Edited by Adam Graycar and Russell G. Smith
Chapter 11: Corrupt Practices Involving Offshore Financial Centres
David Chaikin INTRODUCTION This chapter explores the relationship between offshore financial centres (OFCs) and international criminal activity. The first part examines the phenomenon of OFCs and canvasses three important research issues: whether OFCs are more susceptible vehicles for transnational crimes, whether OFCs have been captured by onshore financial institutions and professionals, and whether there is any meaningful difference between OFCs and tax havens. The next section outlines the legitimate uses of OFCs, pointing out that a lack of information about OFCs makes it difficult to provide an objective judgement of their licit and illicit role in international commerce. From a criminological perspective, the hallmark of OFCs is their lack of transparency, which is generally regarded as a major obstacle to the prevention and investigation of transnational crimes, including corruption. The secrecy structures of OFCs are not only based on their banking and financial secrecy laws, but also and perhaps more importantly on the widespread use of international business companies (IBCs). However, many of the secrecy features of IBCs, such as nominee ownership, corporate directors and bearer share are also found in onshore jurisdictions, raising the question of whether a lack of transparency is an exclusive problem of OFCs. The role of OFCs in providing corrupt facilities is illustrated by the literature and practical cases concerning organized crime, money laundering, shell bank fraud, grand corruption, illicit capital flight and international tax evasion. More recently, the Global Financial Crisis has raised the question as to whether OFCs have contributed to international financial...
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