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Banks’ Commitment to Detecting Money Laundering: The Role of Internal and External Audits in Jordan

A Study on the Effectiveness of Audit Standards in Combating Financial Crimes

As the world grapples with the threat of money laundering, a new study has shed light on the effectiveness of internal and external audits in detecting and combating this financial crime. The research, conducted by [Author’s Name], investigated the relationship between audit standards and banks’ commitment to detect money laundering in Jordan.

Current Standards May Not Be Sufficient

According to the study, published in [Journal Name], the current standards for internal audits may not be sufficient to help internal auditors in banks detect money laundering effectively. “The exploratory role of internal audit is expected to be more important in current times through knowing the relationship between it and detecting money laundering,” said [Author’s Name].

Factors Impacting Internal Audit Effectiveness

The study found that the quality of internal audits, independence of organizational structure, professional proficiency, and management support have a significant impact on internal audit effectiveness. These findings confirm the importance of internal audit in playing a crucial role in the financial viability and health of any financial institution.

External Audits’ Role in Detecting Money Laundering

Regarding external audits, the study revealed that there is a positive relationship between external auditors’ fees and total assets of audited companies. Additionally, the research showed that external auditors have a significant impact on detecting and preventing money laundering, particularly in cases where they are independent and objective.

“The audit committee has a major role in supervising the processing of financial reporting,” said [Author’s Name]. “In this respect, there is a positive significant relationship between the contribution to greater auditing quality by external auditors compared with legal committees.”

Importance of External Audits in Detecting Money Laundering

The study also highlighted the importance of external audits in detecting money laundering, citing Article 70/c (1) of the Jordanian Banking Law No. (28) Of 2000, which grants regulatory authorities and auditors the right to examine financial records and documents.

Proposed Hypotheses

Based on these findings, the researcher proposed two hypotheses:

  • H1: “There is a positive relationship between internal audit and banks’ commitment to detect money laundering in Jordan.”
  • H2: “There is a relationship between external audit and banks’ commitment to detect money laundering in Jordan.”

Implications for Financial Institutions

The study’s results have significant implications for financial institutions in Jordan, highlighting the need for improved audit standards and procedures to combat money laundering effectively. As the world continues to grapple with this complex issue, the findings of this research offer valuable insights into the role of internal and external audits in detecting and preventing financial crimes.

References

  1. Chevers et al. (2016)
  2. Fiolleau et al. (2015)
  3. Kamal & Yousef (2016)
  4. Alawaqleh (2017)
  5. Jordanian Banking Law No. (28) Of 2000