The regulatory compliance system: Impact of AML/CFT implementation on the financial performance of Lebanese banks
1-École Supérieure des Affaires (ESA) – Lebanon
Corresponding Author: Naser Chaabo
The purpose of this paper is to provide a better understanding of how the financing of the compliance obligations which are related to “AML / CFT” (Anti-Money Laundering and Combating the Financing of Terrorism) does affect the financial performance of banks in Lebanon. The main question is: Does the compliance system play a positive impact on the risk management in Lebanese banking sector?
Based on a sample of 66 respondents from BLOM Bank employees, the empirical results showed that the employment of a compliance regulatory system has increased bank’s costs. However, its implementation is not an option since it guarantees the compliance with the local, regional and international policies.
Besides, the study revealed that there are numerous benefits associated with these costs that help banks to increase their awareness towards policies and regulations. These benefits are related to the high level of staff training, the closer due-diligence leveling, and the deeper contribution in combating tax evasion by implementing the CRS (Common Reporting Standards) standard in banks systems, which guarantee that information on financial accounts will be automatically exchanged between governments from a worldwide point of view
Keywords: Compliance, Regulatory, Anti-Money Laundering, Combating the Financing of Terrorism, Banks, Compliance Costs