Why Do Banks Fail to Shield Themselves from Money Laundering Risk?

It is at times perplexing that with vigorous measures in place, banks are still knowingly and unknowingly absorbing money laundering risk into their institutions. Besides various measures implemented by the banks, the regulators are also making constant attempts to protect the banking industry, but the regulatory force is far from providing a total solution.  This paper attempts to discuss some of the reasons (drawn from micro and macro perspectives and looking at institution-specific and industry-specific causes) that might explain why banks are still exposed to money laundering risk despite continuous efforts to reduce the use of the banking sector as a conduit for illegal activities.