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An expectation-performance gap between money laundering reporting officers and their directors – evidence from Germany

Lars Haffke (TUM School of Management, Technical University of Munich, Munich, Germany)

Journal of Money Laundering Control

ISSN: 1368-5201

Article publication date: 16 November 2021

Issue publication date: 8 June 2022

253

Abstract

Purpose

Money Laundering Reporting Officers (MLROs) carry out day-to-day anti-money laundering (AML) tasks while directors ultimately remain responsible for AML compliance. Therefore, directors’ expectations of what their MLROs do should ideally coincide with what their actual tasks to minimise liability risk. This paper aims to test for gaps between MLROs and their directors in terms of knowledge, expectations and performance of AML tasks. Likewise, it is researched whether MLROs and directors communicate well with regard to MLROs’ tasks.

Design/methodology/approach

This paper first develops a model for analysing the dyadic relationship between MLROs and their directors, based on the audit expectation-performance gap. Second, a paired electronic survey of MLROs and directors of German companies was conducted in autumn 2020, testing for participants’ knowledge, expectations and performance of possible AML tasks (n = 136 pairs).

Findings

While there is no knowledge or performance gap among MLROs and directors, expectations among them are partially unreasonable and their communication needs to be improved. Additionally, this study suggests that MLROs of German non-financial businesses are less knowledgeable, perform AML duties more poorly, and communicate less effectively with their directors.

Practical implications

Training of MLROs and communication with their directors need to be improved. Especially in the non-financial sector, action is urgently required.

Originality/value

This paper reports the results of the first paired survey of MLROs and their directors, offering unique insights into their relationship and the status of private AML efforts.

Keywords

Acknowledgements

The author would like to thank all MLROs and directors who participated in the study and completed the relevant questionnaires, as well as all pre-test interviewees. He is also grateful for the valuable comments received by several colleagues at the TUM School of Management, in particular by Benedikt Downar, Mathias Fromberger, Ronja Schregle, Timo van der Linde and Sascha Vogel.

Funding: The author received no financial support for the research, authorship and/or publication of this article.

Data availability statement: The research instrument is available from the author upon reasonable request.

Citation

Haffke, L. (2022), "An expectation-performance gap between money laundering reporting officers and their directors – evidence from Germany", Journal of Money Laundering Control, Vol. 25 No. 3, pp. 567-593. https://doi.org/10.1108/JMLC-10-2021-0111

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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