerations in bolstering the effectiveness of AML initiatives.We established a positive and significant relationship between knowledge sharing management practices and the judgment levels exhibited by bank officers.This highlights the need for banking institutions to not only prioritize knowledge sharing management but also foster a culture of ethical conduct among their officials. This research contributes to the growing body of knowledge on effective AML practices within the financial sector, providing empirical evidence of the direct impact of knowledge sharing management and ethical culture on AML assessment. Practically, our results underscore the imperative for financial institutions to integrate knowledge sharing management initiatives with a commitment to ethical conduct. By recognizing the synergistic interplay between knowledge sharing management, ethical culture, and judgment levels, financial institutions can fortify their defenses against the perpetration of money laundering activities. Limited to the context of practices in Malaysia, this study founded a paramount basis for future study to explore on different factors or perhaps at different nations as extensions to this research.