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Prevention and control of money laundering crimes on know your customer principles application: empirical study of Indonesia banking sector

Meiryani (Accounting Department, School of Accounting, Binus University, West Jakarta, Indonesia)

Journal of Money Laundering Control

ISSN: 1368-5201

Article publication date: 2 November 2023

Issue publication date: 14 August 2024

174

Abstract

Purpose

The purpose of this paper is to find out the role and factors that lead to efforts by banking institutions to deal with money laundering by using the principle of knowing your customer.

Design/methodology/approach

This research method uses a sociological juridical approach and descriptive analysis in analyzing the data.

Findings

The results of the study found that the implementation of the principle plays a role in identifying each transaction, and if there is a transaction that is considered suspicious, each bank is required to report the transaction to the center for reporting and analysis of financial transactions.

Practical implications

Banks must reduce the risk of being used as a means of money laundering by knowing customer identities, monitoring transactions, maintaining customer profiles and reporting suspicious transactions made by parties using bank services. The application of the know your customer principle (KYCP) is based on the consideration that KYCP is not only important in the context of eradicating money laundering but also in the context of implementing prudential banking to protect banks from various risks in dealing with customers.

Originality/value

To the best of the author’s knowledge, this is first empirical study of banking in Indonesia that conduct money laundering crimes through application of KYCPs.

Keywords

Acknowledgements

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”.

Citation

, M. (2024), "Prevention and control of money laundering crimes on know your customer principles application: empirical study of Indonesia banking sector", Journal of Money Laundering Control, Vol. 27 No. 5, pp. 873-885. https://doi.org/10.1108/JMLC-01-2023-0008

Publisher

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Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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