AML‐related technologies: a systemic risk

Dionysios S. Demetis and Ian O. Angell

Journal of Money Laundering Control, 2006, vol. 9, issue 2, 157-172

Abstract: Purpose - The paper seeks to analyse the systemic effects of AML‐technologies and regulations, at both national and organizational levels. Design/methodology/approach - It focuses the power of systems theory, particularly the insights about self‐referential systems, to describe the organizational and bureaucratic phenomena that have emerged from the introduction of technology in the AML domain. Findings - The paper confronts the technological instrumentalism both prevalent in the AML community and implied by the actions of regulators. It demonstrates the many false assumptions being made, and calls on the whole AML community to re‐think and clarify its position. Research limitations/implications - This is the second paper describing an ongoing research project that focuses theory on the phenomena occurring when information and computer technologies are applied in the AML arena. The project is experimental and in its early stages, and so is necessarily limited in scale, but not in scope. The objective is to invite the AML community into a hermeneutic debate of the ideas, thereby informing AML policy decisions. Practical implications - The paper calls for a reconsideration of the underlying assumptions within which AML‐related technology is appropriated by financial institutions. It demonstrates how this technology creates multiple complex systemic phenomena that often act contrary to initial intentions. This complexity is generated not only by data mining and/or profiling technologies, but also by peripheral technologies as they interact with human activity systems in the AML domain. Originality/value - The paper is one of the relatively few that moves away from narrative description of AML phenomena, to present an academically legitimate theoretical foundation for analysis.

Keywords: Money laundering; Bureaucracy; Systems theory; Risk analysis (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jmlcpp:13685200610660970

DOI: 10.1108/13685200610660970

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