Regulatory technology implementation, strength of auditing standards, and money laundering prevention among a few selected commercial banks in Kampala

Abstract

This research aimed at examining the effectiveness of regulatory technology in money laundering prevention with the moderating role of the strength of auditing standards in commercial banks in Kampala. The study was premised on two objectives: to establish the effect of regulatory technology on money laundering prevention and to assess the moderating role of the strength of auditing standards on the relationship between regulatory technology and money laundering prevention in commercial banks in Kampala, Uganda. The study used cross-sectional and correlational survey research with a quantitative study approach, collecting numerical data from 141 respondents using a survey questionnaire from a sample of 158 staff from large-sized banks (Stanbic and Centenary banks), medium-sized banks (Bank of Africa and Eco Bank), and small-sized banks (Cairo Bank and ABC Bank). Data were analyzed using the statistical package for social science (SSPS Version 23) and Andrew F. Hayes Macro Process Version. The study revealed that regulatory technology (B = 0.730, P≤ 0.01), electronic know-your-customer (B = 0.256, P≤ 0.01), transaction monitoring (B = 0.121, P≤ 0.01), and cost and time efficiencies (B = 0.355, P≤ 0.01) influence money laundering prevention among commercial banks in Kampala district. Furthermore, the results revealed that the strength of auditing standards (SAS) had no moderating role in the relationship between regulatory technology and money laundering prevention, as indicated by an insignificant interaction term between regulatory technology and the SAS dummy variable (B = -0.126, p > 0.01, 96% CI [-0.137,0.117]). The findings imply that commercial banks may be better compliant with money laundering regulatory requirements when they apply regulatory technology aspects and high-quality auditing standards. The study therefore recommended that the management of banking institutions employ electronic tools to establish business relationships and conduct customer due diligence (CDD) through the use of advanced technology, especially in the digital age. Furthermore, the study recommended appropriate staff training in financial information technology in order to efficiently construct and integrate complicated strategic technological information capabilities in order to detect and prevent fraudulent transactions. This study will be important to the management of the banks under study, the banking industry at large, the Financial Intelligence Authority, and bank regulators.