Tax evasion and money laundering through crowdfunding: a comparative study of the laws of Mauritius, UK and US
| Date | 19 May 2023 |
| Pages | 698-710 |
| DOI | https://doi.org/10.1108/JFC-03-2023-0063 |
| Published date | 19 May 2023 |
| Author | Ambareen Beebeejaun |
Tax evasion and money
laundering through crowdfunding:
a comparative study of the laws
of Mauritius, UK and US
Ambareen Beebeejaun
Department of Law, University of Mauritius, Reduit, Mauritius
Abstract
Purpose –The phenomenal proliferation of crowdfunding platforms raises concerns on the heightened
occurrence of financialcrimes since billions of funds are exchanged through these onlinesystems frequently.
Accordingly, some countries have implemented legislative responses to address these risks, although each
countries’laws have varyingdegrees of severity. Hence, the purpose of this study is toassess the efficiency
and robustnessof Mauritian laws to combat financial crimes that may arise from a crowdfunding transaction
with a particularemphasis on money laundering and taxevasion.
Design/methodology/approach –To achieve this research objective, the black letter approach was
used to analyse Mauritian rules and regulations on the researched topic and a comparative analysis was
carried out against the correspondinglaws on crowdfunding in some other jurisdictions, notably the UK and
the USA with theview of suggesting the policy recommendations to Mauritianauthorities.
Findings –It was found that there is still scope for improving the existing legal and regulatory
framework on crowdfunding in Mauritius to prevent instances of money laundering and tax evasion. The
paper suggests that a crowdfunding operator must be categorised as a reporting person and must carry
out regular due diligence checks. There must also be more collaboration in terms of information
exchanges and training sessions among the tax authority of Mauritius, crowdfunding operators, fund
seekers and investors t o shed light on the tax treatment of income and de ductions to avoid issues of tax
evasion.
Originality/value –At present, to the best of the authors’knowledge, this study is amongst the first
academic writings on the efficiency of Mauritian laws in dealing with the risk of financial crimes through
crowdfunding, and also, because existing literature is quite scarce on assessing the adequacy of
crowdfunding rulesin developing countries, this research aimsat filling in the gap in literature. The study is
carriedout with the aim of combining a large amount of empirical, theoreticaland factual information that can
be of use to variousstakeholders and not only to academics.
Keywords Crowdfunding, Laws on crowdfunding, Mauritius and crowdfunding,
UK and crowdfunding, USA and crowdfunding
Paper type Research paper
1. Introduction
Initially, banks wereconsidered to be the sole source of financing, but further to the financial
crisis witnessed in 2008, banks’ability to lend and people’s confidence in banks are now
substantively reduced (Teichmann et al.,2022). As such, an alternative source of financing
for both businesses and individuals, known as crowdfunding,has been introduced in recent
Conflict of interest: The author declares that there is no competing financial interest or personal
relationship that could have appeared to influence the work reported in this paper.
JFC
31,3
698
Journalof Financial Crime
Vol.31 No. 3, 2024
pp. 698-710
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-03-2023-0063
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
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