Internal and External Audit and the Banks' Commitment to Detect and Combating of Money Laundering in Jordan

By Qasim; Alawaqleh, A. et al. | Academy of Accounting and Financial Studies Journal, January 1, 2018 | Go to article overview

Internal and External Audit and the Banks' Commitment to Detect and Combating of Money Laundering in Jordan


Qasim, Alawaqleh, A., Airout, Rana, Aleqab, Mahmoud M., Academy of Accounting and Financial Studies Journal


INTRODUCTION

The phenomena of money laundering adversely affect economies of countries by reflecting on Gross Domestic Products (GDP), Gross National Products (GNP), Debt, financial and monetary policies, also on income of individuals, consumption and across all sectors.

The Jordanian economy depends mainly on remittances from Jordanian workers abroad and donations and foreign aid, where illegal remittances have become inadequate for the Jordanian economy because of money laundering.

The Jordanian economy suffers from difficulties relating to the economic situation and the situation of the neighbouring countries of Jordan, which adversely affected all the situation in Jordan, and was the inevitable result of this situation to the deficit in the governmental budget which reached to 30 billion dollars by the end of 2016 (Financial Stability Report, 2016). Therefore, the Jordanian government called on all public and private sectors and researchers to find solutions to combat money laundering. In relation, the Jordanian government established the Money Laundering Unit of the Central Bank for combating money laundering.

In this study, we will clarify the relationship of the accounting factors in Jordanian banks, based on anti-money laundering instructions in order to reduce and combat the problem which certainly driving the weak economy and social stability in Jordan. Jordan is still facing economic challenges despite its economic growth since 2014, Therefore, in 2017, the Central Bank of Jordan (CBJ) sought to maintain financial and monetary stability in order to enhance the ability of banks and other financial institutions to take risks and reduce any structural imbalances. Jordan's financial stability continued to improve despite economic and political conditions in neighboring countries which had a negative impact on Jordan's financial and economic situation (Financial Stability Report in Jordan, 2017)

PROBLEM STATEMENT

The problem of the study is to find the relationship of internal and external audit with money laundering in order to demonstrate the effectiveness and quality of money laundering combating by Jordanian Banks.

In general, the percentage of money laundering in the Arab world has widely increased as a result of the wars against terrorism that have been inflicted on neighboring countries of Jordan (Abu Olaim & Rahman, 2016), which negatively affected the economy of Jordan, especially the technological progress which is considered as one of the variables that have helped the existence of money laundering cases in Jordan, because those who carry out money laundering have experience in financial transactions such as economists, traders, lawyers, companies and banks. Despite the numerous international attempts and Jordanian efforts at all levels of the country's financial and security to combat the use of these suspicious accounts, there is still a big gap that still prevents the full control of the users of these accounts in a manner that ensures their discovery and achieves financial stability. Therefore, this study is designed to introduce new variables such as internal and external auditing, and its relationship with banks' commitment in Jordan to detect suspicious accounts In order to assist all sectors of the state financial and security to stop and arrest the perpetrators of these crimes and camouflage uses for their implementation.

The problem focused on determining the outcomes of the accounting factors use in banks and to find out the main problem in Jordanian banks. Until this moment, according to our limited knowledge; there are no previous researches have investigated the relationship between the accounting factors combined and the banks' commitment to detect money laundering in Jordan. Consequently, the following question helps to solve this problem:

1. What is the relationship between internal audit and banks' commitment to detect money laundering in Jordan? …

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