Institutional Quality, Regulatory Effectiveness, and Anti-Money Laundering Compliance in FinTech Ecosystems: Evidence from Emerging Markets
Purpose: The growth and rapid advancement of financial technology (FinTech) in developing countries have enhanced financial inclusion in a significant manner and, simultaneously, made it easier to perpetrate money laundering and financial crime. The article studies the co-existence of anti-money laundering (AML) regulation policies and company governance practices in some emerging markets, and the paper addresses the problem of fragmentation in the regulations and ineffective governance structures. Its purpose is to compare the AML frameworks and evaluate governance mechanisms and their influence on compliance results of FinTech firms.
Method: The study applies a comparative cross-country approach in analyzing secondary data on regulatory reports, firm disclosures, as well as governance indicators.
Key Findings: The results show that the effectiveness of AML is highly differentiated depending on jurisdictions, and the effectiveness of regulatory frameworks and governance structures are linked to better compliance results. However, an organized deficiency of implementation and organization is still an area of weakness.
Contribution: The paper contributes to the literature by making a correlation between AML performance and the strength of corporate governance and highlights the importance of the institutional context. The policy recommendations include that there is need to harmonize the regulations and more governance frameworks, risk-based supervision and regulatory technologies to enhance AML compliance and not restrict innovation.
Keywords: Anti-Money Laundering (AML); Financial Technology (FinTech); Corporate Governance; Emerging Markets; Regulatory Frameworks; Compliance
