The Application of National Bank Principles on Anti-Money Laundering in the Ethiopian Private Commercial Bank: A Case Study at Bank of Abyssinia

Abstract

This study aims to assess the application of national bank principles on Anti-Money Laundering in bank of Abyssinia. Purposive sampling technique was chosen to get the required sample size. Data gathered were analyzed based on 57responses and additional interviewee. Descriptive research design was employed along with qualitative research approach. The study uses percentage, frequency and means to analyzed the collected data. The result indicates that even though banks have compliance department who have relevant competence and authority to oversee the bank’s Anti-Money Laundering or Combating Financing of Terrorism compliance program, banks did not communicate the Anti-Money Laundering policies, procedures and manuals. Bank of Abyssinia had internal audit function to assess anti- money laundering and sanctions and practices, but they do not have other independent third party to audit and assess money laundering. The absence of national identity (ID) card for customers, no renewed identity (ID) and the law concerning Know Your Customer(KYC) requirements and other preventive measures suffer difficulty and such gaps create a suitable ground for money launderers to exploit the banking system. The study recommends that banks strictly follows the national bank policy and to implement it their ongoing services and policies of bank to practices and apply it within the banks in order to have that bank of Abyssinia have build a strong Know Your Customer (KYC) department and maintain the effective of the compliance department to identify and trace money laundry and suspicious transaction.