Bank Secrecy, Illicit Money and Offshore Financial Centers
International and national institutions regularly put pressure on offshore Financial centers and their clients to enforce compliance with anti-money laundering regulations and that in spite of the existence of bank secrecy. This paper discusses the winners and losers of such policies. Surprisingly, aggregate profits and tax revenues can increase under those policies. In addition, we show that o¤shore banks can be encouraged to comply with rigorous monitoring of the investor's identity and the origin of his/her funds when the pressure creates su¢ ciently high risk of reputational harm to this investor. Nevertheless, the efficient pressure policy is dichotomous in the sense that a social planner chooses zero pressure or the pressure that just entices o¤shore banks to comply. By contrast, the imple- mentation of those pressure policies on an onshore institution may be ine¢ cient. Finally, we show that deeper financial integration fosters compliance by the offshore center while it also gives better incentives for delegated organizations to effectively induce compliance.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: 162a avenue de la Faïencerie, L-1511 Luxembourg|
Phone: (+352) 46 66 44
Fax: (+352) 46 66 44 ext 633
Web page: http://wwwen.uni.lu/research/fdef/crea
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andrew K. Rose & Mark M. Spiegel, 2005.
"Offshore financial centers: parasites or symbionts?,"
Working Paper Series
2005-05, Federal Reserve Bank of San Francisco.
- AndrewK. Rose & MarkM. Spiegel, 2007. "Offshore Financial Centres: Parasites or Symbionts?," Economic Journal, Royal Economic Society, vol. 117(523), pages 1310-1335, October.
- Rose, Andrew K & Spiegel, Mark, 2005. "Offshore Financial Centres: Parasites or Symbionts?," CEPR Discussion Papers 5081, C.E.P.R. Discussion Papers.
- Andrew K. Rose & Mark Spiegel, 2006. "Offshore Financial Centers: Parasites or Symbionts?," NBER Working Papers 12044, National Bureau of Economic Research, Inc.
- Donato Masciandaro, 2005. "False and Reluctant Friends? National Money Laundering Regulation, International Compliance and Non-Cooperative Countries," European Journal of Law and Economics, Springer, vol. 20(1), pages 17-30, July.
- Slemrod, Joel & Wilson, John D., 2009.
"Tax competition with parasitic tax havens,"
Journal of Public Economics,
Elsevier, vol. 93(11-12), pages 1261-1270, December.
- Ravi Kanbur & Michael Keen, 1991.
"Jeux Sans Frontieres: Tax Competition and Tax Coordination when Countries Differ in Size,"
819, Queen's University, Department of Economics.
- Kanbur, Ravi & Keen, Michael, 1993. "Jeux Sans Frontieres: Tax Competition and Tax Coordination When Countries Differ in Size," American Economic Review, American Economic Association, vol. 83(4), pages 877-92, September.
- FitzGerald, Valpy, 2004. "Global financial information, compliance incentives and terrorist funding," European Journal of Political Economy, Elsevier, vol. 20(2), pages 387-401, June.
- Abbott, Kenneth W. & Snidal, Duncan, 2000. "Hard and Soft Law in International Governance," International Organization, Cambridge University Press, vol. 54(03), pages 421-456, June.
- CREMER, Helmuth & PESTIEAU, Pierre, .
"Factor mobility and redistribution,"
CORE Discussion Papers RP
1749, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Desai, Mihir A. & Foley, C. Fritz & Hines, James Jr., 2006. "The demand for tax haven operations," Journal of Public Economics, Elsevier, vol. 90(3), pages 513-531, February.
- Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
When requesting a correction, please mention this item's handle: RePEc:luc:wpaper:08-18. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elisa Ferreira)
If references are entirely missing, you can add them using this form.