The relationship
between technology and structure has been the topic of much writing and
research (Woodward, 1965; Perrow, 1967; Thompson, 1967; Hickson, Pugh, and
Pheysey, 1969; Mohr, 1971; Hage and Aiken, 1969; Barley, 1986). Although the
accumulation of research studies has modified the concept of technological
imperative, technology is still considered an important variable in relation to
organizational structure (Rousseau, 1979). Yet, after decades of research
relating organizational technology to organizational structure, "the
evidence for technology's influence on structure, is at best, confusing and
contradictory" (Barley, 1986: 78). The same may be said for the multitude
of conceptions and methodologies employed in such studies (Rousseau, 1979).
While technology may be generally defined as the transformation of
organizational inputs into organizational outputs (Perrow, 1967; Rousseau,
1979), numerous definitions and operationalizations at varying levels of
analysis and contexts demonstrate the diversity of technology research
(Comstock and Scott, 1977; Rousseau, 1979; Fry, 1982). Despite this diversity,
little attention has been paid to the effects of technology over time.
Cross-sectional research has typically focused on existing technologies and
corresponding formal organizational structures. The majority of these
cross-sectional studies treat technology as the independent variable, based on
an assumption that organizational technology is inflexible and,
correspondingly, that there is a need for structure to adapt to the
requirements of technology. These assumptions are questionable. Technology can
be a flexible organizational strategy that can be modified by an organization's
structure, in particular, the informal structure. Structural arrangements act
as the conduits of technological change and, as such, may influence
organizational technology as well as be influenced by it. Investigation of the
effects of a change in technology may illuminate the process by which structure
affects technology, or vice versa. Few studies relating technology to structure
have considered the relationship between organizational structure and power.
Structural position is an important source of power in that it provides access
to people, information, and other resources. As Pfeffer (1981) noted, power is
first and foremost a structural phenomenon. Likewise, power strengthens
existing structural configurations. Those in power seek to maintain power by
reinforcing the existing organizational structure (Pfeffer, 1981). Thus, a
change in structure may necessitate a change in the distribution of power, and
vice versa.
Although minor,
incremental changes in power and structure may occur gradually over long
periods of time, the likelihood of a major restructuring may only occur when
the organization encounters an "exogenous shock" (Barley, 1986: 80)
such as the implementation of a new technology. Such a shock might be
conceptualized as a sudden, dramatic increase in uncertainty (Tushman and
Anderson, 1986). Attempts to reduce uncertainty may foster changes in
interaction patterns, with those able to cope with uncertainty adjusting their
social location and increasing their power (Salancik and Pfeffer, 1977; Tushman
and Romanelli, 1983). Thus, it is possible that a change in technology may
produce changes in structure, power, or both. However, as Pfeffer (1981) noted,
stability, not change, is typical of the distribution of power and influence in
most organizations. Those in power seek to perpetuate their power advantage.
Such processes as commitment to previous decisions, institutionalization of
beliefs and practices, and the ability of those in power to generate additional
power contribute to stability (Pfeffer, 1981). Likewise, structural patterns of
interaction become institutionalized over time and contribute to organizational
stability. Thus, while a technological change may provide the opportunity for a
redistribution of power and organizational structure, it does not guarantee it.
Unfortunately, even
the cleansing dirty money through money laundering procedures has also been
affected by technology. Example of these changes includes the new drug
trafficking routes are spawned in Africa and
the lower regions of the old Soviet regime, the list of countries more
vulnerable to money laundering widens. Perhaps more dangerous is the absence of
implementation of anti-money laws or even ratification of the 1988 Vienna-U.N.
Drug Convention. (Bureau of International Narcotics and Law Enforcement
Affairs, 1998) The INCSR lists Aruba,
Colombia, Mexico,
the Netherlands Antilles, Nigeria, Singapore, Turkey and Venezuela. Just as important, the
anti-money laundering laws that governments enacted in the early 1990s are now
no longer sufficient, especially given the increase in non-drug crimes, the use
of new technologies, and more sophisticated ways to move money.
Moreover, the
proliferation of financial crimes include the more common types of financial
frauds and new variations, especially the use of prime bank guarantees, phony
or fictitious letters of credit, counterfeit or stolen bonds, and other
monetary instruments offered as surety for loans, and other scares. Some of the
new methods include the use of secret telex codes for bank-to-bank transactions
in order to move $42 million in cash from the Hong Kong
and Shanghai Bank in Jakarta.
(Bureau of International Narcotics and Law Enforcement Affairs, 1998) The use
of fake certificates of deposit drawn on other branches of an international bank
that can range from $10 million to $25 million recently occurred.
"`Fraudsters' will also use counterfeit letters of agreement, drawn on
bank letterheads, seemingly vouching for a client from another branch of that
bank," or confirming the approval of a bogus deal.
Similarly, professional
money launderers differ little in their money management than corporate money
managers. Money brokers and transnational criminals collaborate to minimize
their risk, partly through diversification of the means to transport, convert
cash, or both, as well as to layer and integrate the laundered funds.(532)
Furthermore, banking
is increasingly global, inter-connected, and operates twenty-four hours. Large
multinational banks have global branch and subsidiary networks as well as
correspondent relationships. Correspondent banking enables launderers to
initiate transactions through the weakest link in the bank. Once launderers
start a bank relationship, they can quickly move money globally within the
bank. (Bureau of International Narcotics and Law Enforcement Affairs, 1998) At
the June 1996 International Conference of Banking Supervisors, banking
supervisors from 140 countries agreed to adhere to twenty-nine recommendations
"designed to strengthen the effectiveness of supervision by both home and
host-country authorities of banks that operate outside their national
boundaries."(p 154) The recommendations were incorporated into a report by
the Basle Committee on Banking Supervision, issued in October 1996. Home
supervisors must be able to assess "all significant aspects of their
banks' operations, using whatever supervisory techniques are needed, including
on-site inspections." Means to overcome impediments to effective
consolidated supervision are suggested. The Basle
report sets forth "guidelines for determining the effectiveness of home
country supervision, for monitoring supervisory standards in host countries,
and for dealing with corporate structures which create potential supervisory
gaps." Additional guidelines are provided for host country supervision.
Concurrently, when
the recommendations conflict with bank secrecy or similar legislation in
certain countries, supervisors have agreed to use best efforts to amend the
secrecy legislation. Countries with further recommendations were reviewed prior
to the international meeting scheduled for October 1998. (Bureau of
International Narcotics and Law Enforcement Affairs, 1998) Much competition
exists globally to attract high net-worth individuals and companies as private
banking clients. The transactions of these clients are treated confidentially.
Such customers are treated with more deference and receive various types of
personal services. A concern exists that, in the competition to attract and
maintain these clients, financial institutions or their officials may suspend
or not implement anti-money laundering and other due diligence procedures.
In addition to
that, the use of microchip-based electronic money for financial transactions,
via smart cards and the Internet, has the potential to revolutionize the means
for laundering money. Some new cyberpayments systems are engineered to be an
electronic emulation of paper currency. Cybercurrency has the attributes of
conventional currency: a store of value; a medium of exchange; a numeraire;
potential anonymity; and convenience. Other features include transfer
velocity--an almost instant electronic transfer from point to point--and
substitution of electrons for paper currency and other physical means of
payment. Cyberpayments also include other payment components, such as
cyberchecks, cybercredit, cyberdebit, and so forth. This development requires
close attention because the use of microchip and telecommunications
technologies adds some significant new dimensions for law enforcement.
The existence of cyberpayments
also include other payment components, such as cyberchecks, which emulate paper
checks, cybercredit, cyberdebit, etc. Cyberpayments raise the issue of whether
such payments can be made subject to monetary reporting and supervision
measures. Law enforcement issues that will arise include fraud, counterfeiting,
and computer hacking. High-speed, worldwide transfers add complexity to law
enforcement's ability to trace criminal activity and recover illicit proceeds. (p.
512)
Other challenges to
anti-money laundering enforcement include the counterfeiting of currencies and
other monetary instruments, especially bonds, the rise in contraband smuggling,
the acquisition of banks and other financial institutions by suspected criminal
groups, and the resort by criminals to the use of smaller, pass-through
banking, and electronic cash systems. As a result of the occurrence of
financial crimes and money laundering with varying degrees of regularity in
more than 125 jurisdictions, a continuing concern exists that some governments
still have not criminalized all forms of money laundering.
