Fuzzy logic is a form of mathematical reasoning that deals with imprecision and uncertainty, allowing systems to handle partial truths rather than binary true or false outcomes. Unlike traditional logic, which requires strict yes/no decisions, fuzzy logic allows for a range of values between 0 and 1, making it ideal for solving problems where information is incomplete or ambiguous. 

In the Anti-Money Laundering (AML) and financial crime compliance space, fuzzy logic is particularly useful for detecting suspicious activities. Financial transactions often involve complex patterns that do not fit neatly into predefined categories of legal or illegal. Fuzzy logic helps compliance systems identify potential risks by considering factors like transaction amounts, frequency, and client behaviour on a spectrum, rather than rigid thresholds. This flexibility allows for more accurate detection of unusual or suspicious activities that might otherwise go unnoticed using traditional rule-based methods.