Banking on Secrecy — The Price for Unfettered Secrecy and Confidentiality in the Face of International Organised and Economic Crime
| DOI | https://doi.org/10.1108/eb025968 |
| Date | 01 March 2000 |
| Pages | 83-86 |
| Published date | 01 March 2000 |
| Author | William Baity |
| Subject Matter | Accounting & finance |
Banking on Secrecy — The Price for Unfettered
Secrecy and Confidentiality in the Face of
International Organised and Economic Crime
William Baity
Journal of Financial Crime — Vol. 8 No. 1 — Analysis
It is the author's view that there is a fairly broad con-
sensus on the nature of the confronted threat. This is
how the composition, the scope, the magnitude and
the creativity of the transnational criminal elements
are changing and growing — thanks in large part
to the electronic information network that everyone
has come to know and rely upon. As an example,
there are the recent headlines in the USA surrounding
an investigation allegedly involving funds in part
generated by organised crime in Russia and see-
mingly involving dozens of banks around the
globe. Whether there is money laundering or not,
no matter the true source of the funds, the matter
clearly highlights a growing concern which needs
to be addressed in a spirit of cooperation. It is a fact
that in using global electronic banking and other
financial networks, it appears that financial institu-
tions in many countries were used to moving billions
of dollars in a relatively short period. This case study
in the flow of not just money, but value, illustrates
the types of vulnerability and challenge presented
by electronic transfers to law enforcement, financial
institutions and policy makers.
— One of the vulnerabilities is the speed with which
people can move and therefore cloak the true
source and ownership of money.
— The second is the shield of secrecy, often provided
by law or regulation or custom, which provides
the cloaking mechanism for such transfers.
— A third vulnerability is the jurisdictional issue.
The independence and sheer number of agencies
responsible for financial security and stability
operate to hinder cooperation in countering the
growing clout of transnational crime.
— Finally and perhaps most importantly, we are at a
point where governments can no longer simply
rely on mandating measures, such as reporting
certain suspicious deposits or transfers, that the
private sector will adopt and put in place. The
private sector must not only be a partner but
must begin to accept some of the responsibility
for the successes and failures of national policies.
It is not enough for the private sector to say
that they are following or implementing national
guidelines established to prevent money launder-
ing for example. They must come to understand
and be committed to the notion that they are as
much a stakeholder in upholding the integrity
of financial systems as governments and regula-
tory bodies. These financial institutions are as
much damaged by such crimes sweeping through
their centres, as are governments and fellow
citizens.
As a result of the recent news headlines, there has
been a renewed cry to get financial institutions to
learn more about their customers and the source of
their money.
It is well known that transnational crime depends
on a lack of cooperation. Yet as never before the
international community is doing much to combat
crime on a cooperative basis, and never before has
so much depended upon that cooperation. The rise
of transnational organised crime is directly related
to globalisation. Technological advances and the
greater freedom of movement of peoples, products
and information have created significant new
opportunities for criminals to expand the scope and
range of their activities, so increased cooperation is
necessary here, as it has been in other areas of
economic globalisation. Criminals are networking
and collaborating with one another to maximise
profits and minimise the risks and costs of their
illicit activities. Moreover, this networking occurs
with little concern for national borders, ethnic
backgrounds or political affiliations. They operate
in a borderless world — one that offers them the
newest frontier of economic enrichment.
Though these criminal enterprises have become
more sophisticated and more politically adept,
corruption and violence remain indispensable
tools.
Today transnational crime constitutes a direct
assault on democratisation and the rule of law. It
Journal of Financial Crime
Vol 8 No
1,2000.
pp 83-86
© Henry Stewart Publications
ISSN 0969-6458
Page 83
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