A balancing act: offshore financial centre strategy and the global anti‐money laundering movement
| DOI | https://doi.org/10.1108/13685200410809869 |
| Date | 01 April 2004 |
| Pages | 153-157 |
| Published date | 01 April 2004 |
| Author | Conrad Oberg |
| Subject Matter | Accounting & finance |
A Balancing Act: Oshore Financial Centre Strategy
and the Global Anti-Money Laundering Movement
Conrad Oberg
INTRODUCTION
The Global Anti-Money Laundering Movement has
made steady progress since the Vienna Congress
1988
1
and reached tax-related money laundering
matters in the mid-1990s.
2
The Financial Action
Task Force (FATF) was formed in 1989 to make the
Convention operational. FATF identi®ed Non-
Cooperative Countries and Territories (NCCTs),
producing the famous `blacklist'. Oshore Financial
Centre (OFC) jurisdictions, popularly known as tax
havens, dominated that list. Those on the blacklist
were under pressure to implement fundamental
reforms in their anti-money laundering legislation to
avoid otherwise devastating consequences to their
prospering national economies. The signs are that
they have improved their legislation against organised
crime with the eect that money laundering therefore
seems to move in other directions, evident from the
current NCCT blacklist that includes countries such
as Egypt, Guatemala, Indonesia, Myanmar, Nigeria,
Philippines and Ukraine.
However, the focus of this paper, oshore bank
secrecy itself, prevents onshore countries from clearly
following up to which degree members of the OFC
Jurisdictions Community cooperate in the global
money laundering movement. The questions are:
how have the OFCs acted to be able to eectively
stamp out drug tracking, terrorism and other
kinds of serious organised crime; what are they still
keeping behind the impregnable oshore bank secrecy
to secure a future for their strong national economies;
and, how do these remaining bank secrecy structures
relate to the aims of global anti-money laundering
initiatives?
A challenging research problem was formulated in
the well-named hidden economy. Primary data are
self evidently out of reach, by de®nition, protected
behind the barriers of bank secrecy. That secrecy is
there for exactly that reason. An abundant body of
reported research over the years in the oshore ®nan-
cial sector is therefore mainly based on a vast spectrum
of secondary data.
THE MARKET FOR OFFSHORE BANK
SECRECY
This section on a subject ®rst examined by the author
in 2002,
3
builds on previous writing.
4
The aim was to
®nd ways to collect primary data behind the veils of
bank secrecy in the OFCs. The research method was
cross-disciplinary law and economic psychology.
The approach was in simple terms: a lawyer with
inside access in that capacity selects the grounded
theory method
5
used within the economic psychology
discipline to ®nd workable methodological ways to
collect and analyse primary data (Complete Partici-
pant Observation, `research people who do not know
that they are being researched', a well-known ethical
issue in the social sciences research community
6
).
One of the case studies is presented here to explain
®ndings on how an OFC balancing act operates:
how to adapt to the FATF requirements on anti-
money laundering legislation, so avoiding their
NCCT blacklist, while still keeping a pro®table ®nan-
cial sector, the key for survival as a strong and auent
national economy.
A seminar was organised by a well-known OFC in
London in 1997. Speakers were their Prime Minister,
Attorney-General and leading professionals in bank-
ing and law. The invited audience consisted of law-
yers, accountants and City fund mangers.
The Prime Minister
The key words were: `Anti-crime legislation' and
`stamping out money laundering'. The Prime Minis-
ter opened the seminar with a speech on how the
political leadership in the jurisdiction saw the problem
and the challenge to ®nd solutions. The booming
®nancial sector had taken a poor country into auence
for all citizens, producing good schools and good
health care facilities. Was there a viable future? The
threat came from organised criminals, drug barons
and terrorists, trying to in®ltrate the economy. A for-
ceful legislation was enacted to stamp them out and
eectively prevent them from attempts to enter in
the future.
Page 153
Journal of Money Laundering Control Ð Vol. 7 No. 2
Journalof Money Laundering Control
Vol.7, No. 2, 2003, pp. 153± 157
#HenryStewart Publications
ISSN1368-5201
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