The Limits of the Law: An Analysis of the Interrelationship of the Criminal and Civil Law in the Control of Money Laundering

Abstract

In recent years the divide between areas of law, which have hitherto been perceived, in most systems of jurisprudence, as relatively and mutually distinct, has narrowed and in some instances all but disappeared. This tendency is perhaps no more dramatically illustrated than in, which for a better description, might be termed the area of financial regulation. When the present author started teaching a course in the University of Cambridge on financial services regulation in 1979, the perception among those of his colleagues who regarded such things, was that this formed part of the corpus of corporate law. Of course, this analysis is only partly justified, and beyond the area of corporate finance law is misconceived. On the other hand, the commercial lawyers, who — at least in Cambridge, have been regarded or perhaps more accurately tolerated, as being a little more academically respectable than pure corporate lawyers, were distinctly unsympathetic to the notion that financial services law is in part akin to banking law and therefore a subject more suited to mercantile law. Given the author's predilection to weigh more heavily those aspects of the law that are protective of society, rather than facilitative of enterprise, it is not surprising that he ventured more and more into the realm of prohibitions, sanctions and even the criminal law. Take for example, the abuse of price sensitive information obtained by those in a confidential position, by virtue of that privileged relationship, to trade on the basis of that information in corporate securities — in other words, insider dealing. Is this properly regarded as a matter for the traditional law relating to directors and officers, and thus, company law, or given the fact that most countries today seek to curb such activity on the basis that it harms confidence in the integrity of public markets, a matter of public, and in particular criminal law? While such a debate may appear somewhat academic, even if it does result in the demarcation of courses and the like, it can and occasionally does have a very real practical significance. For example, in some jurisdictions, such as the USA, the Federal Legislature is competent to legislate on matters pertaining to international trade and finance, and thus the protection of the markets, but not matters of traditional company law. On the other hand, it has been contended in jurisdictions such as Canada that given the uncertainty attaching to the Federal Legislature's competence in regard to the financial markets, it is better to consider insider abuse as a matter of company law. Similar issues arise in the context of the competence of specific organs of the European Union and, of course, are not uncommon in the demarcation of competence between domestic agencies, whether of law reform or enforcement.

Citation

Rider, B.A.K. (1999), "The Limits of the Law: An Analysis of the Interrelationship of the Criminal and Civil Law in the Control of Money Laundering", Journal of Money Laundering Control, Vol. 2 No. 3, pp. 209-224. https://doi.org/10.1108/eb027188