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Money Laundering Prevention through Regulatory Technology and Internal Audit Function in Indonesia Banking Sector

Author

Listed:
  • Yusri Hazrol Yusoff
  • Yossi Rosalina Oktaviani
  • Siti Handayani
  • Muhammad Safwan Ismail
  • Muhamad Ridzuan Hashim
  • Roszana Tapsir

Abstract

Money laundering poses a significant challenge globally, involving using cash to conceal the origins of funds. With the rise of digitalisation and the adoption of financial technology (FinTech), the financial sector has been compelled to adapt to these changes. The COVID-19 pandemic has further accelerated the use of FinTech services, including digital banking, to address social distancing concerns and enhance customer convenience. Despite having an index of risk considered moderate for money laundering, Indonesia continues to be a destination for these types of illegal activities. Anti-money laundering (AML) and counter-terrorism financing (CFT) programs must be implemented, especially in all financial service providers that Bank Indonesia oversees.Additionally, the internal audit function is crucial in identifying money-laundering activities within banks. However, there needs to be more research regarding integrating RegTech and evaluating internal audit functions in preventing money laundering in Indonesian banks. This paper aims to address this gap by examining the benefits of RegTech solutions and the role of internal audit functions in preventing money laundering. The findings can be used to enhance regulations and implement effective measurement to combat money laundering and illicit activitivities. Furthermore, the study highlights the importance of Indonesia's membership in the Financial Action Task Force (FATF) to strengthen the country's AML framework and contribute to global policies on AML and countering the financing of terrorism.

Suggested Citation

  • Yusri Hazrol Yusoff & Yossi Rosalina Oktaviani & Siti Handayani & Muhammad Safwan Ismail & Muhamad Ridzuan Hashim & Roszana Tapsir, 2023. "Money Laundering Prevention through Regulatory Technology and Internal Audit Function in Indonesia Banking Sector," Accounting and Finance Research, Sciedu Press, vol. 12(4), pages 1-62, November.
    • Handle: RePEc:jfr:afr111:v:12:y:2023:i:4:p:62
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    References listed on IDEAS

    as
    1. Anagnostopoulos, Ioannis, 2018. "Fintech and regtech: Impact on regulators and banks," Journal of Economics and Business, Elsevier, vol. 100(C), pages 7-25.
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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