Systems thinking about anti‐money laundering: considering the Greek case
| Published date | 01 July 2005 |
| Date | 01 July 2005 |
| Pages | 271-284 |
| DOI | https://doi.org/10.1108/13685200510620993 |
| Author | Ian O. Angell,Dionysios S. Demetis |
| Subject Matter | Accounting & finance |
Systems Thinking about Anti-Money Laundering:
Considering the Greek Case
Ian O. Angell and Dionysios S. Demetis
INTRODUCTION
It is time to stop thinking of anti-money laundering
(AML) procedures as a `solution' to the `problem' of
money laundering. There can be no solution, only
the consequences of decisions made about the issue,
and these can ®nesse, even oppose, the original inten-
tions behind AML actions.
In its broadest sense, that of evading government
restrictions on the movement of money, money laun-
dering (ML) is almost as old as money itself. It is here to
stay, but so is AML. That having been said, the cost of
complying with AML regulations has exploded over
the past decade, and is having a serious impact on
business. Small businesses that have to comply with
all sorts of `improved' regulations have seen compli-
ance costs increasing ®vefold.
1
Both ML and AML
have now become fully blown industries, each a self-
reinforcing way of life in their respective illegal and
legal economies.
Eliminating the pro®t-oriented crime that is ML,
thereby putting an end to the world's third largest
market, is a utopian dream.
2
The form that ML
takes is continuously changing, as are the AML
responses. Both money laundering and anti-money
laundering are socio-technical systems that co-
evolve. One cannot exist without the other, for both
practical and dialectic reasons. In this paper Systems
Theory is introduced to highlight some aspects of
this co-evolution, describe possible systemic improve-
ments to AML procedures, and provide a theoretical
framework where AML research can expand. The
authors assert that there is much to be gained by think-
ing in this way, and by rejecting the problem/solution
dichotomy.
Disguising the proceeds of crime, which are often
huge sums of money, requires a set of management
skills
3
that have become extremely elaborate and
sophisticated.
4
Such `skills' are continually and con-
tinuously evolving, being regularly re-equipped
with novel technologies and instruments. For ex-
ample, launderers have moved on to the internet,
involving themselves with online casinos and credit
card e-transactions.
5
In a market of more than $50bn
a year,
6
the illegal utilisation of the potential outlets
opened up by new technology has increased consider-
ably.
7
The scale of such ML usage can only get bigger
when the internet is eventually linked eectively to
global mobile telephony.
Even though it is very dicult, if not impossible, to
measure the ML market accurately, it must be
acknowledged that, despite aggressive international
AML initiatives, the trend is for money laundering
to increase in volume year on year. There are two
main reasons. First, dematerialised e-cash and other
®nancial e-instruments, and their subsequent liquid-
ity, provide the opportunity for disintermediation.
This brings both buyer and seller together directly,
with much to be gained by keeping their transactions
secret, many likely ending as `black' transactions
8
in
the alternative illegal economy.
Secondly, the economic aspect of globalisation has
created a money stream of such magnitude that mis-
creants can, with a little caution, position themselves
so as to avoid attention. Despite the existence of
sound evidence to assume the expansion of such crimi-
nality,
9
the ¯ow of money will not be reduced. The
drive to globalisation is too attractive. Countries that
have liberalised their markets have enjoyed dramatic
economic bene®ts,
10
whereas marginalised countries
have little or no growth, resulting in increased poverty
and inequality.
11
The downside to globalisation is that the subsequent
increase in money laundering can have severe macro-
economic implications for a country, especially in
terms of growth, stability and investment. ML can dis-
tort statistical indices,
12
it can cause instability to the
world economy if large sums of money move through
integrated ®nancial systems,
13
and it can have a nega-
tive impact on the productivity of (particularly) devel-
oping countries.
14
THE THREE-LEVEL AML `SOLUTION'
Given the importance of AML, the need to under-
stand the nature of anti-money laundering is clearly
paramount. First of all, it must be acknowledged
that governments project AML as a three-level
Page 271
Journal of Money Laundering Control Ð Vol. 8 No. 3
Journalof Money Laundering Control
Vol.8, No. 3, 2005, pp. 271± 284
#HenryStewart Publications
ISSN1368-5201
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