Corporate Governance Quality and Money Laundering Risk Management: The Moderating Role of Internal Audit Effectiveness

Abstract

The increasing sophistication of financial crimes has intensified the need for stronger governance mechanisms capable of protecting financial institutions from money laundering risks. Among these mechanisms, corporate governance has emerged as a strategic framework that enhances accountability, transparency, risk oversight, and regulatory compliance. Nevertheless, governance practices alone may not be sufficient to ensure effective Anti-Money Laundering (AML) risk management unless they are supported by an independent and competent internal audit function. This study investigates the relationship between corporate governance quality and money laundering risk management while examining the moderating role of internal audit effectiveness. A quantitative research design was adopted using a structured questionnaire administered to professionals working in governance, internal audit, compliance, and risk management within financial institutions. Data were analyzed using descriptive statistics, correlation analysis, and multiple regression techniques to evaluate the proposed relationships. The findings are expected to demonstrate that high-quality corporate governance significantly strengthens money laundering risk management practices, while effective internal auditing enhances this relationship by improving internal controls, monitoring compliance, and supporting timely risk identification. The study contributes to the growing literature on financial governance by providing empirical evidence that emphasizes the complementary roles of governance quality and internal audit effectiveness in strengthening institutional resilience against money laundering risks and improving regulatory compliance.