Technology and Anti-Money Laundering

Technology and Anti-Money Laundering

A Systems Theory and Risk-Based Approach

Dionysios S. Demetis

This insightful book examines the influence of information systems on anti-money laundering (AML). It builds on systems theory in order to develop a coherent theoretical framework that can be used for AML research.

Chapter 1: Introduction

Dionysios S. Demetis

Subjects: economics and finance, economic crime and corruption, money and banking, innovation and technology, technology and ict, law - academic, corruption and economic crime, internet and technology law, terrorism and security law, politics and public policy, terrorism and security

Extract

Money laundering (ML) has long been recognized as an important contemporary phenomenon and a challenging problem area. Institutions have been organizing their responses to targeting ML for some time, however these efforts have intensified over the past two decades. Following the arbitrary connection made between the financing of terrorism and money laundering, a renewed interest in the topic has emerged within the broader agenda of dealing with security issues. Despite the continuous efforts against ML, encouraging results have not really been witnessed; prosecutions are scarce and convictions even scarcer. Although the network of stakeholders involved in anti-money laundering (AML) has expanded due to a wide range of regulatory initiatives, such an expansion has come with a number of practical difficulties for these stakeholders (that is professions like lawyers, accountants and so on) and the regulators that are supposed to check compliance against AML legislation. For most practical purposes, it would be difficult not to accept that financial institutions remain at the forefront of the fight. Consequently, the study of how financial institutions deal with this important problem domain remains crucial. However, financial institutions do not exist in a void. They are part of a complex socio-political and economic environment that, although advancing in particularly structured ways, faces unstructured consequences. A considerable part of this lack of structure is due to the widespread penetration of technology into traditional organizations. Technology has transformed the way we operate within an organization, but more importantly, it has created a new platform for orchestrating informationutilization...