Unfolding AML/CTF (Anti-Money Laundering/Counter-Financing of Terrorism) Complex System

By Dionysios S. Demetis

Anti-Money Laundering (AML) and the Counter-Financing of Terrorism (CFT of CTF) have undoubtedly emerged as two important contemporary themes that have generated considerable attention over the past two decades. In their core, they constitute the broader responses to the phenomena through which they have gained their existence to begin with; namely, money laundering (ML) and the financing of terrorism (FT). But these responses can be rendered on a number of dimensions. Regulation has itself evolved in an attempt to encapsulate an increasing degree of variation. The introduction of the risk-based approach has largely guided this evolutionary step, supposedly getting rid of the rigidness of the rules-based approach and focusing on the prioritization of suspicion. Meanwhile, the widespread adoption of technological infrastructures, mostly in the form of transaction monitoring systems, has become interconnected with attempts to combat the phenomena. This has created a series of effects that cannot be easily delineated. Despite their importance, one can witness a widespread lack of guidance on the processes where technology influences the monitoring of ML/FT. In this paper, I analyze AML/CFT as a complex system in its own right, while taking the opportunity to address a number of aspects regarding the current status quo of AML/CFT dynamics. This is carried out over two distinct themes that are then systemically brought together by the concept of complexity. These themes include: the need for standardization and the risk-based approach.

Over the past two decades, Anti-Money Laundering (AML) and the Counter-Financing of Terrorism (CFT) have undoubtedly emerged as two important contemporary themes that have generated considerable attention. The following Emerging Issues Analysis explores these two themes, and illustrates the complexities that are inherent in following transactions in this arena.

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Comments

Anonymous
Anonymous
  • 04-19-2012

I thing, if every one will be careful for their right, then nobody can do wrong in the country.