Regulating against White‐Collar Crime in the Financial Services Sector
| Date | 01 March 2000 |
| Published date | 01 March 2000 |
| Pages | 7-11 |
| DOI | https://doi.org/10.1108/eb025961 |
| Author | George P. Gilligan |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 8 No. 1 — Analysis
ANALYSIS
Regulating against White-Collar Crime in the
Financial Services Sector
George P. Gilligan
As the forces of globalisation gather pace, national
economics arc becoming more internationalised and
interdependent, and the power of individual nation-
states is being diminished in relative terms. Increas-
ingly, individual countries arc less able to control
their national economics. One consequence of these
developments is that regulatory structures and pro-
cesses are becoming more internationalised and a
variety of modes of global governance is emerging.
These shifts in regulatory power arc apparent in the
growing influence of bodies such as the Basle Com-
mittee on Banking Supervision (BCBS); the Finan-
cial Action Task Force (FATF); the International
Organisation of Securities Commissions (IOSCO);
the Organisation of Economic Cooperation and
Development (OECD); and the World Trade
Organisation (WTO). Similar shifts are facilitated
through networks of specific agreements between
professional and industry associations, and state-
sanctioned self-regulatory organisations (in particular
through Memoranda of Understanding — MoUs).
However, although there is a trend towards growing
regulatory harmonisation, different national and
cultural influences impact upon national systems of
regulation, and in international contexts these
values may conflict. Given these developments, it is
becoming increasingly important to understand
how regulatory structures and standards function in
different countries. Two elements that are constant
in nearly all jurisdictions arc the acknowledgement
of public-interest concerns in regulatory systems and
the need for compliance with regulatory standards.
This paper considers the issue of regulating against
white-collar crime in the financial services sector in
the contexts of promoting regulatory compliance
and the representation of notions of the public interest.
WHITE-COLLAR CRIME IN THE
FINANCIAL SERVICES SECTOR
In most advanced industrial economics entre-
preneurial skills have assumed primacy and this affects
the classification of what is considered legitimate and
illegitimate activity. Aubcrt's comment of almost
50 years ago, that the perceptions of both the general
public and the perpetrators of white-collar crimes
may not be congruent with those legal definitions
that do exist, still has resonance today. In fact some
white-collar misconduct can have economic value
for a community. This may be particularly true for
the financial services industry, which is highly resis-
tant to external interference and is the engine of the
enterprise culture that dominates most advanced
economies. One result of this economic and political
reality is that it can be more difficult for law enforce-
ment agencies to be proactive against white-collar
offences by increasing regulatory obligations if this
enforcement reaction is interpreted as stifling enter-
prise and raising production costs, thereby reducing
economic benefits for society. Regulatory agencies
must operate in a political environment, continually
making political and moral decisions regarding how
they can best employ their usually limited regulatory
resources in the law-making/law-breaking/law
enforcement process.
A partial explanation of why many white-collar
offenders escape punishment is the fact that harm is
a concept crucial to the process of penalising
conduct and deciding sanctions.2 In comparison to
many conventional offences, the effects of white-
collar crime arc often diffused over a long period of
time so that many people do not recognise its occur-
rence. White-collar crime is largely impersonal, the
offender/victim relationship is distanced, and the
links between its regulation and social mores arc
weak in comparison with more conventional
offences. This makes punishment of many white-
collar offences less likely because it can be difficult
to apply culpability and demonstrate intention to
harm. Many white-collar crime behaviours attract
limited or ambiguous censure. In fact ambiguity
permeates the definition and regulation of white-
collar crime and these factors can be mutually
Journal of Financial Crime
Vol 8No
1.2000.PP
7-11
© Henry Stewart Publications
ISSN 0963-6458
Page 7
To continue reading
Request your trial