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Interaction
Interaction effects of professional effects
commitment, customer risk,
independent pressure and money
laundering risk judgment among 493

bank analysts
Zuraidah Mohd-Sanusi
Accounting Research Institute, Universiti Teknologi MARA,
Shah Alam, Malaysia
Yusarina Mat-Isa
Faculty of Accountancy, Universiti Teknologi MARA Cawangan Selangor,
Kampus Puncak Alam, Malaysia
Ahmad Haziq Ahmad-Bakhtiar
Faculty of Accountancy, Universiti Teknologi MARA, Shah Alam, Malaysia
Yusri Huzaimi Mat-Jusoh
Faculty of Accountancy, Uiniversiti Teknologi MARA Cawangan Machang,
Malaysia, and
Tarjo Tarjo
Department of Accounting, Universitas Trunojoyo Madura, Bangkalan, Indonesia

Abstract
Purpose – This study aims to examine the direct and indirect effects of professional commitment, customer
risk and independence pressure on money laundering risk judgment among bank analysts.
Design/methodology/approach – This study uses a within-subjects experimental research design and
collects primary data via a questionnaire distributed to bank analysts in banking institutions in Malaysia.
Findings – Results show that professional commitment, customer risk and independence pressure significantly
influence money laundering risk judgment (i.e. customer due diligence and money laundering reporting). The results
also show significant interaction effects between customer risk and independence pressure in influencing money
laundering risk judgment.
Practical implications – Professional commitment and situational factors are crucial in putting pressure
on bank analysts responsible for performing a thorough check and due diligence to minimize money
laundering risk to the bank.
Social implications – As money laundering is lifeblood of crimes, understanding the factors influencing
money laundering risk judgment would assist the affected institutions to manage the risk better and
contribute towards the fight against crimes.

Journal of Money Laundering

Authors thank the Accounting Research Institute of Universiti Teknologi MARA for the research Control
grants (re: 600-RMC/ARI 5/3(028/2021 and 600-RMI/ARI_IRES 5/3(0025/2016) in providing financial
Vol. 25 No. 3, 2022
pp. 493-510
assistance for this study. Authors would also like to thank the Faculty of Accountancy of Universiti © Emerald Publishing Limited
1368-5201
Teknologi MARA for providing support for them to conduct this study. DOI 10.1108/JMLC-05-2021-0046
JMLC Originality/value – This study focuses on money laundering risk judgment. It contributes to understanding the
competency of the gatekeepers, such as bank analysts, in practicing professional commitment and dealing with
25,3 situational factors.
Keywords Money laundering, Professional commitment, Customer due diligence, Customer risk
assessment, Independence pressure
Paper type Research paper
494
1. Introduction
Money laundering is one of the main concerns of banking institutions. The United
Nations Convention on Transnational Crime Organized recognizes the scope of money
laundering to include financial crimes, such as bank fraud, credit card fraud, investment
fraud, prepayment fraud, bankruptcy, fraud and embezzlement, which are the most cited
sources of crime (Mugarura, 2014). The criminals have used banking institutions to
commit money laundering via banking products and services, explaining the need for a
more thorough and regular review of customer risk on financial crime and money
laundering (Pol, 2020).
The rationale behind the regulators’ strict rules is to protect the country’s economic
stability from being abused and banking institutions from being used by criminals as a
money-laundering platform. In a recent report, penalties of US$10.4bn for compliance
breaches with anti-money laundering (AML) regulations have hit global financial
institutions (Finergo, 2020). For instance, the second-largest Australian bank, Westpac, was
charged with a record US$900m fine for failing to report cross-border transactions, and thus
breaching AML laws (Kyckr, 2021). These strict requirements ensure that the financial
system is not used as a channel to launder money and protect customers.
In Malaysia, local and foreign banks must comply with the guidelines and policies issued
by Bank Negara Malaysia. Malaysia lost RM 1.3bn between January and August 2017 due
to financial crimes (Borneo Post Online, 2018). The banking sector needs to be more alert to
financial crimes because banks conduct the first level identification of crimes in financial
institutions. Likewise, bank analysts from the head office and bank branches, including
staff, frontliners and everyone else in the bank, play an essential role in financial crime
detection and prevention. They need to ensure their clients’ risk assessment, especially
involving customer due diligence (CDD) and reporting money laundering cases. Low
judgment in decision-making leads to an increase in the number of cases and subsequently
heightens the risk to the banks and the economy.
Although new guidelines have been applied, criminals can find various ways to
circumvent them. Banking institutions have faced difficulty dealing with all customers
when it comes to money laundering and risk assessment (Nasir, 2019). Research on
professional commitment, customer risk and independence pressure is limited. Most of the
three factors were conducted in different studies and under various fields or areas. Thus,
this study examines the effect between customer risk and independence pressure on money
laundering risk judgment among bank analysts.
The findings of this study contribute to the extant literature on the determinants of
money laundering risk judgment among bank analysts. Factors that may affect the money
laundering risk judgment could occur at the institutional (banks) and/or individual (bank
analysts) level. This study focuses on the individual (inner) level, work processes and
external factors by examining the factors affecting bank analysts’ money laundering risk
judgment. The next sections discuss the literature review, research methodology, results,
discussion and conclusion.
2. Literature review Interaction
2.1 Money laundering risk judgment effects
According to the United Nations, the estimated amount of money laundered annually is US
$800bn–US$2tn in or 2%–5% of global gross domestic product. Detecting the “dirty money”
source and origin is more difficult when it gets into the international banking system. It is
tough to estimate the total amount of money laundering that goes through the laundry cycle
due to its illegal nature (United Nation, 2020). Given that the “dirty money” has been mixed
up with “clean money” and has gone through various placement, layering and integration 495
processes to conceal the origin of the fund, estimating the total amount of money being
laundered globally is a bit challenging.
Based on the Basel AML Index, Malaysia ranked 62 out of 125 countries with a score of
5.28 in 2019 (Basel Institute of Governance, 2019) and ranked 57 out of 129 countries in 2018
(Basel Institute of Governance, 2018). The score was reduced by 0.28 compared to the
previous year, which indicates a lower money laundering risk in Malaysia. A negative score
implies that Malaysia has made progress in tackling money laundering risks.
According to the Global Economic Crime Survey 2016 (Malaysia Report), Malaysia was
expected to reduce the AML/counter financing of terrorism (AML/CFT) controls by as much
as 20% (PwC, 2016), despite the increasing risk of money laundering. PwC (2016) reported
that money laundering facilitates activities and economic crimes, such as tax evasion,
corruption, drug and human trafficking and terrorism, by transferring or holding the
required fund to commit crimes. Money laundering usually involves two crimes as follows:
trying to legitimize the proceeds by exploiting financial institutions and committing the
crimes mentioned above from the proceeds received from money laundering.
The three basic steps of the money laundering process are placement, layering and
integration. The common factor behind money laundering operations is the need to control
gains from criminal activities, the need to cover the true ownership and the source of the
proceeds and the need to change the form of the proceeds generated by initial criminal
activity to minimize the huge amount of cash (Idowu and Obasan, 2012). The process of
money laundering is said to be completed if the launderer or the criminal manages to secure
the illegal proceeds and obtain clean money.
Professional judgment is an action made by experienced persons or experts, such as
bank analysts. The events need to be cognitively accessed before deciding on a judgment.
Different professions have different rules that need to be considered when assessing certain
events (S is
mano glu and Arıkboga, 2018). Thus, a person from different professions or less
experience in certain fields needs to assess a situation before making any judgment
carefully. S is
manoglu and Arıkbog a (2018) defined that professional judgment as a process
of gathering information to produce results. Professional judgment can be made when
information on certain issues or matters and judgment is exercised from the gathered
information upon the completion of the assessment on the issues.
Judgment is when an individual knows the issues and considers alternative ways to
solve problems to obtain the most beneficial outcome. After considering what is morally
wrong or right, judgment on certain issues can be formed. One of the components of
judgment is the proximity and closeness between two parties. Proximity has a relationship
in the three stages of auditors’ ethical decision-making process (Johari et al., 2019). A
thorough and robust assessment needs to be conducted before making any judgment to
ensure that the judgment is the best solution or finding to a certain problem or issue.
Bank analysts must evaluate customer profiling to ensure a high level of CDD to account
activities by identifying the politically exposed person within the customer base to prevent
money laundering and potential crime, such as corruption (Lowe, 2017). CDD process is
JMLC applied to all customers regardless of the risk level of customers. However, the level of due
25,3 diligence and the enhancement depends on the background and the risk level of customers
(FATF, 2019). The process of CDD requires bank analysts to make a professional judgment
on the probability of customer evaluation (Baklouti and Baccar, 2013).

2.2 Professional commitment

496 Singh and Gupta (2015) stated professional commitment as identification with and
psychological attachment to one’s profession. Individuals demonstrate a strong willingness
to uphold membership in their job profession and are willing to put extra effort in work and
identify strongly with the professional goals when they have high professional commitment.
According to Nasution and Ostermark (2012), professional commitment refers to an
individual’s attachment to the profession or the association of an individual’s strength
toward a profession. Individuals with a high level of professional commitment are considered
to have a strong belief in professional goals, a strong wish to remain in the profession and a
willingness to put effort to grow their profession.
According to Meyer et al. (1993), professional commitment has various levels. Individuals
with affective professional commitment want to remain in their work and profession
because of emotional attachments. Individuals with normative professional commitment
feel that they should stay in the profession because of a sense of obligation. Continuance
professional commitment refers to individuals who remain in the current profession because
of the belief in investing in the current job or organization-specific skills and/or lack of
suitable employment alternatives.
Paillé and Valéau’s (2018) study on sportsmanship shows that professional employees
who avoid complaining about their job are less likely to leave their current profession even if
they continue their job search. Professional employees who endure inconveniences about
their work environment are less likely to look for a new job to leave their profession.
Professional employees that display a high level of tolerance on their job will maintain job
search activities (Paillé and Valéau, 2018).
Employees are highly committed to their job when they firmly believe in the importance
of social responsibility and ethics. Such value will not compromise and jeopardize their
beliefs when they are facing pressure from customers. For instance, tax fraud should be
judged strictly because public wealth will be transferred to individuals, and such fraud
shows the violation of social obligation (Shafer et al., 2016). When employees who have a
high level of professional commitment believe such fraudulent actions are unethical, they
will make a fair judgment on any issue. Individuals with a high level of professional
commitment among tax accounts will judge tax fraud as unethical, whereby such judgment
is related with low intention to commit fraud (Shafer et al., 2016).

2.3 Customer risk assessment

Customer risk is evaluating the risk associated with each customer, which could link to money
laundering and financial crime risk. Crime risk assessment is the process of identifying and
evaluating crime risks that could occur and the impact of crime activities toward banking
institutions. Financial crime risk is the probability of the crime occurring and the likelihood of
the criminal activities happening in banking institutions. The reference factors of customer
risk can be divided into geography (location and country), business, industry and customer.
According to FATF (2014), the risk-based approach defines that countries, authorities and
banking institutions are required to identify, assess and recognize the money laundering risk to
which they are exposed. Furthermore, they are required to take appropriate measures to
mitigate the risk. Countries, authorities and banking institutions should analyze the individual’s
information to detect and identify the likelihood of money laundering risk and its impact on Interaction
banks, the banking sector and the national economy. Risk assessment of money laundering can effects
be categorized as low, medium and high (FATF, 2014). The objective of the customer risk
assessment is to assist banking institutions in recognizing and detecting the areas where money
laundering is likely to occur and to take proactive measures to mitigate the risks.
Based on O’Sullivan (2016), the failure of the AML of The Hongkong and Shanghai
Banking Corporation Limited (HSBC) Bank Mexico was because of its inability to respond
proactively to high-risk customers. If CDD has been properly conducted and recorded, the 497
bank can effectively determine whether customers should remain high-risk. Information
from the CDD process could assist banks in determining whether the risk profile is in line
with the bank’s risk appetite.
Several departments and business areas are available in banking institutions, such as
retail or personal customer banking, commercial banking, investment banking and global
markets. Different business areas and market segments would have their own risk appetite.
Thus, customer risk assessment, financial crime risk and the approach to preventing crime
risk are different (Mat-Isa et al., 2015). Customer money laundering risk assessment refers to
judgment on possible money laundering risks of customers, including customer identity and
capital transaction amount in implementing AML (Xue and Zhang, 2016). Some systems are
capable of automatically identifying risk factors, including customer districts, identity and
professions according to account information and classifying customers according to
different risk levels, which can be obtained through automatic grading.

2.4 Independence pressure

Independence pressure could result in bad implications toward the bank analyst.
Individuals show constant boredom with inadequate stress and show less interest at work.
However, excessive occupational stress will decrease the bank analyst’s overall performance
(Yeboah-Kordee et al., 2018). Furthermore, banking industries need to ensure that the level of
stress at the workplace is at an optimum level for the employees to perform well.
Stress at work is common and puts pressure on employees, motivating employees to
work harder. However, stressful working conditions with increasing pressure on the
employees will take a toll on the employees’ performance and affect their mental and
physical well-being (Giri Goswami, 2015). The perception of discrepancy between individual
capacities and environmental demands may define occupational stress.
Obedience pressure and conformity pressure show that traits and influence come from
external factors. Obedience pressure is when people with power can influence other individuals
or subordinates’ behavior by giving orders. Conformity pressure is where individual judgment
is inclined to follow group consensus and tends to disregard personal insights, although the
decision made during the meeting may contain errors (Nasution and Ostermark, 2012).

2.5 Hypothesis development

Behavior change is often a target for staff or officers working directly with management,
governments, organizations or communities. Bandura’s social cognitive theory suggests that
people are driven by external factors and not by inner forces (Bandura, 1986). This model
proposes that the function of the human system can be explained by a relation interaction of
personal, behavior and environmental factors. Several concepts underlie the process of behavior
change and human learning. Behavior can be determined by individuals’ perceived behavioral
control, which can be defined as individual perceptions of the capability to perform a behavior.
Shafer et al. (2016) stated that tax accounts with a high level of professional commitment
would conclude tax fraud as unethical. The judgments were because of the personnel’s low
JMLC intention to commit fraud. Given that tax fraud and money laundering are considered a
25,3 financial crime, money laundering risk judgment will be considered when professional
commitment among bank analysts is high. Singh and Gupta (2015) and Nasution and
Ostermark (2012) defined professional commitment as an individual attachment to the
profession. Thus, when bank analysts have high professional commitment, they will attach
themselves to their profession and put more effort in work.
498 Few studies have been conducted on the professional commitment of bank analysts. The
findings from previous research reveal a relationship between professional commitment and
judgment. Thus, the following hypothesis is proposed.

H1: High professional commitment of bank analysts leads to high money laundering
risk judgment.
The purpose of customer risk profiling and assessment is to determine and detect money
laundering risk. According to FATF (2014), banks should develop and implement policies and
procedures to mitigate the money laundering risk after the individual risk assessment has been
identified. Ai et al. (2010) stated that customers have different risk levels and that the bank should
develop its own risk profile. Xue and Zhang (2016) stated that money laundering risk assessment
refers to the judgment on the possible money laundering risk of customers, which was done
based on collected customer identity and capital transaction amounts of implementing AML.
Thus, when the assessment on the customer risk level has been performed, money laundering
risk judgment will be implemented to mitigate the risk. When the customer risk is high or has
increased from the previous assessment, this will lead to high money laundering risk judgment.
This study focuses on the risk assessment performed by bank analysts, who are one of
the three lines of defense in banks. Thus, the following hypothesis is proposed.

H2: High customer risk leads to high money laundering risk judgment.
Findings from Giri Goswami (2015) and Yeboah-Kordee et al. (2018) show that the
performance and productivity of bank officers will decrease with the presence of
occupational stress. However, Yeboah-Kordee et al. (2018) also stated that inadequate stress
will cause employees to be bored at work and raises the lack of interest in working.
Management needs to ensure an optimum level of stress at the workplace for employees to
perform well. Furthermore, Nasution and Ostermark’s (2012) findings show that auditors
who experienced obedience pressure and conformity pressure will sign off a higher net of
equipment balance than auditors without pressure. When related to money laundering,
obedience and conformity pressure will lead analysts to high judgment pertaining to money
laundering risk. Thus, the following hypothesis is proposed.

H3: High independence pressure of bank analysts leads to high money laundering risk
judgment.
Bank analysts face different levels of pressure in daily workings. Procedures remain the
same with minimal changes given that bank analysts are guided by policies and guidelines.
In terms of money laundering risk judgment, bank analysts must make their judgments
about money laundering for different types of customers. Money laundering is likely to
occur at every customer level. Bank analysts still need to comply with the policies and
regulations imposed by their respective banks and Bank Negara Malaysia. They need to
complete their tasks to assess the customers’ risk and accomplish the CDD review on their
customers. Furthermore, each bank analyst would undergo training and learning conducted
by banks to ensure that all bank analysts are familiar on the work process.
 Bank analysts are required to complete their tasks and make judgments on money Interaction
laundering risk concerns. Yeboah-Kordee et al. (2018) stated that occupational stress is effects
considered important and essential at the workplace. According to Giri Goswami (2015),
pressure is part of work and would boost employee motivation. Based on S is manog lu and
Arıkboga (2018), professional judgment is a process of collecting information, which will
lead to a result or finding. Ai et al. (2010) also mentioned that banks should develop
customers’ risk profiles because customers have different risk levels. Thus, given that
independence pressure is part of bank analysts’ daily work, they still need to make their own 499
judgments and decisions pertaining to money laundering risk for every type of customer
risk. The following interaction effects are proposed.

H4: Under the low independence pressure of bank analysts, high customer risk increases
money laundering risk judgment. On the contrary, under high independence
pressure, high customer risk does not increase money laundering risk judgment.

3. Methodology
This study collected data from primary sources using a structured questionnaire distributed
to bank analysts in banking institutions in Malaysia. The sample includes bank analysts
who are responsible for servicing customers and are involved in assessing their risk profile.
Out of the 26 commercial banks in Malaysia, the top 15 commercial banks (based on size)
were selected for this study.
Out of 106 respondents, 82 (77.4%) are female and 24 respondents are male (22.6%),
showing that the total number of female bank analysts who participated in the study is
about three times more than the total number of male bank analysts.
A questionnaire was designed using an experimental approach and distributed using
Google Forms. When the questionnaire was completed and ready for distribution, the link of
the questionnaire was sent to the bank analysts via WhatsApp and email. Time was
allocated for data collection and the retrieval of responses from targeted respondents. The
data were gathered and analyzed using data analysis tools.
The research instrument consists of one case scenario followed by seven statements. The
respondents were asked their opinion on the underreporting of income and money
laundering risk based on the case scenario. Some statements required the respondents to
determine the level of CDD and customer risk in the case scenario. The respondents were
also asked on their views on the independence pressure relating to the case scenario. Each of
the four sets of questionnaires had different case scenarios. Different respondents are given
different a set of questionnaires, which shows a between-design experimental approach. The
variables are manipulated in the four different scenarios. The case scenarios are developed
based on the information obtained from FATF (2014) and Rahman and Rahman (2014),
which were adopted and modified to suit this study (refer to Appendix).
The items for each of the variables are adapted from previous studies. The dependent
variable of this study, money laundering risk judgment, is measured using two measures as
follows:
(1) CDD process (judgment on [JDM]-CDD); and
(2) Money laundering reporting (JDM-MLR). Details of the dependent and independent
variables measured are shown in Table 1.

The questionnaire and case scenarios were reviewed by the banks’ Financial Crime and
Compliance Manager and CDD analyst to validate the questionnaire’s content. The lecturers

Variable
Table 1.
measurement
Variables Definition
Money laundering risk judgment – two measures: Judgment on the likelihood of
Customer due diligence (JDM-CDD) money laundering and the risk
Money laundering reporting (JDM-MLR) of money laundering
Professional commitment The extra effort that the
(PCOMM) professionals put into their task
and how they are willing to stay
in their profession
Customer risk The process of identifying
(CRISK) customer risk rating/assessment
Independence pressure Independence, stress and
(PRESSURE) pressure are conditions faced by
individuals whenever they
experience the risk of mental and
physical loss
Items
Money laundering
Underreporting of income
Customer due diligence process
Career satisfaction
Responsibility
Career loyalty
Career obligation
Customer’s details and risk
Management, peer support and
behavior
25,3
500
JMLC
Source
Adopted from Jaffar et al. (2011)
and Mat-Isa et al. (2015);
modified according to research
study
Adopted from Meyer et al.
(1993); modified according to
research study
Adopted from Xue and Zhang
(2016) and FATF (2014);
modified according to research
study
Adopted from Rahman and
Rahman (2014); modified
according to research study
also reviewed the questionnaires and evaluated the constructed case scenarios and the items Interaction
measurement for all variables (statements and questions). effects
Data analysis was conducted using the SPSS software. The answers were converted on
an excel sheet, and data clean-up was completed prior to mapping the data into the SPSS
software.

4. Analysis 501
4.1 Manipulation check results
To determine whether the two independent variables, customer risk and independence
pressure, were successfully manipulated in this study, one question regarding the customer
risk and one question regarding independence pressure were tested.
Table 2 presents the manipulation check results on customer risk and shows that the
mean values between low customer risk and high customer risk are significantly different at
the 0.05 level. The results indicated that respondents who received high-level scenarios
perceived that the level is higher than those who received low-level scenarios for tested
independent variables. In conclusion, customer risk and independence pressure were
successfully manipulated within the questions in the case scenarios.

4.2 Reliability analysis

The ideal Cronbach’s alpha coefficient of a scale for internal consistency should be above 0.7
to 0.8 (Field, 2013) and should be approximately 0.7 (Pallant, 2007). All items in MLR and
professional commitment are suitable to proceed with reliability analysis given that the
Cronbach’s alpha values for both variables are 0.747 and 0.923, respectively. Table 3
indicates that all items in MLR and professional commitment are reliable.

- Customer risk assessment

Group statistics
Manipulation question CRISK N Mean Sig (two-tailed)
Customers in the above case 0 = Low customer risk 49 4.00 0.012
would be indicated as risky customers 1 = High customer risk 57 4.98
- Independence pressure
Group statistics
Manipulation question PRESSURE N Mean Sig (two-tailed) Table 2.
Bank analyst in the above case has 0 = Low independence pressure 50 3.68 0.00 Manipulation check
low management and peer support 1 = High independence pressure 56 5.45 statistics

Details Reliability statistics

Variables Cronbach’s alpha N of Items

JDM-MLR 0.747 3
PCOMM 0.923 10
Excluded variables: JDM-CDD (two items only),
CRISK and PRESSURE (measured using scale 0 and 1)

Notes: CDD – Customer due diligence, MLR – money laundering reporting, PCOMM – professional Table 3.
commitment, CRISK – customer risk and PRESSURE – pressure. Reliability analysis
JMLC 4.3 Pearson correlation analysis
25,3 Table 4 shows a negative correlation between CDD and MLR, which is significant at the 0.01
level. The result also shows that customer risk and independence pressure negatively
correlate with CDD and a positive correlation between professional commitment and CDD,
but the value is not significant at the 0.05 level. A positive and significant correlation is
observed between all independent variables with MLR with the value of Pearson correlation
502 at 0.216, 0.402 and 0.202.

4.4 Anova
Based on Table 5, the R-squared (R2) shows the explanatory power of the dependent
variable, JDM-CDD. The independent variables explain the value of R2 at 44.0% of CDD.
The adjusted R2 is 41.7%, which is lower than the value of R2. The value of R2 is also
reflected by the total of the 106 respondents, which explains the entire research sample
(Figure 1).
The R2 was also used to test the explanatory power of the research involving JDM-MLR.
Based on Table 6, the value of R2 explains 29.0% of the independent variables. The adjusted
R2 implies that only 26.20% of the independent variable can explain MLR (Figure 2).

Variable JDM-CDD JDM-MLR PCOMM CRISK PRESSURE

JDM-CDD 1 0.371** 0.086 0.593** 0.205*

JDM-MLR 1 0.216* 0.402** 0.202*
PCOMM 1 0.048 0.025
CRISK 1 0.034
PRESSURE 1
Table 4. Notes: **. Correlation is significant at the 0.01 level (two-tailed). *. Correlation is significant at the 0.05
Pearson correlation level (two-tailed). CDD – customer due diligence, MLR – money laundering reporting, PCOMM –
analysis (N = 106) professional commitment, CRISK – customer risk and PRESSURE – pressure.

Tests of between-subjects effects

Dependent variable 1: CDD (JDM-CDD)

Source Type III sum of squares df Mean square F Sig.
Corrected model 161.661a 4 40.415 19.813 0.000
Intercept 41.338 1 41.338 20.266 0.000
PCOMM 2.262 1 2.262 1.109 0.295
CRISK 132.234 1 132.234 64.827 0.000
PRESSURE 14.328 1 14.328 7.024 0.009
CRISK  PRESSURE 15.253 1 15.253 7.478 0.007
Error 206.021 101 2.040
Total 1,784.250 106
Table 5. Corrected total 367.682 105
ANOVA – analysis
on DV1 – money Notes: a. R2 = 0.440 (adjusted R2 = 0.417) JDM-CDD – customer due diligence, JDM-MLR – money
laundering risk: JDM- laundering reporting, PCOMM – professional commitment, CRISK – customer risk and PRESSURE –
CDD pressure.
 Interaction
effects

503

Figure 1.
Tests of between-
subjects effects (JDM-
CDD)

The first hypothesis examines the effect of the professional commitment of bank analysts on
money laundering risk judgment. Table 4 shows that professional commitment is positively
correlated with CDD (JDM-CDD), but the relationship is not significant at 0.05 level. This
finding is consistent with the ANOVA results in Table 5, where the p-value is 0.295.
However, professional commitment is significantly correlated with JDM-MLR at the 0.05
level, consistent with the ANOVA results in Table 6, where the p-value is 0.006. Thus, H1 is

Tests of between-subjects effects

Dependent variable 2: MLR (JDM-MLR)

Source Type III sum of squares df Mean square F Sig.
Corrected model 56.116a 4 14.029 10.321 0.000
Intercept 56.543 1 56.543 41.597 0.000
PCOMM 10.605 1 10.605 7.802 0.006
CRISK 30.114 1 30.114 22.154 0.000
PRESSURE 8.626 1 8.626 6.346 0.013
CRISKPRESSURE 10.090 1 10.090 7.423 0.008
Error 137.290 101 1.359 Table 6.
Total 2,975.000 106 ANOVA – analysis
Corrected total 193.406 105 on DV2 – money
Notes: a. R2 = 0.290 (Adjusted R2 = 0.262) JDM-CDD – customer due diligence, JDM-MLR – money laundering risk –
laundering reporting, PCOMM – professional commitment, CRISK – customer risk and PRESSURE – judgment on money
pressure. laundering reporting
JMLC
25,3

504

Figure 2.
Tests of between-
subjects effects (JDM-
MLR)

partially supported whereby high professional commitment leads to high money laundering
risk judgment.
The second hypothesis examines the effect between customer risk on money laundering
risk judgment and the decision-making among bank analysts. Table 4 shows that customer
risk is negatively correlated with CDD (JDM-CDD) at the 0.05 level. This finding
is consistent with the ANOVA results in Table 5, where the p-value is 0.000. Table 4 shows
that customer risk is positively related with MLR (JDM-MLR) at the 0.05 level, which
is consistent with the ANOVA results in Table 6, where the p-value is 0.000. Therefore, H2 is
accepted whereby high customer risk leads to high money laundering risk judgment.
Table 4 shows that independence pressure is negatively correlated with CDD at the 0.05
level. This finding is consistent with the ANOVA results in Table 5, where the p-value is
0.009. Table 4 shows that customer risk is positively related to MLR at the 0.05 level,
consistent with the ANOVA results in Table 6, where the p-value is 0.013. Therefore, H3 is
accepted whereby high bank analysts’ independence pressure leads to high money
laundering risk judgment.
A test was conducted to analyze the interaction effect between customer risk and bank
analysts’ independence pressure. The results reveal a significant interaction effect at the
0.05 level between customer risk and independence pressure on CDD with a p-value of 0.007
and toward MLR with a p-value of 0.008. Thus, H4 is accepted.

4.5 Additional analysis (regression)

This study has extended the analysis using multiple regression analysis. Table 7 shows that
professional commitment has no significant effect on CDD because the value is not
significant at the 0.05 level, where the p-value is 0.154 (Model 1) and 0.295 (Model 2).
 Coefficientsa
Interaction
effects
Model Unstandardized Standardized t Sig.
coefficients coefficients
B Std. error b
1 (Constant) 4.234 0.720 5.880 0.000
PCOMM 0.189 0.132 0.110 1.435 0.154
CRISK 2.212 0.287 0.592 7.696 0.000 505
PRESSURE 0.681 0.287 0.183 2.374 0.019
2 (Constant) 4.926 0.743 6.633 0.000
PCOMM 0.136 0.130 0.079 1.053 0.295
CRISK 3.017 0.405 0.808 7.442 0.000
PRESSURE 1.510 0.412 0.405 3.670 0.000
CRISK  1.542 0.564 0.377 2.735 0.007
PRESSURE
Model R R2 Adjusted Change statistics
R2 R2 change Sig. F
change
1 0.631a 0.398 0.380 0.398 0.000
2 0.663b 0.440 0.417 0.041 0.007

Notes: CDD – customer due diligence, MLR – money laundering reporting, PCOMM – professional Table 7.
commitment, CRISK – customer risk and PRESSURE – pressure. aPredictors: (Constant), PRESSURE, Regression analysis
PCOMM, CRISK; bPredictors: (Constant), PRESSURE, PCOMM, CRISK, INT_CRISKxPRESSURE on CDD (JDM-CDD)

However, a significant negative effect is observed between customer risk and independence
pressure toward judgment on CDD. The p-value for both independent variables is 0.000 and
0.019 (based on Model 1). The findings of customer risk and independence pressure toward
CDD are consistent with the results of the Pearson correlation analysis.
Based on Model 2 in Table 7, the interaction between customer risk and independence
pressure shows a significant positive effect on CDD. The finding is consistent with the
ANOVA result from Table 5, which shows a significant interaction effect between two
independent variables on CDD.

5. Discussions and conclusions

This study examines the independent variables, professional commitment, customer risk
assessment, independence pressure and the interaction between customer risk with
independence pressure. Bank analysts will report any suspicion toward customers or
transactions to the respective authority. As a result, money laundering risk judgment will be
high when bank analysts have high professional commitment. Money laundering risk
judgment is measured through bank officers when performing CDD and MLR. The results
are consistent with Shafer et al. (2016), who stated that tax accounts with a high level of
professional commitment will judge tax fraud as unethical and that the judgment made is
because of their low intention to commit fraud. Also, concerning findings from Singh and
Gupta (2015) and Nasution and Ostermark (2012), bank analysts with high professional
commitment will attach to their profession and put more effort into work, which will lead to
the effectiveness of their work.
Based on the finding for H2, the results of the ANOVA showed a significant and direct
effect between customer risk on money laundering risk judgment. The results of the
regression show that customer risk has a significant negative relationship with judgment. In
general, high customer risk will lead to high money laundering risk judgment. The findings
align with the concept of FATF (2014) whereby the purpose of customer risk profiling is to
JMLC determine and detect the money laundering risk and financial crime risk. Xue and Zhang
25,3 (2016) stated that money laundering risk refers to the judgments on possible money
laundering risk of a customer, which was done based on several factors, including collecting
customer identity and transaction amounts.
The ANOVA results show a significant and direct effect between independence pressure
on CDD and MLR. When high pressure from the management is observed, the work needs to
506 be completed quickly, leading to a low level of CDD and impacting the money laundering
risk concern. Management needs to ensure an optimum level of pressure at the workplace to
enable the employees to perform well. Similarly, findings from Nasution and Ostermark
(2012) show that the auditors who have experienced obedience pressure and conformity
pressure will sign off a higher net of equipment balance compared with that of the auditors
without pressure.
The result of the money laundering risk judgment remains constant under high or low
bank analyst’s independence pressure. The test between customer risk and independence
pressure with CDD shows a significant effect between the two variables. The test between
the variable with MLR also shows a significant effect; irrespective of the pressure level, the
money laundering risk judgment will be high when customer risk is high. Bank analysts
need to complete their tasks and make any necessary judgments and decisions at any level
of pressure because they need to comply with policies and regulations. Otherwise, money
laundering risk will affect their banks. Based on S is manog lu and Arıkbog a (2018),
professional judgment is a process of collecting information, which will lead to a result or
finding. Thus, given that independence pressure is part of bank analysts’ daily work, they
still need to judge money laundering risk for every type of customer risk.
This study provides several theoretical and practical implications. Professional
commitment is considered an inner force whereby customer risk and independence pressure
are considered external factors. The findings also showed that professional commitment
only significantly impacts the MLR but has no significant impact on the CDD (as per the test
conducted using ANOVA and regression). MLR is the act of judgment derived from an
individual’s belief, perception and the value of the outcome.
Regarding practical implication, professional commitment is believed as a personal trait
that comes from individual inner factors. Employers and management should conduct more
effective programs and training to enhance employees’ professional commitment. Sufficient
training might increase the individual’s sense of loyalty, responsibility and self-image in the
banking profession. Exchange and sharing sessions between management and employees
should be regularly conducted to ensure that the management knows of their employees’
well-being and mental condition.
Furthermore, management and employers should ensure that the working environment
is cozy and attractive. Based on Siegel and Sisaye (1997), the professional commitment of
employees could be explained by the exclusive work environment. Bank management needs
to ensure that pressure is at an optimal level and regularly revises the stress/pressure
management programs to meet the needs of the bank employees/analysts. In terms of
policies and guidelines, Bank Negara Malaysia and banking institutions will regularly
revise and update the policies and regulations to meet and ensure that they fit the current
scenario. Bank analysts need a regular refresher to ensure that they are fully equipped with
the latest updates on the policies, leading to effective customer risk assessment.
This study has several limitations. The respondents are bank analysts in a banking
institution. The descriptive analysis shows that half of the respondents have less than five
years of experience in banking institutions. This factor limits the generalizability to the
population of experienced bank analysts. Bank analysts do not possess the same type and
amount of experience in the financial crime risk and specifically in money laundering risk Interaction
(Mat-Isa et al., 2015), which could have influenced the results and their judgment. effects
The study and the data collection were conducted during the COVID-19 pandemic. Most
of the bank analysts worked from home or were either working on shifts. This study could
not be completed at a larger scale given the movement control order and the standard
operating procedure to overcome the spread of the virus. Thus, reaching the targeted
respondents and explaining the objective of this study is difficult.
Future studies could test the effect of professional skepticism on money laundering risk 507
judgment. Khan and Harding (2020) stated that professional skepticism is essential to
ensure effective audit and core for audit quality. Future studies could examine how bank
analysts define skepticism and the effect of bank analysts’ skepticism in evaluating money
laundering risk, conducting CDD and evaluating evidence/information.
Future studies should also test the impact of pandemics (such as the COVID-19 pandemic)
on money laundering risk judgment. The COVID-19 pandemic has led to a sudden change in
banking procedures and policies and challenges locally and globally (Wass, 2020). The
pandemic has impacted banking institutions and has led them to implement effective
financial crime risk supervision and AML supervision. Effective implementation of AML
measures can resolve the challenges in the banking system, especially conflict of interest,
lack of compliance culture and weak ethical standards, the non-availability of technical tools
and the Bank Chairman/Chief Executive Officers overbearing influence (Nasir, 2019). Banks
must avoid being exploited from the current pandemic situation to commit crime and money
laundering via banking institutions.

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Appendix. Constructed case scenarios

Scenario A
The case is about Ivory Bank (IVB), a leading brand in the regional banking industry. IVB has strong
performance, such as competitive deposit interest rate and robust capitalization. Mr. Tompson, a
Philippine national, has been banking with IVB for two years. Many large transactions were noted
from/to unknown counterparties during the account review and transaction monitoring process. The
analyst-in-charge was having a long break. The analyst found out that the customer is a businessman
and director cum shareholder in various companies. The analyst could not obtain sufficient information
such as income documents to justify the customer’s current funds and validation documents to verify
the transactions. The customer kept on avoiding the bank and claimed that he was busy. The bank’s
know-your-customer process (KYC) is limited, and customer information was not properly recorded.
Although the customer has a high net worth and large account balance, the management insisted and
wanted to conclude the review quickly based on the obtained information. Given that the review was
done quickly within a short period, the analyst could finish the work.

Scenario B
The case is about IVB, a leading brand in the regional banking industry. IVB has strong performance,
such as competitive deposit interest rate and robust capitalization. Ms. Jims, who is a Malaysian national,
has been banking with IVB for two years. The analyst-in-charge was having a long break. During the
account review and transaction monitoring process, normal transactions were noted mainly for personal
living expenses. The analyst found out that the customer is a freelancer in the fashion industry. The
customer provided relevant documents to the bank during the account review. The analyst also
conducted the ongoing due diligence process and scrutinized the customer’s identity. Although the
customer is a retail customer with minimal account balance, the management insisted and wanted to
conclude the review quickly based on information obtained to avoid bad customer experience and account
disruption. Given that the study was within a short period, the analyst could not finish the work.

Scenario C
The case is about IVB, a leading brand in the regional banking industry. IVB has strong performance,
such as competitive deposit interest rate and robust capitalization. Mr. Tompson, who is a Philippine
national, has been banking with IVB for two years. During the account review and transaction
JMLC monitoring process, large transactions were noted from/to unknown counterparties. The analyst-in-
25,3 charge was having a long break. The analyst found that the customer is a businessman and a director
cum shareholder in various companies. The analyst could not obtain sufficient information such as
income documents to justify the customer’s current sources of funds and validation documents to verify
the transactions. The customer continued avoiding the bank and claimed that he was busy. The bank’s
KYC is limited, and customer information was not properly recorded. Although the customer has a high
510 net worth and large account balance, the management encouraged and reassured that the review
process should be conducted following the policy and guidelines. The manager also helped the analyst
by explaining the proper customer risk and CDD process.

Scenario D
The case is about IVB, a leading brand in the regional banking industry. IVB has strong performance,
such as competitive deposit interest rate and robust capitalization. Ms. Jims, who is a Malaysian
national, has been banking with IVB for two years. Normal transactions were noted mainly for personal
living expenses during the account review and transaction monitoring process. The analyst found out
that the customer is a freelancer in the fashion industry. The customer provided relevant necessary
documents during the account review. The analyst conducted ongoing due diligence and scrutinized the
customer’s identity. All documents were filed accordingly to ensure all transactions were supported and
recorded for future reference. Although the customer is a retail customer with minimal account balance,
the management encouraged and reassured that the review process should be conducted following the
policy and guidelines. The manager helped the analyst by explaining the proper customer risk and
CDD process.

Corresponding author
Yusarina Mat-Isa can be contacted at: yusarina@uitm.edu.my

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