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The purpose of this paper is to examine the current dilemmas facing foreign banks and countries in the pursuit of eradicating money laundering and international financial crimes.

The paper discusses the recently enacted Title III of the USA Patriot Act which regulates foreign banking institutions in order to curb international money laundering. The paper examines the recent decision of the Second Circuit Court of Appeals discussing foreign banks' liability when their depositors have deposited funds obtained as a result of money laundering.

The US Government can easily forfeit funds derived from or connected to a money laundering offence found in correspondent accounts of foreign banks.

Owing to the great risk of seizure in the US of money laundered funds, foreign banks must decide whether the difficulty of recovering any US seizure from their customers call for them to implement additional security measures or limit contact with American financial institutions. Foreign banks may be required to initiate anti‐money laundering programs which exceed what they would have been required to do according to the laws of their home country.

This paper is one of first to examine Title III's effect on innocent foreign banks, as it was written shortly after the interpretation of Title III and its applicability to foreign banks and it examines any defences foreign banks may have in asset forfeiture actions, and any recourse it has in recovering seized funds.

How investors can capitalise on a long‐term currency trend by leveraging their investment in a mutual fund is investigated. The sensitivity of mutual fund yields to exchange rate movements and the degree of leverage is tested for a strong dollar cycle (1981‐1984) as well as for a weak dollar cycle (1985‐1987). The empirical results provide evidence of the benefits derived from leveraging investments in mutual funds in anticipation of a long‐term trend in the home‐currency′s value. To facilitate the foreign leveraging by the small investor, the creation of foreign levered mutual funds is suggested. While this study was performed from the US perspective, the general implications apply to investors in any country.

This paper aims to discuss the issues about the recovery of the proceeds of crime, with emphasis on the USA situation.

The paper first sets forth the rationale for Section 981(k) of the Patriot Act and the requirements the government must satisfy to use it successfully to recover criminal proceeds. It then discusses the facts of a case where the new statute was applied and the legal arguments that were made when a foreign bank challenged the application of the statute in federal court. Finally, it discusses how the court resolved those issues in granting the government's suit for the recovery of the money.

Finds that Section 981(k), while controversial, has proven effective in allowing the Government of the USA to recover property from wrongdoers in the types of cases where it was intended to be applied.

Shows that Section 981(k) is an innovative and controversial addition to the arsenal of weapons that federal law enforcement authorities in the USA can use to recover the proceeds of crime.

The purpose of this paper is to provide an introduction to the distribution of mutual funds around the world, including a background on the lack of sales of US funds offshore and initial practical legal and compliance considerations regarding fund structure, multi‐jurisdictional compliance, and strategic approaches.

From the perspective of a legal practitioner with hands‐on experience in this area, the paper analyzes possible legal and compliance reasons why US‐registered funds have not benefited from recent developments in the international distribution of mutual funds and do not yet enjoy widespread investment flows from retail foreign investors. The paper discusses some of the practical issues around offshore‐domiciled fund structural considerations, then outlines a few critical considerations asset management companies that their legal counsel and compliance personnel should engage in prior to launching and selling offshore funds to international investors.

The paper reveals that strong tax considerations appear to be a major reason why US funds have not been successful offshore, effective offshore options have developed as alternatives, and serious compliance and legal traps for the unwary remain in this complex multi‐jurisdictional area.

A synthesized multi‐jurisdictional review reveals an inconsistency among countries due to the varying stages in regulatory maturity. This means there may be further opportunity in sharing and making more consistent such regulatory regimes and optimizing capital flows and investment choices among otherwise likely similar emerging sets of investor classes.

Strong consideration should be given to making US funds more competitive offshore via changes in the tax code. Continuing caution should be practiced as fund managers new to this area find it necessary to compete internationally for assets.

This paper sets forth a summary compendium of multijurisdictional legal and compliance knowledge heretofore contained in multiple practice areas with limited availability of focused resources to business decision makers.

The increased market share of foreign investment trusts in Japan may be attributed to the fact that Japanese managers have dramatically underperformed benchmarks. Recently, we showed that this underperformance can be attributed to a unique Japanese tax environment. Using data from 1998 though 2001, we find that Japanese and foreign managers are becoming very similar in style and performance. However, Japanese managers suffered in the immediate aftermath of a major April 2000 revision in the tax code. We attribute this result to the huge inflow of new money into this sector and the style shifts necessary to accommodate this flow.

Since their inception in late 2007, the Qualified Domestic Institutional Investor (QDII) funds, which help Chinese investors to invest in foreign capital markets, have experienced significant portfolio losses and persistent fund outflows. While these losses are large in absolute terms, QDII funds, on average, performed better than Chinese A-share funds, but slightly worse than a group of foreign mutual funds. Our study focuses on the QDII industry, and asks three interrelated questions: (1) why have there been large fund outflows from the industry? (2) what explains QDII funds’ poor performance? and (3) why have QDII funds been so heavily exposed to the Hong Kong market? Our empirical analysis shows that the persistent capital outflows were primarily a result of disappointing fund performance. This poor performance can, in turn, be explained by the deficiency of knowledge required of QDII fund managers to successfully invest in foreign capital markets and manage global portfolios. Finally, our study goes some way to explain the phenomenon of QDII funds’ large asset allocation in the Hong Kong market. This ‘Hong Kong bias’ is shown to be consistent with the well-documented ‘home bias’ behaviour in cross-border portfolio investment, but is greatly exacerbated by the lack of global investing experience of QDII managers.

This paper aims to study the market timing skill of USA-based foreign open-end mutual funds in their geographical focus market.

The authors use daily fund data and two multi-factor extensions of the Treynor-Mazuy (1966) and Henriksson-Merton (1981) timing models to measure US-based foreign funds’ market timing skill during 1999 to 2010. In particular, the authors study fund managers’ skill to time their geographical focus market.

The authors report that, in general, foreign funds do not accurately time their geographical focus market. However, during January 2008 to December 2010, the sub period that includes the 2008 global financial crisis, most foreign funds in this sample not only focused on their domestic market, the USA, but also demonstrated statistically significant, good timing skill.

Although US-based foreign funds’ market-timing skill is not an unexplored topic, this study is the first to consider these funds’ skill to time their geographical focus market, a skill that has been studied in the context of hedge funds.

The purpose of this paper is to examine relationship between corporate governance (CG) and firm performance for a set of 255 foreign-funded firms in the form of foreign direct investment (FDI) and private equity (PE). The authors employ a wide range of CG measures including board size, meetings, board gender and foreign ownership which are used as the proxy of globalisation and control variables like firm age, leverage, firm size and capital expenditure to arrive at a conclusion.

Panel data set of 255 (187 companies funded by foreign capital in the form of FDI, and 68 companies having foreign capital in the form PE) companies listed on Bombay Stock Exchange, for the period of eight years (2008–2015) are analysed by using static (fixed and random effects) and dynamic (generalised method of moments (GMM)) panel data specifications to examine the relationship among CG, globalisation and firm performance.

The empirical results of static model indicate the relationship between CG and performance of foreign firms, which are not very strong in India. This is due to the fact that most of the firms are not following the guidelines and regulations strictly in the initial period of sample years. Diversity in board is found as an important variable in accessing firm performance. And the authors also found that foreign firms are very particular about the implementation of CG norms. The results of GMM model highlight the interaction term of foreign ownership with governance indicators. CG is having a positive and significant impact over performance, inferring that higher foreign ownership (in the form of FDI and PE) in firm leading to positive effect on profitability.

The investor’s preference of financing a unit is guided by the performance of a firm. Investors are more inclined towards high-performing firms, and hence higher profitability leads to higher inflow of capital. The result indicates that higher accounting and market performance may be achieved by good governance practices, in turn, leading to reduced agency costs. Countries with high governance scores attract more of foreign capital. Similar to the best governed countries, the companies having good governance practices attract more foreign inflows in the form of capital.

While previous literature considered a single measurement framework in the form of a CG index, the authors tried to incorporate a range of CG indicators to study the effect of globalisation and CG on firm performance. The authors segregated foreign-owned funds into two parts, especially FDI and PE. This paper examined heterogeneity in the form of FDI-funded and PE-funded firms, as no prior literature is available which has evaluated different sets of foreign funds simultaneously on CG.

This paper aims to examine the impact of the return differential between the domestic and foreign markets on the risk exposure of country mutual funds (CMFs). It is argued that when US market returns are higher than the foreign market returns, the returns chasing investors will tilt their portfolio toward the US market assets, increasing the co-movement between the US market and CMF return.

The sample includes 19 exchange traded funds (ETFs) and 18 closed-end mutual funds (CEFs) over the period between 2001 and 2011. A static two-factor model is used to get the benchmark results. On the other hand, a conditional specification is used, with the return differential as the information variable, to capture the variation in the exposure of the country funds to their underlying risks.

Empirically, the authors find results that partially support their argument. The results of the static two-factor model indicate that the CMFs are exposed to the foreign market risks, whereas the local (US) market risk is not generally priced. The results obtained from the conditional specification, however, shows that the estimated US betas are significant for a number of CMFs.

A possible interpretation of this finding is that the return differential encourages return chasing behavior of the US investors documented in the international investment literature. This, in turn, may contribute to the time-varying exposure of the CMF return to their underlying risk factors. The findings of the paper have important implications for the investors as the time variation in risk exposure of CMFs causes fluctuation in diversification benefits over time.

To the best of the authors’ knowledge, this is the first paper that uses return differential as the information variable in a conditional factor model.