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 6: The Risk-based Approach and a Risk-based Data-mining Application

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


135 unobserved is more of a necessity than a mere compromise. Such a necessity however comes with problems and paradoxes: what is observed is not the thing itself, but an internalized representation of that thing, which has to fit into a category created for it by observation. The categorization of ‘things’ observed in the world is both the result of observation, and the means whereby observation is possible. It is an error to insist that a categorical representation of a thing is identical to the thing-in-itself. Furthermore, treating the ‘rest’ as a separate ‘residual category’ is as much an error. It is an error that implies the systemic structural couplings between system and environment have simply disappeared; an error because then the two parts no longer comprise the original ‘whole’. Thus observation, by its very nature, must introduce an asymmetry: the structural couplings are made to disappear from any representation of the observation, but they are still there in the world. They constitute a non-linear phenomenon both in the thing-in-itself and the unobserved remainder. The two artificially separated parts continue to operate (and interrelate) as the unobservable whole. Because of this asymmetry (between the world as it is, and as it is observed), observation is conditional, but those conditions are necessarily unobservable and unappreciable. But observe we do. We continuously observe the paradoxical residual categories of previous observations, and in doing so, introduce new couplings among our ever-expanding set of artificially introduced observational constructs. Piling them up, memory upon memory,...

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