This 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. By using a case study of a major financial institution in the EU-area, a number of technological influences on AML are deconstructed and are used to examine the role that technology plays within AML. The book provides a systems theoretical description of the effects of technology on AML and offers considerations on the risk-based approach – the most important contemporary evolution within regulatory initiatives on AML and terrorism financing. Technology and Anti-Money Laundering will appeal to researchers of financial crime and AML as well as those interested in information systems and systems theory. A number of considerations for practitioners are also discussed, including the risk-based approach and the integration of AML-technology in financial institutions, as well as an important data-mining application. Money Laundering Reporting Officers (MLROs) in financial institutions and central bankers will also find much of interest in this book.
Reviews about this book:
‘While there is much noise about the control of money laundering, there are few whose work is able to rise above the din and in clear notes contribute in a constructive manner to the debate. This work is not only an intelligent discussion of many of the substantive issues relating to the control of money laundering, but a great deal more. Drawing on systems theory and seeing the control of money laundering particularly from the standpoint of technology as complex and integral to the proper and effective operation of financial institutions, the author addresses in a novel and practical way the design and management of risk based compliance. The theory is tested, not only in terms of viable technology, but also in an actual case study involving real issues in a bank. Consequently, those concerned with the formulation of policy, the design of controls and procedures and the implementation of such will find the contribution that this book makes of great significance.’ — Professor Barry Rider, Cambridge University and Bryan Cave LLP
‘This book avoids the usual trap of interminably listing AML war stories. Instead Dr. Demetis presents a solid theoretical foundation for AML research and practice. He gives a damning critique of the way so-called technological solutions are used uncritically by some AML professionals, and analyses the risk-based approach, describing its problems and ways of avoiding them. He presents a fascinating in-depth case study of a financial institution, and a short case of a bank using technology to improve its True Positive Rate substantially to 17 per cent.’ — Professor Ian Angell, London School of Economics
‘Dr Demetis makes a great contribution to our understanding of anti-money laundering at both a systems and practical level. Dr Demetis writes as someone who not only thinks deeply about these issues but, as the in-depth case examples show, has tried to see how far technology can address some audacious goals. Readers will learn that while risk-based approaches to anti-money laundering have been an interesting regulatory development, practical implementation, despite the hype of technology vendors, is still at a primordial state’ — Emeritus Professor Michael Mainelli at Gresham College and Z/YEN
The purpose of the book is to deconstruct the process of knowledge discovery and theory construction on the basis of the four concepts mentioned below, and thereby to discuss the circumstances under which all scientific premises come to be constructed. The implications for theory and method are discussed against four primary and intrinsically interrelated concepts that should be of immediate interest to all scientific disciplines: namely observation, paradox, delusion, and most importantly self-reference. The book then reflects on various modes of theory-construction and -utilization. Grounded in the tradition of second-order cybernetics, the concept of self-reference is used in the context of systems theory in order to examine the mode in which observation, paradox and delusion become ‘structurally coupled’ with cognition. This has wide-ranging implications for not only the discovery of knowledge in itself, but also various expressions of knowledge, be they framed by reductionism or causality, and even those grandiosely claiming to approach a form of Grand Unification (as in Physics). It eventually concludes that so-called ‘rigour’ is merely reinforced self-reference, imposed by the power that comes with the utility delivered by the self-reference.Rooted in information systems analysis this fresh and audacious examination of knowledge discover and theory construction makes an important contribution to the understanding of how we employ scientific method.
Reviews about this book:
‘Overall, I think this is potentially a very interesting and important book, and the authors are probably two of the very few who would attempt this and that might just succeed. It is clearly somewhat of a risky book for a publisher but as in all such risks the rewards are potentially high.’ — Professor Guy Fitzgerald, Department of Information Systems and Computing, Brunel University
‘Excellent and ground breaking. Very well written. Engaging in reading. It is a much needed and original contribution, which will become a key reference in contemporary academic social sciences thinking.’ — Professor Fernando Ilharco, Universidade Catolica Portuguesa, Lisbon