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The 10 fundamental laws of money-laundering 3. Features of an ideal financial haven 4. United States payments structure, 5. Major financial havens Introduction The major money-laundering cases coming to light in recent years share a common feature: Financial havens offer an extensive array of facilities to foreign investors who are unwilling to disclose the origin of their assets, from the registration of international business corporations IBCs or shell companies to the services of a number of offshore banks, which are not subject to control by regulatory authorities.
The difficulties for law enforcement agents are amplified by the fact that, in many cases, financial havens enforce very strict financial secrecy, effectively shielding foreign investors from investigations and prosecutions from their home countries.
While bank secrecy and financial havens are distinct issues, they have in common both a legitimate purpose and a commercial justification.
At the same time, they can offer unlimited protection to criminals when they are abused for the purpose of doing business at any cost. These two issues are analysed in the present study because the recent history of international money-laundering control makes it clear that the indiscriminate enforcement of bank secrecy laws, as well as the rapid development of financial havens, constitute serious obstacles to criminal investigations and jeopardize efforts undertaken by the international community since the adoption of the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, the Conventionwhich first established money-laundering as a criminal offence.
The BCCI case, which is described in more detail in chapter III, generated a shock wave in financial markets and among the supervisory authorities of all countries affected by the scandal, forcing them to tighten up regulations to prevent the use of financial markets for money-laundering purposes.
However, six years later, another prominent case was revealed following the bankruptcy of the Antigua-based European Union Bank, demonstrating that the problem had gained a new dimension with the application of modern technologies. The European Union Bank was founded by two Russians and is alleged to have been used to launder the illicit proceeds of Russian organized crime.
This bank, which was operating on the Internet, offered its clients according to its advertisements on the net "the strictest standards of banking privacy in offshore business" and the "financial rewards of offshore banking".
There are important and sobering lessons to be learned from the experience with the European Union Bank. Among the more important are the following: Changes since BCCI have helped, but there are still important gaps in the regulation of offshore banking by bank secrecy jurisdictions that can all too easily be exploited by criminals of various kinds.
The Internet and World Wide Web offer a whole new dimension for encouraging money-laundering, fraud and various kinds of scams. The experience highlighted that the concept of a bank is becoming increasingly elastic, a development vividly encapsulated in the comments of one auditor that some banks are little more than "closets with computers".
The central problem with virtual banks is that there is virtually no oversight, not least because it is not clear who has jurisdiction or where the crime is being committed.
The man who was operating both the bank and the computer server was in Canada. So now the problem is, where is the crime committed, who committed it, who is going to investigate it, and will anyone ever go to jail? In short, bank secrecy and offshore banking offer multiple opportunities for money-laundering and various other criminal activities.
In the early and mids the Permanent Investigations Subcommittee of the Committee on Governmental Affairs in the United States Senate held a series of hearings on offshore banking and bank secrecy.
The chairman, Senator William Roth, noted that "we have repeatedly heard testimony about major narcotics traffickers and other criminals who use offshore institutions to launder their ill gotten profits or to hide them from the Internal Revenue Service.
Haven secrecy laws in an ever increasing number of cases prevent U. It would appear that the use of offshore haven secrecy laws is the glue that holds many U.
This study examines the world of offshore financial centres and bank secrecy jurisdictions in the context of the control of money-laundering and financial crime. It looks at offshore financial centres and bank secrecy jurisdictions as facilitators of money-laundering and other forms of crime, elucidates the ways in which they are used by criminals and identifies a series of remedies or counter-measures that would block or at the very least diminish the attractions of these havens.
Chapter II looks at the legitimate as well as the criminal uses of offshore financial and bank secrecy jurisdictions and explains briefly how bank secrecy and offshore banking evolved.
It locates offshore banking and bank secrecy jurisdictions within the global financial system, suggesting that the system is a highly congenial one for both licit entrepreneurs and for those trying to launder and hide the proceeds of crime as well as for those who typically exploit loopholes and variations in tax and other laws.
Jurisdictions that offer high levels of secrecy, and a variety of financial mechanisms and institutions providing anonymity for the beneficial owners are highly attractive to criminals for a wide variety of reasons including the potential cover and protection they offer for money-laundering and various exercises in financial fraud.
Not all offshore financial centres and bank secrecy jurisdictions provide the same services, however, and there are important differences in the schemes they offer to ensure anonymity, the extent of the secrecy they provide and their willingness to cooperate with international law enforcement investigations.
Consequently, chapter II also provides an overview of what might be termed the geography of offshore banking and bank secrecy.
Chapter III looks at the way in which offshore financial centres and bank secrecy jurisdictions are used by criminals. It highlights not only the way in which money is often moved to and through offshore banks or bank secrecy jurisdictions as part of money-laundering efforts, but also other ways in which offshore jurisdictions are used by criminals.Full text and audio database of Top American Speeches by Rank Order.
The Standards of Field Work providing the auditor with a different perspective in identifying risks of mate-rial misstatement. In determining others within the entity to whom inquiries.
The Online Writing Lab (OWL) at Purdue University houses writing resources and instructional material, and we provide these as a free service of the Writing Lab at Purdue. Executive summary. Today, enterprise criminals of every sort, from drug traffickers to stock fraudsters to corporate embezzlers and commodity smugglers, must launder the .
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