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This paper surveys the historical development of financial services regulations in the UK, especially the social conditions and power relations that have shaped the…
This paper surveys the historical development of financial services regulations in the UK, especially the social conditions and power relations that have shaped the evolution of British financial markets. The analysis specifically focuses upon the role of special interest groups and how they have influenced regulatory innovation.
Most people in Western countries are more likely to associate the term underground banking with an automatic teller machine in a subway station, than with complex infrastructures of financial remittance that may be utilised either to by‐pass completely conventional banking facilities and processes, or else to connect with those same conventional banking facilities and processes only at selected points, at selected times and selected places. However, the low public profile of underground banking is in contrast to the increasingly high priority that governments, financial regulators and law enforcement agencies are giving to efforts to counter the facilitative role that underground banking can play in the activities of money launderers, organised crime, terrorist groups and tax evaders. Underground banking systems are playing an increasingly important role in the burgeoning tide of laundered money that is projected by the International Monetary Fund (IMF) to be equivalent to 2–5 per cent of global GDP with organised crime groups estimated to be grossing more than US$1.5trn a year. However, there is significant variation regarding guesstimates of the scale of the activities of organised crime and money laundering in general. For example, Walker applies a ‘crime‐economic model’ upon data collated from international databases and his model estimates a global money laundering total of $2.85trn per year, with these flows heavily concentrated in North America and Europe. These types of disparity in assessment are inevitable until a great deal more data is generated regarding money laundering and other sectors of alternative and/or illegal economies. Walker stresses that his results are very much interim, but they suggest some interesting patterns. For example: of totals of money laundered globally, the USA was the origin of more than 46 per cent and the destination of more than 18 per cent; and on a matrix of attractiveness of jurisdictions to money launderers Luxembourg ranked first with a score of 686, followed by the USA (634) and Switzerland (617), with the traditional homes of underground banking systems such as Pakistan (Hawala system) and China (Fei Chien) ranking in the lowest category (0–9). The methodological problems of measurement are especially acute regarding underground banking systems due to their intrinsically low levels of public visibility. Indeed, many of the dilemmas associated with underground banking are reproduced in other issues of conventional banking, financial regulation, law enforcement and economic governance. It is these dilemmas that are the core focus of this paper.
Most financial services regulators and compliance professionals are familiar with the term ‘white collar crime’, and may have encountered white collar criminals or…
Most financial services regulators and compliance professionals are familiar with the term ‘white collar crime’, and may have encountered white collar criminals or examples of white collar crime while carrying out their regulatory responsibilities. However, the majority of regulatory or compliance professionals are unlikely to be familiar with the origins of the white collar crime label or the specialist subject area of criminology. This paper provides a short explanation of the origins of the white collar crime debate, then briefly considers some of the dilemmas that are shared by white collar criminologists and regulatory professionals, before detailing some areas in which criminological research may have relevance for financial services regulation.
The purpose of this paper is to provide some reflections on the Australian experience of ‘Big Bang’ regulatory reform. The analysis is confined to the recent legislation passed on 1st July, 1998 and the reform processes that fuelled these regulatory innovations.
Scandals are a recurring feature of UK financial services and they were probably more common in the 1840s than they are in the 1990s. There is no overwhelming evidence that general financial practice is less ethical than it was and it appears more likely that ethical standards have risen. They are certainly higher than in the Victorian era, for example the ‘railway mania’ of 1845—46 which structurally established large‐scale financial fraud in Britain. During this period, hundreds of railway schemes were launched as a source of enormous fees for promoters, lawyers, engineers and surveyors. Many were never intended to be built, with some promoters (once they had accumulated substantial funds from investors) actively lobbying for their Railway Bills to be rejected by Parliament. However, this relative rise in the ethical standards of contemporary general financial practice will be of little comfort to the thousands of angry investors who have been mis‐sold pensions, or have been victims of modern scandals perpetrated by Peter Clowes, Roger Levitt or Robert Maxwell. Their anger is understandable because modern society expects increasing levels of security from its industries and institutions, and regulation is the medium for achieving this. Despite general trends towards deregulation, in financial services increasing regulation is inevitable, and politically desirable, because of the rising complexity and elaborate nature of exchange relationships. It is the state which is taking on the role of guaranteeing the security of those relationships. It is this guarantor role of the state which ensures that when scandals happen, the anger of victims is not merely directed at the fraudsters, but also at the regulatory system and the government which is responsible for that system.
As the forces of globalisation gather pace, national economics are becoming more internationalised and interdependent, and the power of individual nation‐states is being…
As the forces of globalisation gather pace, national economics are becoming more internationalised and interdependent, and the power of individual nation‐states is being diminished in relative terms. Increasingly, individual countries are less able to control their national economics. One consequence of these developments is that regulatory structures and processes are becoming more internationalised and a variety of modes of global governance is emerging. These shifts in regulatory power are apparent in the growing influence of bodies such as the Basle Committee on Banking Supervision (BCBS); the Financial 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 are 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.
Discusses how important perceptions of tax fairness can be in forming tax‐compliant behaviour in various jurisdictions, based on a crosscultural study of Australia and…
Discusses how important perceptions of tax fairness can be in forming tax‐compliant behaviour in various jurisdictions, based on a crosscultural study of Australia and Hong Kong. Defines fairness and its relationship with legitimacy. Describes a tax survey questionnaire administered to business students, which is broken down by demographic data and includes extensive correlations between tax‐fairness perception and tax‐compliance behaviour. Concludes that legitimacy is a crucial normative influence in shaping how fair tax systems are perceived to be and how likely people are to comply with their tax obligations.
There are increasing levels of concern in many countries about the threat posed by organised crime to established political structures and processes. This analysis…
There are increasing levels of concern in many countries about the threat posed by organised crime to established political structures and processes. This analysis considers some of the issues associated with the political influence of organised crime.
On 4th January, 1996, Mr Michael Lawrence was dismissed from his position as chief executive of the Stock Exchange, instigating a wave of media interest in the…
On 4th January, 1996, Mr Michael Lawrence was dismissed from his position as chief executive of the Stock Exchange, instigating a wave of media interest in the decision‐making process of the Exchange. Generally, this media interest was not especially flattering to the Board of the Exchange; and there were wider concerns about the damage that may have been caused to the reputation and credibility of the City of London itself:
The purpose of this paper is to discuss the subject of politically exposed persons (PEPs) and some of the major issues associated with them. PEPs as a specific category are receiving increased attention from governments, law enforcement agencies and international organisations such as the Financial Action Task Force. An increased academic and theoretical focus upon PEPs is required because there is considerable uncertainty about the specific definition of PEPs, how precisely they may be categorised, what the impacts of their activities are and how they might be countered.
This paper first discusses some of the ambiguities surrounding the definition of PEPs. The paper then emphasises the unsurprising reality that definitional confusion regarding PEPs contributes to uncertainty about their incidence and effects. The paper then highlights some of the key policy challenges in responding to PEPs and provides examples of good and bad practice in seeking to counter the activities of PEPs.
The paper concludes that it is important for governments and business organisations to be proactive about emerging risks relating to PEPs. However, experience suggests that it seems extremely difficult to segregate political contexts from how the harms and other problems associated with PEPs might be countered and that political expediency may be a defining overall factor in how responses to PEPs evolve.
The paper's originality and value lies in its efforts to link the definitional and political landscape surrounding the issue of PEPs, and to articulate that progress in the former is unlikely without open appraisal of the impacts of the latter.