Jobs, Crime and Money: Challenges for the G8 Summit in 1998
| Date | 01 April 1998 |
| Published date | 01 April 1998 |
| Pages | 128-133 |
| DOI | https://doi.org/10.1108/eb027179 |
| Author | George Staple |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control — Vol. 2 No. 2
Jobs, Crime and Money: Challenges for the G8
Summit in 1998
George Staple
THE THREAT
Since the abolition of exchange control in the late
1970s and early 1980s, it has been possible
instantly to transfer money of any amount or
denomination virtually anywhere in the world. It
means that, because the criminal law is territorially
based,
and differs from jurisdiction to jurisdiction,
the investigation and prosecution of fraud and the
related offences of money laundering and corrup-
tion are peculiarly dependent upon mutual legal
assistance between states.
Although many of the cases that have attracted
so much attention in recent years are so-called
City frauds, the authorities are dealing increasingly
with very determined international criminals who
have taken to fraud and the related offences as an
easy way of
making
money.
The activities of these people usually span
several jurisdictions. They have no regard for
international frontiers, indeed they are adept at
exploiting the territorial nature of our laws. There
is ample scope for the commission of offences
partly in one jurisdiction and partly in others.
Often witnesses, such as bankers and professional
advisers, together with documentary evidence, are
to be found in a number of different jurisdictions.
Suspects are frequently not in the jurisdiction in
which they should be brought to
trial.
The pro-
ceeds of the crime can be in yet another jurisdic-
tion,
while the victims, who are seldom
remembered in the criminal justice system, can be
somewhere else.
In May last year, the former shipping magnate-
Abbas Gokal was sentenced at the Old Bailey to 14
years' imprisonment for masterminding a massive
swindle involving £750m in loans from BCCI.
Serious Fraud Office investigators visited no fewer
than 19 countries on a tour which included the
USA, Pakistan, Grand Cayman, Monaco, Abu
Dhabi and the Isle of Man. Prosecutions arising
out of the collapse of BCCI were brought in a
number of jurisdictions.
were no fewer than 100 police officers, lawyers and
accountants working in the case team, the inves-
tigators visited 20 different
jurisdictions.
These and
many other cases are good illustrations of the
international nature of contemporary commercial
fraud.
International trade having been a feature of life
for many centuries has led to the development of
a
body of private international law which has
ensured the efficient disposal of cross-border dis-
putes between commercial men. But large-scale
international fraud is a relatively new phenom-
enon.
While there is no need here to underline the
economic advantages of the abolition of exchange
control,
and the development of information tech-
nology, the question must be asked how well pre-
pared was the country to deal with the huge
expansion of international fraud that came with it?
On the whole, probably rather ill prepared.
THE RESPONSE
So what has been the belated response of govern-
ments to this increasingly difficult problem? The
attitude of the UK Government is an attitude
which is reflected by the governments responsible
for all the world's major financial centres. They
take the view that their financial services industries
are very important, and they want to ensure that
they are effectively protected by a strong system of
regulation in order to prevent fraud and a strong
system of investigation and prosecution to deal
with it when it gets through the regulatory net.
In spite of the decline of sterling as a reserve
currency, the City of London accounts for some 7
per cent of the UK's gross domestic product, and
is the leading centre of
global
currency and capital
markets. There are more foreign banks in London
than anywhere else. London has overtaken New
York and Tokyo as the leading fund management
centre, and the
Financial Times
has estimated that
between 40 and 50 per cent of international mer-
gers and acquisitions are handled through the City.
At the same time successive governments have
encouraged ordinary families to invest their savings
Page 128
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