Determinants and Consequences of Anti-Money Laundering and Counter-Terrorist Financing Disclosure

  • Jinan Mehdi Mohammed

    Student thesis: Doctoral Thesis

    Abstract

    The thesis aims to identify the current practices of anti-money laundering and counterterrorist financing (AMLCTF) disclosure in the UK banking sector and its potential economic consequences. To achieve this aim, the thesis has three objectives. The first objective is to measure AMLCTF disclosure practices in annual reports. The second objective is to examine the determinants of AMLCTF disclosure. In particular, it investigates corporate governance mechanisms' impact on AMLCTF information. The third objective is to test the influence of AMLCTF disclosure on bank performance.
    To achieve these objectives, the study first creates a self-constructed index and uses manual content analysis to measure the AMLCTF disclosure for 625 UK bank-year observations for 2015-2019. The main contribution of this thesis is in the development of a comprehensive AMLCTF disclosure index. Second, the research performs Tobit regression to explore the drivers of AMLCTF disclosure. Third, the thesis uses quantile regression to evaluate the economic consequences of AMLCTF disclosure. For the second and third objectives, the study conducts robust multiple linear and lag approach regressions as further analyses. Thus, examining AMLCTF disclosure determinants and consequences provides new evidence to disclosure literature.
    The results show that the AMLCTF disclosure score increases over time and is higher than prior literature score, but the average is still low. Also, the findings display that board independence, audit committee size, and board gender diversity are the determinants of AMLCTF disclosure. Besides, the analysis shows that AMLCTF disclosure negatively impacts bank performance.
    The thesis findings highlight AMLCTF disclosure practices in the banking industry of the UK. The assessment may guide the policymakers to figure out the tightness and looseness of the industry in preventing financial crimes. It may support policymakers and international institutions in setting a global index or a checklist for best AMLCTF disclosure practices. Also, the regulatory bodies may create schemes that help promoting institutions' AMLCTF declarations.
    Keywords: Anti-money laundering, Counter-terrorist financing, Corporate governance, Bank performance, Voluntary disclosure, Content analysis
    Date of Award14 Sept 2022
    Original languageEnglish
    SupervisorKhaled Hussainey (Supervisor) & Awad Ibrahim (Supervisor)

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