Digital transformation and anti-money laundering compliance in emerging economies: The moderating role of institutional readiness
DOI:
https://doi.org/10.33003/jocaf-2026.v1i1.5.22-31Keywords:
Africa, Anti-money laundering, Digital transformation, Institutional quality, Trade opennessAbstract
The purpose of this paper is to analyze the impact of digital transformation on the effectiveness of anti-money laundering (AML) compliance in African economies, paying special attention to the moderating effect of institutional preparedness. The study uses a balanced panel dataset including twelve African countries from 2015 to 2024. AML effectiveness is measured using the Basel AML Index, while digital transformation measures include internet penetration and fintech infrastructure. To measure institutional readiness, regulatory quality, digital infrastructure, and human capital, variables are used. In addition, fixed-, random-, and robust-effect estimations are employed. The study found that better institutional quality enhances AML effectiveness and that the effect of digital transformation on AML is conditional. Digitalization contributes to the effectiveness of AML processes only within the context of a strong institutional environment, especially in terms of human capital. Besides, trade openness appears to raise risks for AML processes. The research findings imply that digital transformation must be supported by institutional strengthening and by human capital development. The study sheds new light on the problem under consideration and contributes to the literature on financial crimes.
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Copyright (c) 2026 Azeez Abiodun Ajibola, Saheed Ademola Lateef, Fatima Ibrahim (Author)
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