From famine to feast. The prosecution of multi‐jurisdictional financial crime in the electronic age
| Published date | 18 July 2008 |
| Pages | 320-337 |
| Date | 18 July 2008 |
| DOI | https://doi.org/10.1108/13590790810882900 |
| Author | Tyler W. Hodgson |
| Subject Matter | Accounting & finance |
From famine to feast
The prosecution of multi-jurisdictional
financial crime in the electronic age
Tyler W. Hodgson
Dubai First International, Dubai, United Arab Emirates
Abstract
Purpose – The purposeof this paper is to explore the developmentof the common law test for asserting
criminal jurisdiction over financial crimes. Historically, the British courts at the turn of the twentieth
century strongly advocated the territoriality principle to strictly limit the assumption of criminal
jurisdiction to crimes which occurred entirely within the jurisdiction. With the rapid advance of
telecommunications technologies during the latter half of the century, such a narrow approach to
jurisdictionbecame unworkable, as themajority of financial crimes assumedmulti-jurisdictionalaspects.
Design/methodology/approach – This paper traces the gradual liberalization of criminal
jurisdiction over financial crime within the common law until the eventual emergence of the much
more permissive comity theory of jurisdiction, which sanctions the assumption of criminal jurisdiction
over any conduct which causes harmful consequences or effects in the territory of the country seeking
to prosecute an accused.
Findings – While this is a welcome and necessary development in an age of global money laundering
and organized crime, it is argued in this paper that unless a consistent and rational manner of prioritizing
the claims of competing jurisdictions over the same criminal conduct is adopted, there is a risk that the
first jurisdiction to be in a position to make an arrest may not necessarily be the correct or most
appropriate one. As the double jeopardy principle operates to bar multiple prosecutions for the same
criminal conduct, it is recommended that the doctrine of forum non conveniens, a familiar and developed
concept in civil law, be applied to criminal prosecutions to maximize prosecutorial efficiency.
Originality/value – The paper is of value in discussing factors to be considered by law enforcement
agencies in determining the most prudent sequence of legal proceedings that may be brought in
different jurisdictions.
Keywords Common law, Crimes,Laws and legislation, Finance, Civillaw
Paper type Research paper
Introduction
An enduring (if somewhat dubious) urban legend claims that Frederick W. Smith,
founder and CEO of FedEx, received a poor grade from a skeptical college professor
who found his business proposal for a worldwide overnight courier system to be an
unrealistic flight of fancy (Foust, 2004).
Regardless of the actual grade Frederick Smith may or may not have received, the
world has changed a great deal since the FedEx founder was a college student in the
mid-1960s. Over the past 40 years, the “global village” has evolved from an academic
The current issue and full text archive of this journal is available at
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This paper is based on a presentation that was delivered at the 25th International Symposium on
Economic Crime, Jesus College, Cambridge University. The author wishes to thank Hugh Craig
and George Gunn of the Ontario Securities Commission, as well as my wife, Kelly Hart, Crown
Attorney’s Office (Toronto), for their invaluable assistance in the preparation of this paper.
The views expressed in this paper are those of the author and do not reflect the views of the
Dubai Financial Services Authority or any other organization.
JFC
15,3
320
Journal of Financial Crime
Vol. 15 No. 3, 2008
pp. 320-337
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590790810882900
catchphrase into a tangible reality. Due in large part to the rapid growth of computer
and telecommunications technologies, virtually all aspects of the human condition in
the twenty-first century have assumed international dimensions – and financial crime
is certainly no exception.
A recent investigation by the Dubai Financial Services Authority uncovered a
sophisticated and elaborate fraudulent scheme that involved members of a boiler room
in London promoting investments in currency contracts over the telephone to residents
of Singapore and Australia. The contracts were to be listed on a fictitious exchange in
the Middle East called the Dubai Options Exchange. Potential investors were referred
to a web site for the exchange, as well as a separate web site for the exchange’s
fictitious regulator, the United Arab Emirates Commodities Futures Board. The
web sites, which contained active telephone and facsimile numbers in Dubai and the
UK, were primarily hosted by Internet Service Providers located in the USA. Interested
investors were instructed to wire funds to bank accounts in Malaysia and Poland
(DFSA v. Abu-Amara et al., 2007).
Determining the most appropriate forum for legal proceedings with
multi-jurisdictional dimensions is by no means a straightforward exercise at the
best of times. And while in the not-too-recent past the factual scenario above may have
seemed the kind of unlikely or improbable factual pattern that sadistic law school
professors delighted in concocting for final examinations, in the present age of mobile
capital and international commerce it is becoming all too commonplace.
The obvious question arises: has the law been able to keep pace with the rapid
changes to contemporary business practices, especially given the fact that the laws
governing the exercise of juridical jurisdiction were developed long before Frederick
Smith was born, never mind a college student? As noted by Mr Justice Sharpe for a
unanimous Ontario Court of Appeal in a recent decision, the legal rules governing
assumed jurisdiction were “shaped by the sovereignty concerns of a dominant
nineteenth century world power anxious to safeguard its territorial sovereignty and
jealous of any attempt by foreign states to intrude” (Muscatt v. Courcelles, 2002).
The recent evolution of the common law on criminal and administrative jurisdiction
has not been without growing pains. Traditionally, the common law was perceiv ed to
be fixed and unchanging. Although more recent judicial pronouncements have
recognized the inherent necessity for the common law to evolve in order to reflect
changing social realities, the process of changing the law is designed to be slow and
incremental[1]. Radical changes in jurisprudence tend to evoke strong and colourful
reactions – it was not that long ago that the now commonplace Mareva injunction was
referred to as the legal equivalent of a “nuclear weapon”[2].
Nonetheless, despite some apparent reluctance and misgivings on the part of the
judiciary, the current state of the common law reflects a distinct relaxation in the rules
governingjurisdiction, both in the civiland criminal context. Although,the outer ambit of
the exercise of juridical jurisdiction remains unclear, a fundamental shift in the
jurisprudenceon the subject has undeniablyoccurred. The challengetoday in prosecuting
international financial crime is no longer in attempting to find a court anywhere in the
world that will assume jurisdiction over a transnational offence – nowadays, numerous
courts would be willing to do so. Instead, the primary challenge currently facing law
enforcementbodies is to ensure that their collectiveefforts are effectively coordinatedand
that legal proceedingsare commenced in the most appropriate jurisdiction.
From famine
to feast
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