Designing a Model to Reduce Money Laundering Risk in Banks and Financial and Credit Institutions

Abstract

This study aimed to design and validate a localized model for reducing money laundering risk in banks and financial and credit institutions considering internal and international conditions. The research employed a mixed-methods exploratory design. In the qualitative phase, semi-structured interviews were conducted with 21 banking experts using the grounded theory approach (Strauss & Corbin, 1998). In the quantitative phase, 110 valid questionnaires were analyzed using SMART PLS software. A total of 121 initial codes were extracted, of which 96 codes were categorized into the paradigmatic model (causal, contextual, intervening conditions, strategies, and outcomes). Reliability and validity were confirmed (Cronbach’s α = 0.875; CFI > 0.9; RMSEA < 0.08). Confirmatory factor analysis results indicated a good fit across all model components. The causal conditions included interaction with internal and external institutions, inter-policy coordination, and exploration of strategic capacities. Contextual factors encompassed internal banking structures, influence of interest groups, and economic and environmental conditions. Intervening conditions covered political-security factors, legal frameworks, technological innovation, and regulatory integration. Strategies involved aligning national policies, identifying bottlenecks, and preserving cultural and Islamic-Iranian values. The model outcomes—control of money laundering risk and improvement of credit risk management—were statistically supported. The proposed model offers a systematic and indigenous framework for identifying, assessing, and managing money laundering risks in Iran’s banking system. Results highlight the importance of integrating international compliance standards, enhancing financial monitoring technologies, staff training, and institutional coordination to strengthen anti–money laundering mechanisms and public trust. This validated model provides a practical roadmap for improving the transparency, governance, and integrity of the financial sector.