Effectiveness of regulatory technology implementation in Indonesian banking sector to prevent money laundering and terrorist financing
Journal of Money Laundering Control
ISSN: 1368-5201
Article publication date: 1 June 2022
Issue publication date: 30 May 2023
Abstract
Purpose
Money laundering and terrorism financing use the banking sector system illegally and result in enormous losses for the state and nation. Regulatory Technology (RegTech) is an important part of effectively preventing money laundering and terrorism financing. However, the implementation of RegTech related to the prevention of money laundering and terrorist financing, especially in the Indonesian banking sector, has not been widely studied and discussed. Therefore, this study aims to provide empirical testing evidence regarding the effectiveness of RegTech implementation in the Indonesian banking sector to prevent money laundering and terrorist financing.
Design/methodology/approach
This study uses primary data obtained through a survey distributed to 160 bankers who work in eight different banks in Indonesia with a 95% confidence level and a confidence interval of 7.75. The criteria needed to determine the sample in this study are individuals who actively work as staff whose work is directly related to banking; individuals who are actively working in banks registered with OJK; individuals who have been actively working in the banking sector in Indonesia for at least three years. The data that has been obtained were analyzed using the SmartPLS application to test the validity and reliability, descriptive statistics and structural models (inner model).
Findings
The results of this study indicate that electronic know your customer (eKYC), transaction monitoring (TM), cost and time efficiencies (CTE) influence the prevention of anti-money laundering (AML) and countering financing of terrorism (CFT) in the Indonesian banking sector. However, eKYC and CTE have little influence on AML-CFT in the Indonesian banking sector. Meanwhile, TM has a moderate influence on AML-CFT in the Indonesian banking sector. In addition, in general, most bankers agree that the bank they work for has followed the guidelines, policies and regulations that have been given.
Originality/value
This study uses the Indonesian banking sector as a research subject that raises the effectiveness of the implementation of the use of RegTech to prevent money laundering and terrorism financing.
Keywords
Acknowledgements
Declarations:
Funding statement: This study is supported by BINUS University 2022 funding, as a part of Research Grant of Proyek Inisiatif BINUS (BINUS Initiative Project) entitled “Publikasi International Bereputasi, Hak Kekayaan Intelektual dan Multidisiplin Research Output dalam Integrated Catur Dharma Perguruan Tinggi” or “Reputable International Publication, Intellectual Property Rights and Multidisciplinary Research Output in Integrated Catur Dharma College”.
Author contribution statement: Meiryani: Contributed reagents, materials, analysis tools or data; Analyzed and interpreted the data; Wrote the paper.
J. Audrelia, Gatot, Meiryani: Performed the experiments; Conceived and designed the experiments; Analyzed and interpreted the data; Wrote the paper.
Competing interest statement: The authors declare no conflict of interest.
Additional interest statement: No additional information is available for this paper.
Citation
Meiryani, M., Soepriyanto, G. and Audrelia, J. (2023), "Effectiveness of regulatory technology implementation in Indonesian banking sector to prevent money laundering and terrorist financing", Journal of Money Laundering Control, Vol. 26 No. 4, pp. 892-908. https://doi.org/10.1108/JMLC-04-2022-0059
Publisher
:Emerald Publishing Limited
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