The aftermath of the financial crisis. Poor compliance and new risks for the integrity of the financial sector
| DOI | https://doi.org/10.1108/13590791111127723 |
| Published date | 10 May 2011 |
| Pages | 148-161 |
| Date | 10 May 2011 |
| Author | Patrick Hardouin |
| Subject Matter | Accounting & finance |
The aftermath of the financial
crisis
Poor compliance and new risks for
the integrity of the financial sector
Patrick Hardouin
Patrick Hardouin International Consulting, Paris, France
Abstract
Purpose – The purpose of this paper is to evaluate the international community efforts through the
OECD and the Financial Action Task Force (FATF) in confronting tax evasion and money
laundering (ML).
Design/methodology/approach – The paper is based on the confrontation of OECD’s and FAFT’s
results with data produced by the World Bank and Transparency International.
Findings – The G20 has speeded up the fight against tax evasion. There is no dilemma between
confronting tax evasion or organized crime/terrorist ML but a potential crowding out effect and a risk
of facade compliance. Corruption and poor governance have regional aspects but generate money for
global laundering. The OECD is impressive in countering tax evasion. Its listing is not universal and
gives satisfaction to jurisdictions having bad corruption/governance indicators. The FATF’s record is
striking but governance remains an issue as well as fair cooperation, and the ML and terrorist
financing (TF) threat is evolving. New risks include tax evasion know-how, facade compliance, rising
bad banks and financial centres in poorly governed jurisdictions. There is a destabilizing effect in the
competition and linkage between weakly and highly compliant institutions and jurisdictions.
The misuse of the financial sector has a bright future as long as poor governance continues to affect
jurisdictions.
Practical implications – The paper is a call to practitioners, professionals and policy makers for
keeping the momentum on ML and taking into account governance indicators.
Originality/value – The paper puts a parallel between the actions of the international community on
tax evasion and ML and confronts official results with relevant assessments on corruption and
governance.
Keywords Money laundering, Tax pla nning, Tax havens, Governance, Corruption,
Internationalcooperation
Paper type General review
The aftermath of the financial crisis: poor compliance and new risks for the
integrity of the financial sector
The financial sector and the global economy have been victims of miscond ucts within
the financial sector. Misconducts covered a wide range of activities and were linked
to various and numerous causes including poor and inadequate regu lation
The current issue and full text archive of this journal is available at
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Outlines of the paper were presented at Jesus College, University of Cambridge, 27th International
Symposium on Economic, “The Enemy within – Internal Threats to the Stability and Integrity of
Financial Institutions”, Session XXI “Privacy, Confidentiality and Privilege – Things of the Past”,
Jesus College, Cambridge (UK), 5 September 2009, and 28th International Symposium on Economic
Crime, “The New Deal – Ensuring Integrity, Stability and Survival”, Session XV “Setting
Standards Internationally and Their Impact!”, Jesus College, Cambridge (UK), 11 September 2010.
JFC
18,2
148
Journal of Financial Crime
Vol. 18 No. 2, 2011
pp. 148-161
qEmerald Group Publishing Limited
1359-0790
DOI 10.1108/13590791111127723
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