Combating money laundering risk in the banking sector: a case study of Tropical Bank Limited and Cairo Bank Uganda

Abstract

Money laundering is one of the biggest problems financial institutions face. The study was guided by specific objectives namely; (1) to identify challenges faced by Banks in combating Money Laundering, (2) to identify the potential effect of money laundering on Ugandan Banks and (3) establish measures Ugandan Banks should put in place to counter money laundering. The study adopted an explanatory and a descriptive research design. The sample size constituted 56 staff from Tropical Bank Ltd and Cairo Bank Uganda who were selected purposively. Findings revealed that the main challenges faced in combating money laundering by Tropical Bank Ltd and Cairo Bank Uganda were difficulty in managing cross-border and multi-jurisdictional anti-money laundering (AML) compliance requirements, the lack of skilled personnel to handle money laundering issues, differences in money laundering legislation and international standards regarding money laundering among others. The study found out that the main effects of money laundering include damage to reputation, risk of facing penalties from failure to conduct due diligence on customers during the boarding process, compromise of the corporate governance structure of the bank. From the findings of the study, the appropriate strategies for combating money laundering involve getting the board of directors and senior management involved in fighting money laundering, the adoption or use of modern technology by banks. Further, the study recommends both banks to hire highly skilled employees and continuously train them to handle the Anti-Money Laundering.