Building synergies between theory and practice: Countering financial crime on a systemic approach

Abstract

Purpose

The purpose of this paper is to expand on the idea that appropriate theory can lead to prompter and more effective action, or prevent the waste time and resources in trying to achieve empirically something we can never attain.

Design/methodology/approach

Starting from anecdotal examples, the paper shows how appropriate theory can lead to prompter and more effective action, or prevent from wasting time and resources in trying to achieve something we can never attain. Then it reports about an example of the potential for applications coming from a proper methodological approach (namely a research project carried out by the Ufficio Italiano dei Cambi in association with the London School of Economics) and its methodology. Finally it deals with complexity and the conditions for acting upon a system, the need to work out preventative monitoring instruments and how it may be approached. In the field of financial crime, a research project, which UIC (the Italian FIU) has been carrying out in association with the London School of Economics, explored a methodology aiming at mapping behaviours associated with money laundering in terms of IT assisted targeting models.

Findings

The process of model building rests on the appropriate design of the path that goes from choosing the elements to describe the behaviour, to identifying the better parameters to reflect them, and to setting out proper queries that match parameters within the available data. A proper methodology assists and assesses every component and step of the process. If we want to act in a system, we have to develop a systemic cognitive framework and a systemic approach. We must be aware that the system will react rearranging its internal structure and procedures, and take this reaction into account. If we want to combat effectively financial crime, it is crucial that we know what instruments and opportunities the system offers to those who are to act within it. We need to work out monitoring instruments to be used to predict/intercept crooks' possible actions. We must identify structural links and connections, risk areas and loopholes. We have to map our possible routes, discover connecting nodes and access points that are not sufficiently guarded, becoming able to address proper action. Research can do much to help find appropriate answers.

Originality/value

The paper addresses regulators, enforcers and academics in the field of anti‐money‐laundering and anti‐terrorism‐financing action. It shows that research can help both in developing/gathering knowledge and in integrating knowledge into action. This need for qualified, practical‐fitted knowledge is the widest field of possible co‐operation between research – a kind of new frontier in whose development to invest resources in search of innovation, synergies and new strategies for the times to come.

Citation

Nardo, M. (2006), "Building synergies between theory and practice: Countering financial crime on a systemic approach", Journal of Financial Crime, Vol. 13 No. 3, pp. 292-299. https://doi.org/10.1108/13590790610678387