Globalisation and the Offshore Dimension — Building Integrity, Confidence and Cooperation
| Pages | 318-322 |
| Published date | 01 April 2002 |
| Date | 01 April 2002 |
| DOI | https://doi.org/10.1108/eb027312 |
| Author | Carlo Santini |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 5 No. 4
Globalisation and the Offshore Dimension —
Building Integrity, Confidence and Cooperation
Carlo Santini
The theme of this paper is the connection between
economic crime and the globalisation of economies
and markets. It is a broad topic, rich in literature,
but where there is still much to examine and analyse
more deeply. The paper will be limited to sharing
some reflections on the commitment needed to
tackle these problems more adequately and on the
support asked from institutions which hold responsi-
bility for regulating and supervising markets. There
will also be mention of how to prevent the risk
that such connections could undermine market
integrity.
Markets for goods, services and capital today are
more integrated than ever. Even developing econo-
mies are being increasingly drawn into the global
dimension.
About a year ago, while presenting the proposals
of the Committee on Progress in Strengthening
the Architecture of the International Financial
System, the Managing Director of the International
Monetary Fund pointed out the ambivalences in the
globalisation of markets. There are indeed many
contradictory features in there.
On the up side, globalisation brings an unprece-
dented opportunity for economic growth and for
the improvement of all peoples' standards of living.
It helps diversify risk and enhances performances of
economies by encouraging a more efficient allocation
of resources. Growth in trade and the free circulation
of goods, services and capital that follows in its wake
can promote prosperity, better the distribution of
wealth and incomes, and underpin stability.
But on the down side, if not properly overseen,
globalisation brings in its train risks of destabilising
imbalances, uneven growth both between countries
and within countries. Sometimes the process of inte-
gration is tumultuous and indiscriminate. The system
is prone to recurring crises and often to severe ones
— the fruit of systemic causes, of local structural
weaknesses, and of perverse market dynamics.
Finally, it must not be forgotten that the removal
of barriers to the free movement of capital, the
greater speed and lower costs of electronic financial
transactions, and the rise of alternative technologies
for payments can open breaches that can easily be
exploited for camouflaging profits from criminal
activities and for their re-surfacing with a veneer of
cleanliness.1
Jurisdictions marked by weakness in their legal-
institutional framework, and defective in the regula-
tion of their financial systems, have maintained and
still maintain that the conditions exist for a supply of
opacity at the service of distorting and perverse
economic phenomena (fraud, corruption, insider
dealing, money laundering, tax avoidance and eva-
sion).
The transparency, functionality, efficiency
and security of markets are at risk. Should they
falter, globalisation could become the very vehicle
that serves economic crime.2
Exploitation of credit and financial markets by
organised crime, if not adequately tackled, can discre-
dit the very instruments, operations and inter-
mediaries that are part of a healthy and efficient
market economy. It risks favouring the introduction
of constraints, vetoes and protectionist procedures: all
inimical to economic growth and a source of diffi-
culty in discriminating appropriately between legal
and illegal relationships and flows. The system must
be sheltered from these risks. The costs that inter-
mediaries and other blameless operators have to
bear in such circumstances have to be weighed against
the benefits they get from the proper functioning of
the markets.
The themes mentioned so far are part of a broader
issue, of growing political import, which the
globalised economy has to tackle and will have to
tackle much more in the future: the issue of the
democratic governance of the global market, its
functioning, its instruments, and the hold on sover-
eignty expressed by citizens in making their political
choices.
In such an environment, how to act against the
damaging effects of globalisation while developing
the positive ones becomes the real problem of the
governance of the new worldwide economic order.
When looking at economic crime, it can be
discovered that the international community has
reacted by countering the actions of the centres of
Journal of Money Laundering Control
Vol 5, No 4, 2002, pp 318-322
© Henry Stewart Publications
ISSN 1368-5201
Page 318
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