Research On Influencing Factors Of Employees' Anti-money Laundering In Commercial Banks Of China Based On Behavioral Economics

The commercial banks provide convenience to economic activities as an economic hub.In the meanwhile,this convenience also serves the money laundering.According to the statistics of People's Bank of China,over 50% money laundering cases and suspicious transactions come from commercial banks.As an important subject of anti-money laundering,the commercial banks should serve as the first barrier to money laundering.The new regulation,i.e.‘The management of large and suspicious transaction reports in financial institutions',has been released.Under the risk-based requirement,the commercial banks should actively overtake the obligation of anti-money laundering and increase the effectiveness of recognising suspicious transactions.According to the requirements of the people's Bank of China,all commercial banks have formulated detailed rules for the implementation of anti-money laundering.However,the commercial banks are still of less initiative during practical work.Most reported suspicious transactions in commercial banks are still of great defensibility.The effectiveness of risk based anti-laundering is not high.The key factor is that employees participating in anti-money laundering in commercial banks fail to carry out the related policies.Therefore,to analyse the key factors affecting anti-money laundering behaviour of employees in commercial banks is of benefit to improve the effectiveness of anti-money laundering works by employees.The negative anti-money laundering problem in current commercial banks is supposed to be solved.Firstly,combining the related researches of violations in behavioral economics,the behavior models for anti-money laundering of employees' due diligence are developed by both Expected Utility Theory and Prospect Theory.It is found that the total rate of money laundering is positively correlated with the audit rate,penalty rate and psychological cost when the total utility is unchanged,but negatively with the cost of due diligence investigation.In adddtion,the optimal due diligence level has a positive correlation with audit rate,penalty rate and psychological cost.When the cost of due diligence investigation is lower than a certain critical value,the best due diligence level of employees is negatively related to the cost of due diligence.However,the the level of optimal due diligence is positively related to the cost of investigation if the cost mentioned above is higher than a certain critical value.Secondly,a questionnaire is designed conbined with the existing research on tax evasion and breach of contract.Various indices representing the psychological factors of employees are introduced.Regression analyses are conducted with repect to factors affecting employees' conscientious anti-money laundering and due diligence in anti-money laundering.It is found that somefactors,e.g.the staff position,conformity mentality,the strictness of implementation rules in commercial bank and the internal anti-money laundering cooperation in commercial banks have a positive impact on the possibility of the employees' anti-money laundering.It is also found that the degree of due diligence of elder staff is high than that of freshman.The employees in non anti-laundering position pay more effort to the anti-money laundering investigation than those of the anti-money laundering or compliance position.The group psychology will also improve the degree of the employees' due diligence.In addition,the requirement of the number of suspicious transaction reports by the People's Bank as well as the punishment to dereliction in anti-money laundering both have a positive impact on the degree of anti-money laundering of employees.Finally,some pertinent policy suggestions to improve the enthusiasm of commercial banks' anti-money laundering and the effectiveness of the commercial bank's suspicious transaction reports are proposed based on the researches mentioned above.