Bank secrecy, illicit money and offshore financial centers
AbstractThis paper discusses the effects of pressure policies on offshore financial centers as well as their ability to enforce the compliance of those centers with anti-money laundering regulations. Offshore banks can be encouraged to comply with rigorous monitoring of an investor's identity and the origin of his/her funds when pressure creates a sufficiently high risk of reputational harm to the investor. We show that such pressure policies harm both offshore and onshore investors and can benefit both the bank industry and tax administrations. We show that social optimal pressure policies are dichotomous decisions between no pressure at all and a pressure great enough to persuade offshore banks to comply. The delegation of pressure policies to onshore tax institutions may be inefficient. Deeper financial integration fosters compliance by the offshore center.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Public Economics.
Volume (Year): 95 (2011)
Issue (Month): 7-8 (August)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505578
Money laundering Offshore banking Compliance;
Other versions of this item:
- Picard, Pierre M. & Pieretti, Patrice, 2011. "Bank secrecy, illicit money and offshore financial centers," Journal of Public Economics, Elsevier, Elsevier, vol. 95(7), pages 942-955.
- PICARD, Pierre & PIERETTI, Patrice, 2010. "Bank secrecy, illicit money and offshore financial centers," CORE Discussion Papers, UniversitÃ© catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2010018, UniversitÃ© catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- PICARD, Pierre M. & PIERETTI, Patrice, . "Bank secrecy, illicit money and offshore financial centers," CORE Discussion Papers RP -2343, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Pierre M. Picard & Patrice Pieretti, 2008. "Bank Secrecy, Illicit Money and Offshore Financial Centers," CREA Discussion Paper Series 08-18, Center for Research in Economic Analysis, University of Luxembourg.
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
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