Editorial
| Date | 03 January 2017 |
| DOI | https://doi.org/10.1108/JMLC-10-2016-0044 |
| Pages | 2-4 |
| Published date | 03 January 2017 |
| Author | May Hen |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Editorial
The appeal of tax!
The 34th Cambridge International Symposium on Economic Crime took place from
September 4 to 11 at Jesus College in the University of Cambridge. This year’s theme
was “Economic Crime – where does the buck stop? Who is responsible - facilitators,
controllers and or their advisers?”. The symposium attracted well over 1,600
participants from nearly 100 countries. Although the deliberations ranged across a
spectrum of issues, one that assumed signicance was the enforcement of tax law. A
tax plenary session titled “The criminalization of tax avoidance” drew wide variety
of discussants, including the OECD, US Department of Justice, Texas A&M Law
School and a University of Cambridge-based network of academics in the eld of
sociology, law and economics. The overarching discussion surrounded Richard
Gordon and Andrew Morriss’ journal article “Moving Money-International
Financial Flows, Taxes, and Money Laundering” (Journal: Hastings International
and Comparative Law Review, 2014). The paper served as central stimulus in which
a series of discussion papers was produced by each one of the contributors in the
Cambridge tax group and invited discussants. Plenary presenters focussed on
specic aspects of the paper and drew from their various professional, technical and
research backgrounds in responding to the intensifying debate surround tax
avoidance and tax evasion.
The context of the economic crime symposium allowed plenary members to have
a series of very focussed discussions on taxation, its relation to the theme of the
economic crime symposium and ancillary effects on tax administrations, economic
crime enforcement agencies, compliance industries and international bodies such as
the OECD and EU. Professor Andrew Morris, Dean of Law at Texas A&M, began his
presentation with a discussion on the actual cost of compliance and enforcement
activities relating to tax evasion. Based on the costs and benets, how freely should
we allow money to move? At the moment, the ease of ows of money is hindered by
wasteful and inefcient regulation which is what currently challenges the efcacy of
international nancial systems. Gordon and Morriss’ paper describe the current
system’s approach to regulation as “control rst”. “Control rst” places the
compliance burden on the facilitator of the nancial ow such as nancial
institutions and sees the movement of money as a problem unless subject to control,
much like the approach to the war on drugs (Gordon and Morriss, p. 5). The problem
with the “control rst” approach is that it relies on third-party intermediaries such
as nancial institutions to carry the burden of policing capital ows and the costs of
such implementation including anti-money laundering protocols. The experience of
these protocols, with some mention to the Financial Action Task Force 40 was that
it was largely imposed by small group of powerful jurisdictions on to rest of world
(Gordon and Morriss, p. 45). This transferred the burden of compliance costs to
smaller jurisdictions and nancial institutions while providing unequal benet in
favour of powerful jurisdictions.
What this raised was the largely absent public conversation regarding the real
costs and benets of tax enforcement schemes in relation to adopting “control rst”
style protocols in tax administration. Policy analysts and academics have explored
JMLC
20,1
2
Journalof Money Laundering
Control
Vol.20 No. 1, 2017
pp.2-4
©Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-10-2016-0044
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