Addressing root causes of AML non-compliance and the role of internal audit at Prime Bank PLC.

Abstract

This report investigates the fundamental reasons behind the non-compliance with Anti-Money Laundering (AML) regulations at Prime Bank PLC and assesses the contribution of internal audit functions in enhancing AML effectiveness. Using a mixed-methods strategy, the report integrates direct audit observations, internal audit documentation, a survey involving 13 banking professionals, and an analysis of regulatory frameworks to pinpoint areas of non-compliance. This report has three sections, internship experience, organizational overview and the project part. The first part discusses my work experience, my contributions to the bank, the skills and knowledge I gained, the difficulties I experienced, and the recommendations I made based on those experiences. The second part gives an overview of Prime Bank PLC, including its vision, mission, financial performance over the last five years, and a study of its external and internal environments using frameworks like Porter's Five Forces, PESTEL, and SWOT and the recommendations. The final section investigates the underlying causes of AML noncompliance and the role of internal audit at Prime Bank PLC. It examines the bank's established anti-money laundering policy, regulatory framework, common AML audit observations, and analysis of audit observations. The major findings reveal that inadequate Know Your Customer (KYC) protocols, ineffective transaction monitoring, insufficient staff training, political interference, and technological constraints are significant factors contributing to non-compliance. Furthermore, obstacles such as informal remittance systems (hundi), inadequate collaboration between financial institutions and regulatory authorities, and weaknesses in Trade-Based Money Laundering (TBML) practices further complicate AML enforcement. The research emphasizes the necessity of fostering a robust compliance culture through improved internal audit practices, enhanced staff training, and upgraded technological solutions for transaction oversight.