IMPACT OF MONEY LAUNDERING ACTIVITIES ON THE OPERATIONAL PERFORMANCE OF LISTED COMMERCIAL BANKS IN NIGERIA

Abstract

Money laundering remains a major challenge to the operational efficiency and stability of commercial banks, particularly in emerging economies such as Nigeria, where financial transactions are increasingly complex and high-risk. This study examines the impact of money laundering activities on the operational performance of listed commercial banks in Nigeria, focusing on Suspicious Transaction Exposure, Effectiveness of Anti–Money Laundering (AML) Internal Controls, and Quality of Know-Your-Customer (KYC) Processes. A quantitative research design was adopted, with data collected through a structured questionnaire administered to compliance, risk management, internal audit, and operations professionals across listed commercial banks. Descriptive statistics, Pearson correlation analysis, and multiple regression techniques were used to analyse the relationships among the study variables. The findings show that suspicious transaction exposure has a significant negative effect on operational performance, while effective AML internal controls and high-quality KYC processes exert significant positive effects. AML internal controls emerged as the strongest predictor of operational performance. The results support Institutional Theory and Risk-Based Compliance Theory and highlight the need to integrate AML risk management into core banking operations to enhance efficiency and resilience.

Keywords: Money Laundering Activities; Suspicious Transaction Exposure; AML Internal Controls; Know-Your-Customer Processes; Operational Performance of Banks.