Table of Contents

Research Handbook on International Financial Crime

Research Handbook on International Financial Crime

Research Handbooks in Financial Law series

Edited by Barry Rider

A significant proportion of serious crime is economically motivated. Almost all financial crimes will be either motivated by greed, or the desire to cover up misconduct. This Handbook addresses financial crimes such as fraud, corruption and money laundering, and highlights both the risks presented by these crimes, as well as their impact on the economy. The contributors cover the practical issues on the topic on a transnational level, both in terms of the crimes and the steps taken to control them. They place an emphasis on the prevention, disruption and control of financial crime. They discuss, in eight parts, the nature and characteristics of economic and financial crime, the enterprise of crime, business crime, the financial sector at risk, fraud, corruption, the proceeds of financial and economic crime, and enforcement and control.

Chapter 51: Control liability and compliance: tools for controlling financial crime

Christopher Stears

Subjects: economics and finance, financial economics and regulation, law - academic, corruption and economic crime, finance and banking law


This chapter focuses on the definition and scope of the concept of ‘control liability’ and the application of such liability, as well as the role of ‘compliance’ within financial institutions, as a tool for combating financial crime. The term ‘compliance’ in this context is not merely the ‘compliance function’ (as a constituent of an institution’s wider assurance, regulatory control, prudential and reporting framework), but it also encapsulates the much broader range of officers, employees, agents, professional advisers, contractors and counterparties (collectively ‘actors’) whose responsibility might variously include everyday observance with legal, regulatory and financial crime-related obligations. The genesis of this chapter is the growing influence of regulatory risk on the successful use of traditional ‘control liability’ as a credible ‘stand-alone’ tool in the battle against financial crime. The preservation of ‘financial stability’ has taken precedence over cultural and other behavioural dynamics within institutions. As such, regulatory policy and enforcement is potentially now acting with material unintended consequences upon the effectiveness of the ‘control function’. This is arguably undermining the efficacy of holding financial institutions to account (and more specifically their senior management and ‘compliance’ function) as a principal instrument in the fight against financial crime. The legal risks of increased personal liability (potentially criminal) now being faced by those who are mandated to police and in essence have ‘control’ over the detection and interdiction of financial crime must be aligned with the measured benefits expected by global prudential policy makers.

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