An investigation into the role of information governance in mitigating the risks of money laundering: A case study of the Omani banking sector

Background and Aims: Money laundering (ML) poses significant risks to global financial systems in general and the banking sector in particular. The United Nations Office on Drugs and Crime estimates that the total amount of money laundered annually is 2–5% of global domestic product or roughly US$800 billion to US$2 trillion. However, the rapid growth of data/information in the form of large transaction volumes makes it challenging for banks to detect illicit financial flows from large volumes of transactional data. Information governance (IG) can play a critical role in mitigating ML risks by providing banks with a holistic framework for managing their information assets in a more organised manner. Despite IG’s promising benefits, there is a lack of empirical studies in this area. This present research aims to address this gap by investigating how various IG practices can help banks in Oman to mitigate ML risks.
Methods: This study adopted a qualitative collective-case study approach underpinned by constructivist ontology and interpretivist epistemology. An IG theory by Tallon, Ramirez, and Short (2013) was used as a theoretical lens to guide this study. Data were collected using two primary methods: semi-structured interviews and document reviews. Participants were recruited from nine Omani banks: one regulatory, six local, one specialised and one foreign (international). Fifty semi-structured interviews were conducted with IG professionals from different organisational levels. A thematic analysis was used to analyse the collected data.
Results: This study showed that IG practices played a positive role in mitigating the risks of ML in the Omani banking sector. Analyses of interviews revealed various structural, procedural and relational practices that contributed to ML risk mitigation including data ownership responsibilities, compliance monitoring, data integration, data validation, access control, training and collaboration among key stakeholders. Additionally, the empirical findings suggest that the maturity of these governance practices and their impact on risk mitigation efforts is influenced by the degree of regulatory compliance, senior management support, technological capabilities and funding.
Contribution to knowledge: This study makes significant contributions to theory, methodology and practice. Theoretically, this study fills a gap in the literature by providing new insights into the role of IG practices in mitigating the risks of ML. It also contributes to the IG literature by extending IG theory to the banking sector and uncovering various empirical findings related to antecedents (enablers and inhibitors), governance practices and consequences. More importantly, the empirical findings shed new light on the relationships between these themes, enhancing the understanding of different contextual factors that may have a positive impact on the maturity of specific IG practices. The use of a collective-case study in the IG context can be considered a methodological contribution as it allowed for the investigation of various IG issues across different Omani banks, which enhanced the transferability of the results pertaining to Omani banking sector. This study provides practical recommendations for regulators, policymakers and banking institutions to improve the maturity of IG practices at the organisational and sectoral levels.