Focus Note: The Use of eKYC for Customer Identity and Verification and AML

Perlman, Leon; Gurung, Nora

doi:10.2139/ssrn.3370665

Cited by 5 publications

(5 citation statements)

References 3 publications

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“…eKYC is an electronic means used to identify and verify online the identity of customers (Perlman and Gurung, 2019; 53] World Bank, 2021). Based on Table 5, more than 50% (54.4% to 79.4%) of respondents strongly agree that sophisticated technology can assist banks in online identifying and verifying customer identities.…”

Section: Data Analysis and Findingsmentioning

confidence: 99%

Effectiveness of regulatory technology implementation in Indonesian banking sector to prevent money laundering and terrorist financing

Meiryani

Soepriyanto

Audrelia

2022

JMLC

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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.

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Section: Data Analysis and Findingsmentioning

confidence: 99%

Effectiveness of regulatory technology implementation in Indonesian banking sector to prevent money laundering and terrorist financing

Meiryani

Soepriyanto

Audrelia

2022

JMLC

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“…The independent variable is RegTech, which is measured by eKYC, TM and CT. eKYC is an electronic means used to identify and verify customer identity online to minimize errors usually found in manual processes (Perlman & Gurung, 2019;Turki et al, 2020;World Bank, 2021). TM is one of the efforts that banks can make to monitor and detect financial activities so that cyber security in the services provided remains safe (Repin et al, 2017).…”

Section: Methodsmentioning

confidence: 99%

Regulatory Technology (RegTech): The Solution to Prevent Money Laundering in Indonesia

Utami¹,

Septivani

2022

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Since the 2008 financial crisis, the complexity of regulations and the use of technology and innovation in the financial sector have increased. This makes banks as financial institutions starting to adapt to financial technology very vulnerable to technological risks, one of which is money laundering. Regulatory Technology (RegTech) is a technology trend to assist bank management in supporting regulatory compliance efforts and offering money laundering prevention solutions. Based on this, this study aims to examine the relationship of RegTech, which is represented by three independent variables: Electronic Know Your Customer (e-KYC), Transaction Monitoring, and Time and Cost Efficiency, on Money Laundering Prevention. This study shows that transaction monitoring, as well as cost and time efficiency, have a significant effect on money laundering prevention. In contrast, e-KYC does not affect money laundering prevention. This research is intended to provide valuable insights to Financial Institutions to increase awareness of the importance of adopting new technologies and maintaining good relations with regulators to prevent money laundering in Indonesia.

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“…The paradigm shift from Know Your Customer to Know Your Data shows the movement towards data-based regulations (Perlman and Gurung 2019;Arner et al 2017;Lootsma 2017). Big data is key in using financial application tools, such as machine learning.…”

Section: Regulation Paradigm Shiftmentioning

confidence: 99%

Global Anti-Money Laundering and Combating Terrorism Financing Regulatory Framework: A Critique

Gaviyau

Sibindi

2023

JRFM

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Money launderers prefer to use financial services as the ideal medium for laundering. This study aimed to provide an overview of the global AML/CFT regulations, application and how they should evolve in this dynamic environment. To gather more insight, a qualitative study was undertaken with relevant documents analysed. The main finding was that country implementation of the global AML/CFT regulations differed due to political and economic factors, amongst others. While the various AML/CFT enforcements done by sampled countries were mainly cease and desist orders and monetary penalties that were publicised, the drawbacks of global AML/CFT regulations centred on the application of these regulations and emerging trends. These include, among other definitions of money laundering, reference to the three stages of money laundering, the link between penalty and violations, technological innovations and regulation paradigm shift, cyber-attacks, and data privacy. This study contributes to the application and growing body of knowledge in that the advent of technology has resulted in better consumer experiences, new payment platforms, products and services. However, these innovations have broadened emerging money laundering risks and risks to the financial system in general. Hence, there is a need to conduct research-based FATF recommendations, as risk is dynamic and not static.

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Focus Note: The Use of eKYC for Customer Identity and Verification and AML

Cited by 5 publications

References 3 publications

Effectiveness of regulatory technology implementation in Indonesian banking sector to prevent money laundering and terrorist financing

Effectiveness of regulatory technology implementation in Indonesian banking sector to prevent money laundering and terrorist financing

Regulatory Technology (RegTech): The Solution to Prevent Money Laundering in Indonesia

Global Anti-Money Laundering and Combating Terrorism Financing Regulatory Framework: A Critique

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