Bank secrecy, illicit money and offshore financial centers

Pierre Picard and Patrice Pieretti

No 2010018, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This 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.

Keywords: money laundering; offshore banking; compliance (search for similar items in EconPapers)
JEL-codes: F21 K42 (search for similar items in EconPapers)
Date: 2010-05-01
New Economics Papers: this item is included in nep-ban and nep-ifn
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https://sites.uclouvain.be/core/publications/coredp/coredp2010.html (application/pdf)

Related works:
Journal Article: Bank secrecy, illicit money and offshore financial centers (2011)
Journal Article: Bank secrecy, illicit money and offshore financial centers (2011)
Working Paper: Bank secrecy, illicit money and offshore financial centers (2011)
Working Paper: Bank Secrecy, Illicit Money and Offshore Financial Centers (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2010018

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