European Journal of Business and Management

ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)

Vol.6, No.36, 2014

www.iiste.org

Banking Secrecy and its Impact in Anti-Money Laundering

in Commercial Banks in Jordan
Dr. Abdalla Jamil Abu-Salma
Faculty of Business, Middle East University, Amman - Jordan
abdbank@yahoo.com
Dr.Haitham Mohammad AlZoubi
Faculty of Business, Middle East University, Amman Jordan
haitham_zubi@yahoo.com
Dr.Suleiman J. Mohammad
Faculty of Business, Middle East University, Amman Jordan
Suleiman0516@gmail.com
Abstract
This study aimed to identify the importance of banking secrecy and their relationship to money laundering at the
commercial banks in Jordan, may be the population of the study (16) Bank of commercially The study sample
consisted of (140) employees were selected at random, and for the purposes of data collection has been used
questionnaire as a tool for the study.
The study found a number of conclusions, including that there is the effect statistically significant for compliance
with the standards of banking secrecy in the banks surveyed in the Anti-money Laundering, and the results also
showed that the commercial banks in Jordan use and application of systems of banking secrecy rates are
acceptable, as the study concluded some of the recommendations, which will then be utilized by all countries
involved in combating money laundering, and the creation of alliances and partnership between all government
and private sectors to reduce the crimes of money laundering, and also the necessity of activating the role of
training in the Central Bank of Jordan and the rest of the banks to find units and trained staff and specialists in
the Anti-money Laundering .
Keywords: Banking Secrecy, Money Laundering, and Commercial Banks.
Introduction
The fact that money laundering, which agreed to the majority of men of contemporary thought on the mind a
new crime on the world within the crimes of "organized crime", which began beyond the borders of one state
after widening circle of contacts and after control of the idea of "interest," and after that became the perception
of contemporary criminality turn of regional to international and in particular in the field of molesters money,
after the crime and the individual are localized not exceed any state does not exceed the limits of the political
boundaries of the state. (Nabhan, 1989).
The crime of money laundering is one of the economic crimes (Organized Crime) perpetrated by
groups and gangs and organizations with the formation of special activities and processes various criminal,
including the use of force and violence and other types of illegal methods in order to achieve huge profits from
illicit sources ( Interview, 2002, p 19). Where is the transfer of funds derived from criminal activities to funds
enjoying the source of a sound legal by blurring the real source of those funds, and washed the filth and pumped
through channels in the economic cycle legitimate behind the new fabric for deals cash Baidaat bank or purchase
of securities bank transfers and traveler's checks, and use the services of commercial activities and financial and
banking sector is one of the sectors of the money laundering operations; Because Multi laundered is the art of
employing legitimate means in itself and a private bank to secure the harvest and hide the proceeds of illegal for
one of the crimes, and then pumped into the tube of economic activities and investment legitimate at both
national and transnational manner earned recipe legitimacy to take root again in the middle of a natural economic
project (Daoudi, 2002, p 54).
That banking secrecy tool to attract capital and deposits in banks, but it may be a cover for suspicious
transactions, especially if ignored by banks, inadvertently or deliberately question about the sources of funds
deposited with it, and may not tack inherit for several reasons, including the lack of "alienating" this money,
especially if the amounts Banks are subject to commercial companies in the end purpose of profit and most of
them do not care about the source of these funds. (Smelts, 1995, p 86)
The truth is that illicit funds and under banking secrecy become immune from prosecution once
deposited in bank accounts (smelts, 1995, p 86), or is it of the means employed by the criminals to cover their
crimes and squint without proven or at least whiten their money rea (Elias 0.2001 , p 8).
We have to make Jordan many efforts in the field of anti-money laundering issuing the law against
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Vol.6, No.36, 2014

www.iiste.org

money laundering and terrorism financing for the year 2007 also issued Regulation No. (40) for the year 2009
System Unit to combat money laundering and terrorist financing issued under paragraph (c) of Article (7) of the
Anti-Laundering money (the law against money laundering and terrorism financing No. (47) for the year 2007
published on page 4130 of the Official Gazette No. 4831 dated 17/6/2007, amended by Law No. (8) for the year
2010), regarding anti-money laundering, which is compatible with the provisions of criminalization of money
laundering contained in the United Nations Convention to Combat Transnational Organized Crime (Sulyman,
2006).
Defines article (2 / a) of the Act anti-money laundering and terrorism that money laundering is all an
act involves the acquisition of funds or acquired or disposed of or transferred or managed or saved or replaced or
deposited or invested or manipulated in value or converted, or any other act The intent of this act to hide or
disguise the source or nature of their real or place, movement or disposition or ownership of or rights with
respect to or prevent knowledge from committed the crime obtained them money with the knowledge that they
obtained from a any of the offenses set forth in article ( 4) of the Act and Article (4) of the law on combating
money laundering and terrorism is all money derived from any offenses set forth below subject to money
laundering:
A. Any offense punishable under the provisions of the legislation in force in the Kingdom.
B. Crimes stipulated by international agreements ratified by the Kingdom considers its proceeds to shop for the
crime of money laundering, provided that it is punishable by law in Jordan.
The money laundering linked to illegal activities are usually fugitive outside the validity of laws
against financial corruption and then try to return again legitimately recognized by the same laws that were
criminalized, not the owners of illicit funds or the resulting transactions dirty that they would return their money
into the country only after reassuring to the absence of irregularities and risks associated with security or
sovereignty (AbdelAzim, 1997). There is many multiple sources of illicit funds multiplicity of offenses which
are difficult to restrict it in a window or a certain number, and the most important drug trafficking and crossborder smuggling of goods and bribery and trafficking in foreign currency and associations wicked and terrorism,
embezzlement and corruption in public office and tax evasion and political activities illegal and borrowing from
banks without sufficient guarantees, and crimes of white-collar workers that are committed by people them a
high status in the community (breach of the duties of the job, the investment function, abuse power, ...), fraud,
commercial fraud and trademark counterfeiting and forgery cash, coins, banknotes and falsifying bank checks
and illegal speculation in stock ... and others. (Shafie ,2001)
The censorship in any facility is the mainstay to ensure implementation of the plans and the application
of regulations, policies and achieve the goals, and this control is not in a vacuum, but rather require fundamental
constituents of the existence of those in charge, functions, policies and procedures are one of the management
functions and the pivot on which the administration to make sure that the actual performance are in accordance
with the planned objectives and standards set . The censorship localities as substantial in management but arise
as a result of the likelihood of any errors during the implementation of the plans drawn and the objectives set in
advance (Tawfik, 2000).
Defines censorship as "to make sure that what has been done OK what was planned in advance"
((Tawfik, 2000). And Defines by some as "measuring and correcting performance of subordinates for the
purpose of making sure that the objectives of the facility and plans to reach them has been achieved (Tawfik,
2000).
Also defines too as: "to make sure that what has been achieved from the activities and tasks and goals
is exactly what it should be, including the identification of deviations, if any, and the reasons for and methods of
treatment" ((Hanafi, and Abu Qahef,1992).
The objective of the control procedures relating to the codification of entry and electronic
communication with computers in reducing the risk of penetration of illegal (Illegal Penetration) programs and
computer systems, and there is a set of procedures used, including: (Aldahaan, 1990).
1. Password: It is a way intended to validate the user to identify actions that can or is allowed to do and access to
the system to deal with the software, who shall user define himself to the device by a password and is compared
to the information provided with the information recorded in computer files If matching, managed user access to
the system and use the software allowed him to use, and this method is one of the most preferred ways for easy
change upon the occurrence of any fault, and there are a range of considerations must be introduced, if the
password is composed of a group letters or numbers so long that you cannot access them through
experimentation, in addition to be a specific period of time certain device automatically asks the user to change
the word, and that there is a record of the number of unsuccessful attempts to use the terminals to gain access to
the system.
2. Isolate and classify information: are usually isolated and save information on the means of storing and moving
according to the importance of information and confidentiality, rated and classified in a special file, and specify a
password to gain access to this information, and then put it in a safe place.

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3. Encryption data : is a method whereby the conversion of simple text (Plain Text) to typed cipher text and
conversion programs and information to the forms and symbols incomprehensible, and this means good control
and effective control to protect the programs of the organization, which is characterized by secrecy and
sensitivity as well as to protect the information of changes or modifications is documented from unauthorized
users, and this requires special software and a special key codes be known by the authorized users to gain access
to programs and information.
4. Censor the court to run the computer time-sharing system, and through the manual and automatic closure of
the files and records.
The banks represent one of the most important channels of money laundering globally and that the
growing need for money launderers to use the banking and financial system that offers great potential and
attractive to pass Operations suspicious efforts to conceal and disguise the sources of those dirty money.
Since the mid-eighties of the last century began the world's attention is increasingly trying to adopt a
set of rules and principles of control that must be followed by banks and other financial institutions to strengthen
its role in the fight against money-laundering phenomenon and work to respect the requirements of law
enforcement, taking into account work on activating the financial and banking systems and ensure transparency
financial operations and validation of the legitimacy of the funds and the reduction of the exploitation of
financial institutions to pass and the flow of criminal proceeds in order not to turn into open channels to launder
illicit funds settlement does not achieve the degree of restriction of the principle of banking secrecy without
compromising the right of individuals to respect confidentiality, (Tahir ,2002), and after that there is several
international documents to develop two types of obligations and legal rules and regulatory first type is the
preventive measures aimed at preventing the use of banks and financial institutions in the crimes of money
laundering and the second type is the action detect money laundering and track down the perpetrators, and banks
must prepare and save documents and records relating to operations and financial transactions for customers and
so easy reference when needed by the authorities of the bank or auditors or by the central bank or other
competent authorities. (Fayed, 1992)
From the above it is clear that the absolute banking secrecy represent temptation and attractive to
money launderers and criminal organizations that exploited on a large scale to facilitate money laundering
derived from drug trafficking and other crimes (Tahir, 2002).
Thus researchers believe that the process of restricting the principle of banking secrecy became
international demand urgent to activate international cooperation in the Anti-money Laundering operations
which confirmed most of the relevant international documents to restrict bank secrecy by following the various
states a set of measures that limit the release and to protect the banking system where breakthroughs money
launderers and achieve cooperation with the judiciary and the police to combat money-laundering operations.
Problem of the study
The study linked the problem of crime and money laundering aspects associated with the reduction, including
through the investigation and analysis of the role of banking secrecy in the extent of assistance in reducing and
anti-money laundering. The study comes to answer the following questions:
1-Is there an effect of banking secrecy in the Anti-money Laundering in Jordanian banks?
And the ramifications of them the following questions:
Is there a risk assessment of the impact to the customer on the Anti-money Laundering in Jordanian banks?
Is there an effect of the use of behavior detection technology to combat money laundering in Jordanian banks?
Is there a risk to measure the impact of the deal on anti-money laundering in Jordanian banks?
Is there a mechanism for the effect of the use of workflow and reporting on anti-money laundering in Jordanian
banks?
The main hypothesis of the study hypotheses Sub
H01: There is no statistically significant effect at the level of significance (0.05) banking secrecy dimensions
(risk assessment, behavior detection technology, measuring the risk of the deal, automatic workflow and
reporting) on the Anti-money Laundering.
H01-1: No effect is statistically significant at the level of significance (0.05) to assess the risk of the client on
the Anti-money Laundering.
H01-2: No effect is statistically significant at the level of significance (0.05) technology to detect behavior on
the Anti-money Laundering.
H01-3: No effect is statistically significant at the level of significance (0.05) to measure the risk of the deal on
anti-money laundering
H01-4: No effect is statistically significant at the level of significance (0.05) mechanism for workflow and
reporting on anti-money laundering.

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ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.36, 2014

www.iiste.org

Variables of the study

Independent variable: Bank Secrecy: The banking secrecy that no one knows about the secrets of banking
customers only people who had to the nature of their work so that it is surrounded by all of the information
provided by them in secrecy in nonpublic away from people who have no connection with them.
Risk assessment of the client: the use of detailed information on the activities and transactions that are
collected at the time of the account opening to verify all aspects of the profile of the client.
Behavior detection technology: the use of techniques to be able to detect suspicious patterns of
behavior that could be hidden under the large amounts of financial data.
Risk measurement deal: identify and filter out transactions related to the account, which constitutes a
potential risk for money laundering activities.
Mechanism workflow and reporting: Use tools and reports that will help in checking in case of alarm
and danger.
The dependent variable: Anti-Money Laundering: are regulations and procedures required by the
seriousness with which the banks to open accounts for clients and conduct banking transactions for them so as to
ensure that these banks are not assisting in money laundering (AML law Jordan 46 for the year 2007)
There is many previous studies that relate to the subject of study of both study
( Danh, K. and
Estrada, M. ,2011) Entitled: Bilateral Relating to Money Laundering in the United States and Mexico. The
study aimed to where that money laundering has a tremendous impact on the economy of the country. Policymakers lacked sufficient data that would help them measure the phenomenon and take relevant action against it.
Looking at the specific situation of the bilateral between the United States and Mexico, this paper aims to
understand the extent of laundered money is generated in each country of the activities of organized crime.
Study (Shaykhli, 2010) "The Role of Banks in the Anti-money Laundering" This study aimed to
show the role of banks in the Anti-money Laundering in terms of employing commercial and legal; The study on
the subject of combating this crime is originally the subject of a criminal, but the banks have an important role
and substantially in anti-money-laundering phenomenon because the stands line the first defense in because the
banking system is the environment most suitable for money-laundering operations being characterized by the
rules of the flexibility, speed and secrecy, and the study concluded that the results of the most important: that the
legislative practices and modern banking unfolded for important roles and different commercial banks in
laundering funds.
Study (Singh,VK ,2009), Entitled Anti-Money Laundering in India - Problems and Prospects.
The aim of this study was to show that the crime of money laundering sophisticated crime should not be taken
seriously in the first look by anyone in the community compared with the crimes of the street, to give a lead in
this wanted paper and researchers to reduce the paper to a national context, but he was not able to to do so as this
is not possible due to the fact that any instance of money laundering, will have a hint of the flavor of
international money laundering usually involves the transfer of money through several countries in order to blur
the source. And that the subject of money laundering and nationally in the abstract.
The study ( Eitan, 2009) Entitled "Methods of Money Laundering and the Role of the Banking
System in Anti-Money Laundering ". The aim of this study to the statement of the methods of money
laundering through the introduction to the banking system because the banks are the main target for money
launderers due to the role played by banks in providing various banking services, specifically financial transfers,
especially by electronic means and processes of exchange and money transfer by checks and clearing and trading
currencies, stocks, such operations in its traditional form and mail the best way to take advantage of in order to
conceal the illicit origin of the money.
Study (Ashour, 2008) "The Role of Banks in the Control of Money Laundering Operations". This
study aimed to identify the applicable procedures in banks operating in the Gaza Strip for the control of money
laundering operations and control, and through the study procedures (verification of the client, internal control,
equipment for anti-money laundering operations and include commissions and administrative units, compliance
with laws and regulations and instructions of the International Monetary Authority, training and qualification of
personnel, and clarity of manuals and guidelines.
Study both of ( Schneider F. & Windischbauer U., 2008) "Money Laundering: Some Facts". This
study aimed to define money laundering and clarified then three stages of money laundering in cash. Were the
results that the new technologies in a range of payment methods allow transactions Economic without any
restrictions by legal barriers, regional or through state control, such as: portfolio, electronic (prepaid cards, smart
cards), banking services and online banking, and finally, according to the study that the effects on the overall
economy, such as the implications of the consequences on the balance of payments, and the effects on the money
supply and exchange rates, and the impact on market prices and the instability and the impact on the allocation
of resources and economic growth. study concluded that there is a commitment by the banks operating in the
Gaza Strip to refuse to open an account for the client or engage in any banking transaction in the absence of
completeness procedures identify it, and that banks apply preventive measures to combat money laundering are

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good.
The Study Population
The study population consisted of Jordanian banks and number (16) banks, according to statistics of the Central
Bank of Jordan in 2013.
The Study Sample
The number of the study sample (165) male and female employees in Jordanian banks, were distributed study
tool for the study sample, which was recovered (148) questionnaire were excluded (8) questionnaires for lack of
suitability for scientific analysis, and was getting on (140) to identify valid and reliable for the purposes of
scientific analysis, which is about (90%) of the questionnaires were distributed and (5%) of the study population,
which is acceptable ratio for the purposes of analysis (Nuaimi, 2010).
Study Tool
For the initial data has been adopted questionnaire as a key tool for the study, and use the questionnaire for the
purposes of achieving the objectives of the study so designed building on the Likert scale Quintet (Scale Likert),
which consists resolution of three parts, included the first part of the personal information data and functional,
and the second part consisted of questions on the subject of the study.
Believe tool
To ascertain the veracity of the instrument, the researchers are viewing on a number of professors, specialists in
the universities to make sure of the safety of the language and the appropriateness of paragraphs for the purposes
of the study has been made necessary amendments in the light of the views of arbitrators.
The Stability of the Tool
I have been using the alpha value to measure the stability of the measurement tool where we note that the value
of (alpha) of the questionnaire as a whole is equal to (89.8%), the largest percentage of statistically acceptable
(60%), which reflects the stability of the measurement tool used. (David, 2002).
Shows how the dimensions of stability:
1 assess the risk of the client 82.9%
2 behavior detection technology 92.6%
3 to measure the risk of the deal 84.5%
4 automatic workflow and reporting 91.3%
5 Anti-Money Laundering 81.9%
6 Resolution as a whole 89.8%
Procedures for Processing Tool:
Was measured answer phrases related groups values according to the Likert scale quintet so that they form very
OK number (5), and the corresponding form number (4), and corresponding to a certain extent the number (3),
and is OK figure (2), and Strongly Disagree number (1), and we infer the direction of the respondents to the
study variables according to the arithmetic average and standard deviation of the responses of the respondents.
(Naimi, 2010).
Conclusions reached by the researchers through statistical analysis as follows:
The researchers found through analysis of the data and the results of the analysis that has been assembled to:
1. The banks are updating all customer data, whether individuals or companies who belong to the black list in
commercial suspicious transactions.
2. Banks to notify the competent authorities of suspicious customers' data.
3. Banks to use electronic systems to comply with new registration information to ensure the accounts and
movements accurately.
4. Work continuously monitors banking transactions to detect money laundering.
5. The competent departments of banks classify suspicious accounts according to the degree of seriousness.
6. Are monitored financial transactions made through electronic transfer systems
7. Banks not to grant loans against the assets of unknown source or owned by a financial institution or a third
party.
Recommendations and proposals
By the results of the study, researchers offers the following recommendations:
1- Find new systems operate on the electronic link between the local and international banks all operate on antimoney laundering.

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2-To take advantage of international experience in all countries involved in combating money laundering.
3-Establishment of alliances and partnerships between all government and private sectors to curb money
laundering crimes.
4-Preferred tighten sanctions on all violations related to money laundering.
5-Advised to activate the role of training in the Central Bank of Jordan, and all the banks to find a staff
specialized in Anti-money Laundering.
6-Recommended commitment of all banks to disclose the crimes or even suspicions that lead to crimes of money
laundering in order to take advantage of them for the rest of the competent authorities.
7- Are advised to increase the interest of Jordanian banks risk assessment of the client and the follow-up of
customer behavior through their accounts and their remittances, which affects positively on the Anti-money
Laundering.
8- Recommended concentration of Jordanian banks on the use of behavior detection systems using specialized
technology and thus the development of this technology whenever the need arises to avoid the rapid
development of electronic systems, and anti-money laundering.
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