I really don't know what your "2nd order effects" might be and neither might ISX especially if at the time the entity is a customer of ISX there is no evidence anywhere that the customer is corrupt, doing the wrong thing, intends to do the wrong thing. When the authorities have evidence, their licence is removed and ISX stops doing business with the customer. Additionally, when ISX finds a customer is doing the wrong thing, they will report the company.
And yes, if ISX complies with the law and achieves their objectives with respect to AML/ATF that is ethical to me.
For example, I would not invest in a tobacco company because I believe the companies know that cigarettes are addictive and kill and they still manufacture and sell them. That is my definition of unethical. It has nothing to do with the choice that people make to smoke them.
If hypothesising on everything that a company could possibly do, but which we have no evidence of them doing, we wouldn't be able to call any company ethical.
